Finland Supports Its Gambling Monopoly

29 October 2004

Finland's state lottery says its monopoly status should not be affected by the European Court of Justice's ruling in the Gambelli case, and the Finnish government agrees.

In mid October, the Grand Committee of the Parliament of Finland confirmed Veikkaus' long-standing independent policy by issuing a decision according to which gaming should be excluded from the scope of the E.U. Services Directive. The Grand Committee's decision reiterates the position held by the entire Parliament.

Finland became a member of the European Union on Jan. 1, 1995 and was the only Nordic state to join the Euro system at its initiation in January 1999.

The European Union is unique in that its member states have set up common institutions to which they delegate some of their sovereignty so that decisions on specific matters of joint interest can be made democratically at the European level. This pooling of sovereignty is known as "European integration."

Veikkaus CEO Risto Nieminen stated in the company's annual report for 2003 that the Gambelli ruling confirmed, once again, the principle of exclusive rights prevalent in the European gaming industry. Above that he mentioned that the European national gaming monopoly system was further reinforced in 2003.

"Nevertheless," Nieminen explained, "the Gambelli case has also been cited whilst arguing for the opposite view. Yet, such interpretations of the case are, in fact, impossible in view of its contents. The background of the Italian case is very exceptional. The E.C. Court contested the competition on the Italian gaming market, provoked by the authorities, In Finland, we have an entirely different situation. The national gaming policy, the legislation and the actions taken by the authorities have logically and consistently supported the system based on exclusive rights. The Finnish gaming organizations have strictly complied with this policy."

Nieminen added, "Although the monopoly system is still strong in Finland and Europe, the attacks against it will continue. The world is full of private operators that would be more than willing to scoop lottery revenues and use them for their own purposes.

"However, gaming is not just any form of financial activity. The question of whether to allow gaming in the first place has to be handled separately and independently in each state on the basis of the state's own history and ethical views; gaming is by no means allowed everywhere in the world. The monopoly system empowers the states to decide the type and volume of gaming suited for their societal system. In a competitive situation, the prize payouts must be maximized. Consequently, people play more and more, games become impossible to control and the revenues decrease."

Veikkaus stated in its press information:

"Every society is bound to be interested in lottery revenue and its allocation. However, rather than being aimed at producing revenue, gaming monopolies are there to work for the protection of players and society. Competition would inevitably lead into a rapid, uncontrolled growth of gambling; addictive gambling would increase and gaming revenue would decline. . . . Economic laws cannot be applied to gaming as such. It should, therefore, be treated differently from economic activities in general.

"Gaming is different from other economic activities, because it is not inherently economically productive. The value of a game equals the money players invest in it. Even if games were operated continuously, at a faster and faster pace, they would not produce any additional value; the prizes paid out to players at the end of a game only consist of the money the players have spent on the game themselves. Nor does gaming involve a value chain that would benefit from the playing as such. In this respect, gaming differs both from selling goods or services and investing. Gaming will only be beneficial once the funds collected by the game providers are used to benefit society. If gaming were opened to free competition, we would lose this benefit, too, whereas the detriments of excessive gambling would increase.

Gaming's special nature is appreciated around the world, which also explains why it is regulated worldwide. Rather than being an exception, the Finnish policy is therefore a good example of sound lottery legislation."

All very interesting views. The Parliament of Finland has now confirmed Veikkaus' independent policy, but Finland is still part of the multinational "Viking Lotto" (along with Denmark, Iceland, Norway, Sweden and Estonia.

Does this mean there is more than one policy in Finland?

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.