“ The normal way ( a private sector industry runs in ) Western society is private companies run businesses while governments and parliaments set and supervise the rules . But among the Nordic countries , the state is also quite an aggressive commercial operator . Neither Denmark nor Sweden has managed that process in a good way so far .”
“ The normal way ( a private sector industry runs in ) Western society is private companies run businesses while governments and parliaments set and supervise the rules . But among the Nordic countries , the state is also quite an aggressive commercial operator . Neither Denmark nor Sweden has managed that process in a good way so far .”
— Gustaf Hoffstedt of the Swedish trade association ( BOS ) and former politician for Sweden ’ s Moderate Party
questioned delays in enacting this pre-election pledge .
Ronde has made similar requests of Denmark ’ s Social Democrat government , but he notes there has been no interest from them to sell their stake in the monopoly . “ I think the market itself will dilute the monopoly model ,” Ronde says . “ In Denmark , the monopoly started with a market share of almost 60 percent — they ’ re down to 25 percent now , so I think the market will regulate itself over time .”
Sweden in July increased its gambling tax from 18 percent to 22 percent to bring in an increased tax revenue of $ 48.6 million each year . Naturally , the sector protested , and Sweden ’ s attractiveness as an online gambling market suffered .
“ There is a growing concern regarding Sweden , but I don ’ t think that that large operators will abandon the region ,” says Hoffstedt . But he insists the tax increase has encouraged an increase in black market usage in the country . BOS estimates the current channelization rate is around 72 percent , much lower than the Swedish regulator ’ s aim for a steady rate of 90 percent .
Learning from Mistakes
Hoffstedt and Ronde hope that Finland can learn from the mistakes made by Denmark and Sweden , particularly with regards to its own monopoly operator . Finland ’ s stakeholders have been extremely vocal about the unfair benefits Veikkaus could have against private operators upon market launch .
In one example , industry consultant and former Veikkaus executive Jari Vähänen warned the ministry of the interior in his response to the government ’ s public consultation in August that Veikkaus ’ licensed business will maintain a major competitive advantage if it has access to its 2.5 million-strong monopoly customer base .
“ If they can ’ t bring those customers with them , the value of Veikkaus ’ licensed business will be much lower . But if they start operations with 2.5 million customers , they will dominate the market ,” Vähänen says .
Finland ’ s draft legislation , released in July , laid out restrictive marketing measures , including the banning of affiliate marketing and customer bonuses . These two measures faced huge criticism from the sector as Mika
Kuismanen , CEO of the Finnish trade body Rahapeliala Ry , called the government out for taking “ reckless risks ” in their draft plans by jeopardizing channelization rates in August .
“ Marketing is unjustifiably limited , sponsorship is stifled , while bonuses and offers are prohibited . If it doesn ’ t change course quickly , the law reform will run into a wall and gambling on the gray market will continue ,” he said in an opinion piece published in the Finnish publication Uusi Suomi .
But speaking to GGB , Kuismanen says the government has had extensive discussions with the industry and has since softened its stance on affiliates . “ The law has bit by bit changed into a more operational and liberal one ,” he notes . “ We are very happy that the civil servants working on the law have contacted us and we ’ ve had an open and fair discussion with the lawmakers .”
Looming Black Market Risks
Including industry stakeholders in the regulatory process is key to a successful gambling market . But , according to Hoffstedt , the Nordic markets have very many stakeholders all wanting their perspective and views considered .
“ There are so many strong stakeholders , from universities and nonprofits to government authorities , but none of them have the competence or are interested in creating a commercially attractive gambling market ,” Hoffstedt says . With a heavy emphasis on social affairs , they are seeking to enforce additional regulations and restrictions to improve responsible gambling efforts .
This can ultimately be damaging to the market and push channelization into a tailspin , forcing players to turn to the illegal market for a frictionless experience . There is of course a very delicate balance between the safeguarding of players and ensuring they have an enjoyable and seamless journey when gambling online .
Europe overall faces a growing black-market threat as tightening restrictions are rolled out across multiple markets . We can hope the Nordics ’ notoriously liberal and practical approach to society prevails in any future gambling regulations .
16 Global Gaming Business NOVEMBER 2024