Finland is a Nordic country with a population of 5.5 million people and a gross domestic product that is forecast to reach $242 million by the end of 2020. The country offers a high standard of living and boasts a well-developed economy whose main growth drivers are the service, manufacturing, and refining industries.
These conditions seemingly pave the way for a flourishing gambling industry on Finnish soil. In reality, land-based gaming opportunities are scarce here since Finland has only 16 brick-and-mortar casinos. Nonetheless, gambling enjoys huge popularity as many locals prefer to place bets online.
The biggest betting site in the country, Veikkaus Oy, is operated by the government, which holds a monopoly over the entire gambling industry in Finland. Finns are estimated to spend around €2 billion on casino gaming each year, although it is difficult to arrive at accurate figures because many locals resort to playing on offshore websites.
The state monopoly prevents foreign operators from applying and receiving local licenses. The legal virtual options are restricted to Veikkaus Oy, which offers online casino games, slots, lotteries, sports betting, and poker. An exception is made for the autonomous Åland Islands, where gambling is regulated on a local level.
Similarly to mainland Finland, where Veikkaus dominates the land-based and digital gambling sectors, Penningautomatförening (Paf) holds the sole rights for the provision of gambling services in the Åland Islands.
Laws That Govern Landbased Gambling in Finland
The history of gambling in Finland dates back to the 17th century. Gambling was prohibited in 1899, but it was decriminalized again in 1917 and has been legal ever since. Gambling activities are governed by the provisions of the Finnish Lotteries Act 1047/2001, which has been amended several times.
The legislation defines lotteries in Section 2 as “[activities] in which participants may win a prize of monetary value based in full or in part on chance in which there is a charge for participation.” The Act also applies to casino table games (such as roulette, craps, and blackjack), slots, tote betting, bingo, pool betting, and machines with non-monetary prizes.
Section 5 of the Finnish Lotteries Act states that lotteries and other gambling services may be conducted solely for non-profit purposes by organizations with registered offices in the country. A permit must be issued by a licensing body for this purpose. Section 11 adds that the state-owned Veikkaus Oy holds the exclusive rights to distribute gambling products and services within Finland.
Government Decrees That Complement Finland’s Lottery Act
Åland Islands Gambling LegislationOnline Gambling in Finland
Due to the government monopoly in the country, foreign operators cannot apply for local permits that would allow them to legally service Finnish residents. The only operators that provide virtual casino games and betting in the country are Veikkaus in mainland Finland, and Paf in the Åland Islands region.
Since Finland is a member state of the European Union, it has been pressured to open its gaming market to foreign competition on several occasions. Finnish authorities have shown no signs of succumbing to the pressure so far. Since the country borders Sweden to the west, it has been keeping a close watch on the recent changes and developments in the Swedish virtual gambling industry.
Paf itself urged the Finnish government to put an end to the monopoly, as this would enable the country to address gambling-related harm more adequately. However, Finland’s lawmakers are still reluctant to end the state monopoly. Some of them believe opening the local market will harm the governmental organizations that rely on the gambling funds provided by the state-operated companies.
That being said, Finnish players are not entirely devoid of options. In the absence of locally regulated operators, an increasing number of Finns are taking their business to offshore online casinos, licensed in other European jurisdictions like Gibraltar and Malta.
Such websites operate in full compliance with their local regulatory policies. They normally give Finns the chance to create accounts using EUR as the base currency, and their websites can be loaded in the Finnish language.
While such practices violate the country’s state monopoly, the Finnish government does not legally prosecute locals for participating in offshore gambling activities. No monetary penalties are imposed on Finnish players, either. In the words of Katriina Laitinen, who chairs the Department of Legislative Affairs at Finland’s Ministry of the Interior, local gamblers who patronize foreign gaming sites are “not committing any crime” in doing so.
This is not the case where offshore operators themselves are concerned. They are strictly prohibited from advertising their products and services to Finns. One magazine editor was even fined by the Lappeenranta District Court back in 2010 for publishing ads for offshore gaming companies such as Ladbrokes.
Finland’s Gambling Regulators
The gambling industry in mainland Finland is regulated by the Lottery Administration Department of the National Police Board (Arpajaishallinto). The regulatory entity began operating in its current form at the beginning of 2017. Its main responsibilities include supervising fundraising activities, mitigating the negative effects of gambling on Finnish society, and preventing money laundering.
The Lottery Administration of the National Police Board also has the mandate to oversee and control gambling-related marketing activities. Violators of the advertising restrictions are usually penalized with fines but, in the most severe cases, they can end up behind bars for up to two years.
Since Åland is an autonomous area, gambling activities on the islands are controlled by the regional government. The gambling regime in this territory is similar to that on the mainland in that it is monopolized, with a single government-controlled operator (Paf, est. 1966) covering the entire Åland market.
Paf, whose name is an abbreviation of “Play among Friends,” launched its online gambling operations in 1999 after receiving an exclusive permit from the provincial government of the Åland Islands.
The profits generated by the operator are distributed across various non-profit organizations by an independent allocation board. Since its establishment in 1966, Paf has donated more than €300 million to different charitable and socially beneficial causes.
Responsible Gambling Policies in Finland
Responsible Gambling in the Åland IslandsHow Gambling Operations Are Taxed in Finland
The monopoly operator Veikkaus Oy is taxed based on its gross gaming revenue, which is the difference between the total amount Finnish players have wagered and the amount paid to them as winnings. The provisions of the Finnish Lottery Act stipulate that Veikkaus must contribute 12% of its GGR each month.
The proceeds go toward socially beneficial initiatives and charities. Most of the funds are used to promote sports, health, science, and the horse racing sector. As for Veikkaus’ Åland counterpart, Paf, it offers gambling products across different categories with a single permit and is charged €70,000 for each renewal.
Finnish law does not require local players to pay taxes on their gambling-related profits. With that in mind, gambling debts are enforceable in Finland but only on the condition that the player incurs them through participation in activities offered by the government-owned Veikkaus.
What’s in Store for Finland’s Gambling Industry?
The state monopoly on the gaming sector has met significant criticism over the years. Despite this, the local authorities show no signs of lifting the monopoly. Only the future can tell whether the gambling industry in the Nordic country will remain stuck in a rut. Other than that, several regulatory amendments loom over the Finnish gambling sector, but none of them has anything to do with opening the market to foreign competition.
One change concerns slot players in land-based venues who will have to undergo obligatory identity verification from 2023. Finns might end up with fewer offshore gambling options since the local government has also unveiled intentions to block access and payments to foreign betting sites starting in 2021.