The gambling industry in Scandinavia is peculiar to say the least, while there have been some efforts towards liberalisation the thriving industry is still somehow authorised heavily in the form of various monopolies.
In recent times these monopoly dependant systems have come under increasing pressure to liberalise and become more or at all conducive to a competitive market.
A further issue that has commonly plagued monopolistic sectors is the heavy presence of conflicts of interest, occurring far more persistently than in their licenced-based counterparts.
This is most certainly an issue that has proved problematic in the industries endemic to Scandinavia, however, what makes this case unique is that these sectors still remain economically sound and viable.
Particulars of the Scandinavian gaming sector
According to a May 2021 study, gambling monopolies remained the most prevalent form of regulatory regime across Europe up until approximately 20 years ago.
Today throughout Europe only Finland and Norway operate fully monopolistic gambling regimes.
Subsequent to several Court of Justice of the European Union (CJEU) rulings, which themselves highlighted the importance of the regulatory regime specifically, for the very first time, many European nations chose to migrate away from these models.
Instead, most European nations adopted a licensed-based approach, which has now become the most popular means of provision.
These licensed-based regimes bring far more consumer and operator protections in the form of competition and a significant lack of conflicting interests through regulators operated independently from any industry activity.
Problem gambling and gambling addiction
The EU does, however, make provisions for a monopoly regime in any industry under certain justifiable terms.
The gambling sector in particular may include a monopolised industry if this is enacted to prevent gambling harms and to promote public order.
This is most certainly the case in systems presence in Scandinavia.
Finland’s financial solution
As of 2020, the gross winnings paid out worth an estimated €1.6 billion, making it amongst the most winningest nations per capita in the world with regards to gambling activity.
This massive economic benefit is offset, however, by the 3 percent of gamblers being identified as problem gamblers and another 11 percent of the roughly 5-and-a-half million strong population deemed as at-risk of gambling addiction.
Contextualised, this figure actually impressively low given that Finland has one of the highest rates of gambling per capita overall, with research suggesting more than 80 percent of Finnish residents are involved in some form of gambling.
This delicately balanced situation is highly indicative of the effectiveness of the Finnish state-regulated and operated system controlled by Veikkaus.
Grey market conundrum
An issue in a multitude of nations, Finland’s grey market has been particularly pervasively prevalent.
As would be expected in such a stringently monopolised industry as Finland’s numerous Finnish-facing operators have illegally been supplying gambling products to their population for some years now.
Although provisions have been made to attempt to curb this subjecting operators to extremely strict advertising laws, however, these have been innovatively overleaped far too often to be deemed effective.
Similar problems have been of significance in Denmark, a nation with a slightly more liberal system with licences narrowly available. It has recently been reported that up to a staggering 49 gambling sites were shut down by Spillemyndigheden (Danish Gambling Authority) this month alone.
Diversity, in its limited capacity, therefore could be said to be the most harmful factor affecting the Finnish community as it stands.
This also means that billions of dollars are being lost by the government in potential tax revenue as would be available in a nation employing the licencing model.
Swedish solution
Until 2019, Sweden’s gambling landscape seemed very similar to that of Finland, where only state-owned or controlled companies Svenska Spel and ATG were allowed to provide gambling for any monetary reward.
In addition to this minor exceptions were also made to allow public service organisations to arrange lotteries and bingo activities.
However, after the new Gambling Act was introduced on January 1st, 2019, the gambling market was divided.
Now comprising 3 parts, the Swedish gambling industry still maintains a government segment that includes a majority of casinos and token machines.
Additionally, Sweden now has a competitive segment where private organisations may provide online gaming and sports betting, essentially bringing in a licencing regime kin to that on the European mainland.
This succeeds in overleaping the potential for an illicit grey market that eliminates the loss of tax revenue while also keeping the segment stringently managed to prevent gambling harms.
Diversification on a separate level has also been achieved by allowing gambling that is of “public benefit”, comprised mainly of lotteries and bingo. Further allowing a safe well-regulated segment to improve the health and lucrative nature of the industry.
Norwegian nuisance
Holding on to such a monopoly as Finland has managed to do so far may not be possible despite the safety benefits it may provide.
The lack of competition persists, in terms of conflicting interests, product diversification and economic viability.
Norway has experienced similar scrutiny in recent months with its own state-owned entities, Norsk Tipping and Norsk Rikstoto which are together responsible for all gaming in Norway.
So stringent is this regime in fact no other form of gambling for money is legal, which has led Kindred to contest the very latest in accreditations awarded to Norsk Rikstoto.
Receiving a 10-year extension on its exclusive licence to operate sports betting on horse racing.
Kindred’s concerns
Interestingly the monopoly itself is not being questioned by Kindred. After the Oslo District Court was forced to seek guidance from the European Free Trade on the legitimacy of a gambling monopoly, Norway has decided this is wholly compliant we EEA law.
The Norwegian Ministry of Culture and Equality made this statement on the matter:
“The exclusive right is a permit with a strong degree of public control, based on weighty gambling policy considerations. The exclusive right cannot be considered a public contract covered by procurement regulations.”
Kindred is only contesting that the lack of licencing tender prevented anyone from competing to obtain the race wagering licence.
The future of the gaming monopoly
Although several claims could be made concerning the benefits of a gaming monopoly it seems there are perhaps more complex but similarly effective options to combat these issues.
The lack of competition it seems will be too strong of a pull to allow gaming monopolies to continue and most importantly thrive as they did before.
The loss of tax revenue which is highly likely to outweigh the revenue a state monopoly can gain, along with the absorbent regulatory requirements to prevent an illicit and addiction disregarding grey market will be the largest of many factors that could prove too strong for the ways of structures of old.
SiGMA Balkans/CIS
As a globally recognised nexus for networking, SiGMA Group sets its sights next to the Balkans this September, when the SIGMA Balkans/CIS Summit heads to Limassol Cyprus.
A host of networking opportunities and industry-leading knowledge will be emanating from the much-anticipated event which will pack panel discussions, keynote speeches, start-up pitches and much more into 3 days in the diverse Cypriot city.
