Can Veikkaus Compete in Finland’s Liberalised Gambling Market?

Can Veikkaus Compete in Finland’s Liberalised Gambling Market?

Veikkaus, Finland’s state-owned gambling monopoly, faces a pivotal moment as the country prepares to liberalise its gambling market in 2027. With years of declining revenues and increasing competition from unlicensed operators, the question looms: can Veikkaus thrive in a re-regulated landscape? As Finland opens its doors to private competition, Veikkaus must adapt to survive in a market that promises both challenges and opportunities.

The Decline of Veikkaus: A Struggling Monopoly

Veikkaus has seen its monopoly business decline sharply in recent years. In its H1 2024 earnings report, Veikkaus reported a 21% drop in group gaming revenue compared to the previous year, with CEO Olli Sarekoski attributing the decline to decreasing player spend and new protection measures. Sarekoski noted, “Our number of customers is still at a good level, but the amount of money played by customers is average.” While the company saw a slight increase in active players, the overall profit margin fell short of expectations, highlighting the ongoing challenges facing the monopoly.

Local legal expert Antti Koivula pointed out that Veikkaus has lost 40% of its gross gaming revenue over the past five years. “Veikkaus hasn’t been competitive for some time,” he explained, adding that recent updates to the Lotteries Act in 2022 have further eroded the company’s market position. As more consumers turn to unlicensed operators for non-lottery games, Veikkaus’ share of the online casino and betting market has steadily dwindled.

Preparing for a Liberalised Market: Veikkaus’ Strategy

Despite its current struggles, Veikkaus remains optimistic about the impending market liberalisation. Under the new framework, Veikkaus will maintain its exclusive rights to operate lotteries and retail slot machines but will compete directly with private operators in the online casino and betting sectors. The company is undergoing significant restructuring, including a strategic review that could see up to 620 employees laid off as it aims to streamline operations and boost competitiveness.

“The goal of our strategy is to be both the Finnish market leader and an internationally competitive and growing gambling company,” Sarekoski said. Veikkaus is betting on a total turnaround of its business model to adapt to the new competitive environment, with a focus on technological innovation and improved customer engagement.

However, questions remain about how the government will manage its stake in Veikkaus as it carves out different business arms. The company is expected to split into four distinct entities, with some stakeholders suggesting the government should divest its interest to avoid conflicts of interest in regulating the newly competitive market.

The Competitive Advantage and Controversies

One major point of contention is Veikkaus’ access to its 2.5 million-strong customer database, which some industry experts believe gives it an unfair competitive advantage. Jari Vähänen, a former Veikkaus executive, argues that leveraging this database could allow Veikkaus to dominate the new market from day one, much like how Svenska Spel in Sweden transitioned its monopoly players into a licensed environment.

“Veikkaus’ existing customer base could provide a significant head start,” Vähänen noted, suggesting that if the monopoly retains access to its current players, it could effectively sideline new market entrants. This scenario has sparked concerns among private operators who feel that Veikkaus’ entrenched position could stifle competition in the newly liberalised market.

Looking Ahead: Challenges and Opportunities

As Finland’s government pushes forward with the re-regulation process, industry stakeholders have expressed cautious optimism. The draft rules have received generally positive feedback, with many seeing them as a balanced approach that protects consumers while encouraging a high rate of market channelisation. However, concerns about bonus restrictions and marketing limitations remain points of debate as the legislation progresses toward a parliamentary vote in early 2025.

For Veikkaus, the end of its monopoly represents both a challenge and a chance for renewal. The company’s ability to adapt and compete against private operators will determine whether it can reclaim its status as a market leader. While Veikkaus’ established brand recognition and extensive infrastructure provide a solid foundation, it will need to innovate and evolve to thrive in Finland’s new gambling landscape.

A New Era for Veikkaus

The liberalisation of Finland’s gambling market marks the end of an era for Veikkaus, but it also presents a unique opportunity for transformation. As the monopoly prepares to enter a competitive environment, its success will depend on strategic adaptations, leveraging its strengths, and navigating the complexities of a rapidly evolving market. Whether Veikkaus can reclaim its dominance or be outpaced by private operators remains to be seen, but one thing is clear: the stakes have never been higher for Finland’s iconic gambling brand.