Finland stands out in Europe with some of the tightest reins on gambling. Up until now, this arena has been dominated by Veikkaus, a state-run behemoth with exclusive control. But the winds of change are blowing; soon, this monopoly will break apart, paving the way for dynamic new players to enter the market and ignite fresh possibilities.
Gambling revenue steadily declines year after year
Veikkaus opened its doors on January 1, 2017, born from the union of three Finnish gambling companies: Veikkaus, Fintoto, and the Slot Machine Association (RAY). As the sole entity licensed to run both digital and retail gambling in Finland, this state-owned monopoly initially experienced a surge in profits. In 2019, Veikkaus proudly reported gaming revenues of €1.69 billion, with retail sales contributing a healthy €1.15 billion of that total, while digital channels added another €537 million. Yet, fast forward to 2024, and the picture looks different. The gaming revenue has taken a hit, dropping to €959.1 million. Last year's gross gaming revenue showed a 7.2% decline from the previous year, signaling a continuing downward trend that raises concern. The shadowy presence of illegal gambling lurks as a significant factor in this ongoing revenue slump, casting doubt on future prospects.
Market changes result in a dip in revenue, but the impact of offshore gambling operators is significant
Earlier this year, with the release of its 2024 gaming revenue report, Veikkaus openly acknowledged a dip in revenue. As Finland’s state-controlled gambling monopoly, Veikkaus pinned this decline on market changes, including the implementation of authentication checks for ticket-based games. Notably, 2024 marked the first complete year under these new policies. The company elaborated that its gross gaming revenue from physical slot machines suffered due to changes in point-of-sale networks. Moreover, shifts in consumer habits and a downturn in purchasing power further challenged Veikkaus' business model. Compounding these difficulties, the launch of several new games was postponed, delayed by the slow pace of official approvals. Adding to these challenges, Veikkaus is facing stiff competition from international gambling operators. These offshore entities, who also serve Finnish customers, are estimated to have captured more than €550 million of the market in 2024, according to data from H2 Gambling Capital. When stacked against Veikkaus’ reported revenue of €959.1 million, the impact of the unregulated offshore market becomes starkly apparent. Veikkaus reported that digital channels like Veikkaus Casino claimed 60.2% of its gross gaming revenue in 2024, leaving retail outlets with 39.8%. This marked a year-over-year growth of 5.4% in the digital space. Yet, the state gambling monopoly estimated it held only about half of Finland's total digital gambling market, leaving a significant portion unclaimed and unregulated by these offshore operators who evade taxes and flout regulations, directly competing with Veikkaus. Despite stringent rules, many Finnish players still favor offshore operators, drawn perhaps by the allure of fewer restrictions.
The share of offshore gambling operators may be greater than Veikkaus' estimate
The latest figures reveal that offshore gambling operators hold a substantial slice of the iGaming market in Finland. While Veikkaus, the national monopoly, estimates this at €550 million, a former executive has a strikingly different view. Jari Vähänen, who served in high-ranking roles such as Vice President of New Business and Senior Vice President of International Affairs at Veikkaus until April 2020, shared his perspective on LinkedIn. He believes the offshore gambling sector's reach is much wider, estimating it at around €900 million—nearly mirroring Veikkaus’s projected revenue for 2024. In my opinion, the figure is closer to €900 million euros, Vähänen states, suggesting that this presents a very different picture of market shares and the effectiveness of the current gambling system. I would argue that our estimate is much closer to reality, he asserted earlier this year. Vähänen also highlighted the troubling trend of declining revenue for Veikkaus, noting that six years ago, the monopoly's revenue exceeded €1.8 billion. His analysis of recent data shows a worrying 45% drop in revenue, signaling a significant shift in the gambling landscape.
Veikkaus is optimistic about the upcoming changes to the gambling vertical in Finland
Despite recent challenges and the relentless competition from offshore gambling operators, Veikkaus is brimming with optimism about the forthcoming transformation of Finland's gambling landscape. By 2027, Finland will open its doors to a liberalized gambling market, a reform that has long been debated and recently gained momentum with lawmakers' approval. This shift will mark the end of Veikkaus' monopoly in late 2026. The coming year will be pivotal for gambling operators eager to secure a foothold in Finland, offering a chance to bid for licenses. As Finland moves towards dismantling the monopoly, it's crucial to remember that stringent marketing and advertising regulations will remain firmly in place. Robust measures for monitoring and protecting players will be vital in curbing gambling-related harm, ensuring consumer safety. These efforts aim to not only enhance tax revenues from gambling but also address concerns about gambling abuse. The focus will also be on strengthening the legal gambling market. Veikkaus is already investing in innovative strategies and enhancements to secure its future role in Finland's reimagined gambling sector. Regina Sippel, Veikkaus' CFO, expressed: This reform of the gambling system is a tremendous opportunity for Veikkaus, and we have been preparing diligently for this future. In 2024, we will have already implemented our strategy, investing in both business development and international growth. She added with passion: Our commitment is to continually evolve, guided by our new mission, 'We passionately drive better gaming.' It's important to highlight that while Finland will reshape its gambling monopoly model, Veikkaus will maintain its exclusive hold over specific areas. The state-owned operator will continue to control the lottery, scratch cards, and slots. Essentially, the main shake-up will be in the digital gambling realm.
The clock is ticking on the overhaul of the gambling industry in Finland
Offshore gambling is undeniably affecting Finland's gambling monopoly. With the winds of change gathering, it's still uncertain how the market's transformation will unfold or whether it will successfully redirect Finnish gamblers toward regulated options. However, the ambition behind opening the market and fostering competition is clear: make the legal gambling sector more appealing. This move promises significant benefits for consumers, offering them improved player protection and a platform to address their concerns with licensed operators—advantages that offshore companies simply can’t provide.
