Finnish consumer authority calls for regulatory overhaul

29 October 2019

Finland’s Competition and Consumer Authority (KKV) has spoken out in favour of a central regulatory body for the country’s gambling sector being established to improve supervision of the country’s monopoly operator Veikkaus.

The KKV concluded that the regulatory framework currently in place in Finland was not fit for purpose, with numerous different bodies responsible for different elements, many of which overlap.

This, it said, left it unclear which bodies were ultimately responsible for which element.

The KKV explained that under European Union legislation, a monopoly can only be justified when it can effectively prevent potential negative effects of gambling. Its role as a source of funding for social causes is not sufficient grounds for maintaining a company’s monopoly status, the agency added.

It even suggested that better oversight would help tackle problem gambling in the market.

“The prevalence of problem gambling is due more to how gambling is regulated than how it is organised,” KKV head of research Anu Raijas said. “Current gambling regulations must first be centred around one body and made more effective.”

Currently regulation of Veikkaus is divided between parliament, the government and a number of specific departments, such as the Ministries of Finance, the Interior and Education and Culture. Entities such as the National Police Board takes control of monitoring and enforcement, while the Gambling Advisory Board advises the government on policy, and monitors its effectiveness.

The Ministry of Society and Health then deals with potential ill effects from gambling, supported by an advisory board, while Veikkaus itself is overseen by a supervisory board and recently-formed Ethics Council.

The KKV noted that not only does this mean regulation is shared between a diverse range of groups, but also that the direct beneficiaries of funds raised through Veikkaus’ operation have a say in policy matters. This may encourage some to work in a way that maximises the funds they receive, rather than to minimise and prevent problem gambling, it claimed.

By establishing a single regulatory body to replace the various government and national agencies currently responsible for overseeing gambling, KKV argued that Finland would be better-placed to enforce controls and tackle offshore activity. It cited Denmark and Sweden as examples where a centralised regulator had played a role in pushing unlicensed operators to the margins.

Furtheremore, it added, a regulator would be able to better tackle the negative effects of gambling. Noting that Finns were among the highest spenders on gambling a year, averaging €320 per person, a central authority would be able to tell consumers in a clear and concise manner about the risks involved.

Such an authority would also be able to take action, such as limiting the supply of certain products - something Veikkaus has long argued that it is already doing.

The recommendation comes as part of an ongoing KKV investigation into alternatives to the current system for organising and regulating gambling in Finland.

The report is the first of a series that will explore potential alternatives to Finland’s current gambling regulatory framework, eventually coming to a conclusion on whether Veikkaus’ monopoly status should be retained. Further reports will be released over the coming months, with the final conclusions to be published early next year.

In recent months, calls for Veikkaus’ gambling monopoly to be scrapped and replaced by a licensing system to allow foreign operators into the market has been growing. This has forced the operator to defend its monopoly status, and dispute claims that its turnover is much higher than reported in its results.

Public distrust appears to be turning to anger, with police revealing that an unspecified threat was made against the business over the weekend. While the details of the threat have not been made public, it was enough to prompt the authorities to visit chief executive Olli Sarekoski.

"Veikkaus does not accept any threats against the company or our personnel, but we ask the police to investigate each threat," security director Elias Olando said.