With just over a year left for those sculpting Finland’s nascent liberalised market to refine the regime for success, questions are being asked about how effective the system may be for encouraging competition and channelisation.
Set to launch on 1 July 2027, the window for operators to submit licensing applications opened in March and the expectation is that this will be a highly saturated new market. Individual licensees will be allowed to launch multiple brands and market estimates suggest there could be as many as 40 to 50 licensees at launch.
Just by virtue of the numbers of operators likely to be involved, next summer’s launch is set to mark a significant shift after decades of just one state-controlled operator, Veikkaus. The incumbent monopoly operator will remain in control of land-based gaming machines, lottery and scratch cards, but with an estimated 81% of total market GGR already coming from online gambling, the opportunity for new entrants is substantial.
As is ever the case with new markets, not everything is as straightforward as it might seem. One potential hiccup in this careful laid, and long prepared for, plan are the rules around marketing.
Operators are familiar with new licensing regimes capping the scope of marketing and placing limits on advertising and bonusing, but Finland has gone further than most by totally banning affiliates from the market. Not only that, but influencer promotions are also banned and social-media marketing is limited to operators’ own accounts.
In practice, this means advertising will primarily take place through expensive traditional media outlets and sports sponsorships. For top-tier brands with large marketing budgets, this is a navigable landscape, but for smaller challenger brands, the limited scope for the kind of online marketing gambling companies are used to could present a serious barrier.
Moreover, blocking affiliates from the market removes one effective method of channelisation, which is already only around 50% under the current regime, down from closer to 90% ten years ago. Bringing that figure up is going to be difficult without some fairly solid enforcement efforts from the regulator and with operators hamstrung by draconian marketing legislation.
Using a series of freedom of information requests, iGaming Business managed to get an idea of the current enforcement picture in Finland. The trade publication found that the current regulator, the National Police Board, had not sent a single prohibition order to unlicensed operators in the last 12 months. Bearing in mind the scale of the black market, that could prove to be a problem.
The regulator was found to have sent 14 ‘hearing letters’, or warnings, over the same period, only four of which were to operators, including White Hat Gaming, according to iGB.
It is notoriously difficult to enforce channelisation, although many jurisdictions do try. Arguably easier is using well-regulated marketing and incentives to encourage the public to use licensed platforms. This is particularly the case in newly regulated markets, where users have been habitually visiting black market operators in lieu of an appealing legal alternative.
Where the Finnish market differs from many newly liberalised markets, though, is that this is a sophisticated player base. Finland has one of the highest gambling-participation rates in the world, with around 70% of the population known to gamble.
Regulatory responsibility is set to pass to the Licensing and Supervision Agency in June, at which point many hope to see a more nuanced approach to the channelisation strategy. Without it, there is a risk that far from the lively competitive market that 50 new licensees could forge, the new market may in reality differ little from the monopoly it was created to replace.
Veikkaus will retain its exclusivity in limited areas and hold onto its privileged position as a household name and a few large European operators will likely stake their claim early on via high-value media placement and sponsorships. However, smaller brands that have historically relied on online marketing channels could struggle to get a foothold.
That said, it won’t be the first market to see a slew of new entrants gradually whittled down to the few adapted to survive in a given environment. The regime does, on the other hand, seem to be slightly at odds with itself: to open the market to so many competitors, but then so heavily restrict their potential to compete.
