Finland Proposes Sweeping Reform of Gaming Market with Open Licensing System

The Finnish government has unveiled a draft law proposing a major overhaul of the country's gaming regulatory landscape. The proposed system, targeted for launch in January 2027, would usher in a new era of open competition for commercial operators.

Key Developments

• Open Licensing System. The current monopoly held by state-owned Veikkaus would be dismantled and replaced by an open licensing regime for commercial operators in the sports betting and online gaming (iGaming) sectors.
• Veikkaus Retains Monopoly Over Certain Games. Though private operators would gain access to the sports betting and iGaming market, Veikkaus would retain its exclusive rights over lotteries, land-based casinos, slot machines and totalizator/pool betting.
• Taxation. Private operators would be subject to a 22 percent gross gaming revenue (GGR) tax structure.
• B2B Software Supplier Licensing. The new system would also encompass business-to-business (B2B) software supplier licenses.

This reform initiative follows the Finnish government's commitment in June 2023 to address persistent issues plaguing the current monopoly system. These issues include low-market channelization, where a significant portion of gambling activity occurs outside regulated channels, and problem gambling.

The draft law, exceeding 400 pages in length, is currently in its consultation phase and subject to modification before being submitted to the country's parliament. Stakeholders are encouraged to submit comments by Aug. 18, 2024. The Ministry of Interior anticipates a more extensive revision process compared to past legislative efforts.

Shifting Regulatory Landscape

The draft law outlines a significant shift in regulatory oversight. A separate Finnish Supervisory Agency under the Ministry of Finance would assume control from the National Police Board. This new agency would be equipped with broad authority to regulate the market, including the power to impose sanctions, revoke licenses and conduct compliance checks.

Anti-Money Laundering and Player Protection Measures

The draft law prioritizes anti-money laundering (AML) and player protection measures. "Know your customer" (KYC) provisions mandate player registration, identity verification and residency checks. A required minimum age of 18 is proposed, along with a centralized self-exclusion system for problem gamblers.

Marketing restrictions are designed to promote responsible gambling practices. The use of bonuses, affiliates and influencer endorsements would be prohibited. The law emphasizes moderate advertising volume and responsible targeting practices. High-risk games and those under the Veikkaus monopoly would be excluded from outdoor marketing.

Staged Rollout and Next Steps

The Ministry of Interior aims to submit the final proposal to parliament in spring 2025. If approved, a staged rollout would commence. License applications would open in early 2026. Veikkaus would retain its monopoly until the end of 2026, with licensed operators launching services in January 2027. B2B supplier licensing would begin in 2027, with the framework fully operational by 2028.

This draft law signifies a momentous shift toward an open and competitive gaming market in Finland. Though subject to revision, it provides a clear roadmap for the future of the industry. Stakeholders should closely examine the proposal and actively participate in the consultation process to help ensure a regulatory framework that fosters a responsible and competitive gaming environment.

Navigating New Landscapes

Navigating the complexities of licensing, compliance and responsible gambling practices, especially in a new regulatory landscape, can be challenging. This is where Holland & Knight's extensive experience in gaming and casino law can be invaluable.

With a proven track record of advising clients on international gaming regulations for many years, the firm can assist businesses in understanding the nuances of the proposed legislation and help ensure compliance with international legal frameworks.

Holland & Knight can also assist with developing responsible gambling programs, crafting effective marketing strategies within the legal boundaries, and navigating the intricacies of business formation and operations within various markets. For more information, please contact the author.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.