Gambling monopolies in the EU: the case of Finland

The monopoly on the slot machines in Finland is one of the most profitable gambling monopolies in EU in this gambling aspect

Although from September 2013, the European Parliament voted a “Resolution on Online Gambling in the Internet Market” which aimed at establishing free gambling market across the European Union members, many countries are still working hard for protecting domestic gambling monopolies. GamingZion started a series of articles that reveal the most long lasting monopolies on the European Union gambling map, their justification in front of the European Union and their annual economic performances. It is now time to consider the Finnish case.

The national gambling monopolies of Finland

Gambling is an important source of incomes for the economy of Finland which, in the past 20 years, has made an extraordinary progress on a world level. As online gambling sites in the EU report, the welfare state they try to maintain is counting on the sources coming from the gambling sector in order to support a variety of cultural as well as sports activates.

In this respect Finland has constantly made efforts for strengthening the national gambling monopolies on online as well as land-based level. As of February 2017, the Finnish gambling sphere is organized by three national monopolies:the slot machine association, Raha-automaattiyhdistys,(RAY), the national lottery company (Veikkaus) and the national horse betting company(Fintoto).

The Läärä case challenges the usual justifications of the gambling monopolies in the EU

Beside making conditions for flourishing of these three monopolies, the Finish legislation also favored certain types of games instead of others. Thus,the statistics until 2016 show that on annual level, the non-casino slot machines are the most popular form of gambling in the country. All these machines are run by RAY and the revenues collected are planned for various charitable purposes across Finland.

However the impediment for private investors to possess slot machines throw a dark light on the gambling policies in the country, raising several objection concerning their contradictory relation to the accepted free market premises. In the “Läärä case” from 1999, private slot machine owner Markku Läärä charged the Finnish monopoly on slot machines for limiting the free entrepreneurship in the country. The European Court of Jusice (CJEU), however, rejected his charges, although in the same time recommended to the Finnish Government to find better justification for its monopoly system or change it. In general, as online gambling sites in Finland stress, it was said that the limitations they impose collide with the principle of free circulation of goods and services. 

• Finland’s legislative supports the monoply of RAY, Veikkaus and Fintoto

• The Läärä case demanded a new justification of the monopoly of RAY

• Charity: main argument for defending gambling monopoly in Finland

In light of this criticism Finland formed an advisory committee (Rahapelifoorumi) in
2006 to rethink the Finnish policies. This committee has done, in 2010 and 2011, several modifications of the Lottery Act whose aim was to provide strong enough justification that will prevent the appearance of cases similar to the Läärä one in future, which attracted the attention of the European Court of Justice.

How Finland justified its gambling monopoly? 

Rahapelifoorumi found several new arguments for defend the domestic legislation. Unlike many other countries which usually base the defenses of monopoly on the argument of prevention of illegal gambling, this justification of preventing criminal activities is not present in the Finnish gambling laws. What is present to a great extent in the Finnish legislation is mainly the consumer protection factor starting from the Lotteries Act 1047/2001, Article 1, which was modified in June 24, 2010. In this respect, monopolies are considered by the Finnish commission to be an instrument for preventing harms caused by gambling, mainly those caused by market competition. However, that market competition causes consumer harms and social problems, as a sole variable, is something that has never been proved nor any sort of evidence was offered by Rahapelifoorumi or other Finnish legislators. 

Beside the social harms, as gambling news report, one of the main arguments in the justification is that the Finnish monopolies have exclusively supported charitable causes. And the promotion of non-profit activities and support of social and cultural activities is, as of today, one of the key cards in the hands of the Finnish defenders of the gambling monopoly in the country. However, the Court of Justice of European Union has said in several occasions that this is not a valid justification, but the Finish legislation is still adding articles in their gambling acts according to which the strengthening of the gambling monopoly in Finland is for the common benefit of many cultural sectors in the country.