iGaming Regulation 2023: Everybody Needs Good Neighbours, Good Friends; What Finland Can Learn From Its Nordic Cousins
Because it promises to open up a raft of new growth opportunities for operators, the news of the intended re-regulation of the Finnish iGaming market was extremely well received by the industry.
But, nevertheless, many believe that this soon-to-be European iGaming hub will only be a success if it manages to find the right balance between market competitiveness and player protection. Fortuitously, there’s a lot that can be learned from their pathfinder Nordic neighbours, friends and family.
We caught up with Gustaf Hoffstedt, General Secretary of The Swedish Trade Association for Online Gambling , known by its Swedish acronym, BOS, to hear his thoughts on the future of the Finnish iGaming market — and how they can learn from their Scandinavian brethren to create the sustainable growth for their new licensees.
BOS recently reported that the licensed share of Sweden’s regulated online gambling market is declining. Why do you think channelisation is struggling? And what can be done to improve this?
“Sweden is a fairly regulated gambling market. We re-regulated our market back in 2019 and our government and parliament wisely decided to set up a channelisation goal. I believe that is crucial for any licensing and gambling system. The Swedish goal was set to 90 percent for the acceptable share of Swedish consumers gambling within the national licensing system.
“After 2019, we had a great start but then very quickly it began to show worrying signs of decline. We recently proved via a survey we commissioned from an independent firm that, as it stands, the channelisation in general is 77 percent and in some specific gambling verticals, the situation is even worse.
“I assume it comes with no surprise that the online casino sector has had the weakest levels of channelisation, in Sweden’s case, 72 percent. That’s really a big pain, because it means that more than one-in-every-four Swedish Krona spent is leaking out of the Swedish licensing system. That problem is far greater than just financial. It’s also connected to consumer protection and other important values that you want to reach with a high channelisation.
“Something that I’ve seen in Sweden and many other jurisdictions as well, when they re-regulate, is that the regulator tends to focus a lot on penalising the licensed operators.
“I believe that Sweden and other jurisdictions that recently re-regulated or are about to, such as The Netherlands or Finland, should actually try to cooperate more with the industry.
“Cooperation between the industry and the regulator is, I believe, a way of strengthening the channelisation levels in that jurisdiction. In that sense, I wouldn’t say that Sweden has failed. But Sweden could do much better and you don’t have to look far away to find better examples, namely Denmark, our close neighbour, which today reaches a much higher channelisation level than Sweden.”
Swedish iGaming regulation has proved to be quite polarising to many industry stakeholders. With some accusing it of being overly stringent, having a negative impact on competition. How can operators, regulators and the government work better together to create more practical legislation?
“I believe it’s important to stress that we must understand our different roles. I do understand that as an industry representative, I represent my members’ interests, a commercial interest, plus I have to respect that the government and the regulator have another interest.
“They are the ones who represent the common interest of the public in general. But I also want to stress that when we are respecting each other’s roles, it is crucial that we are the only commercial operators out there on the gambling market.
“In Sweden the state is not just the rule setter. It is also a very aggressive commercial operator. So, in our case, the state is effectively running its own casino and its own gambling company. I believe it’s super important that the one who sets the rules is not also the one playing in the commercial arena at the same time.
“It’s like a football match; It’s usually not a good idea to be the referee and a player at the same time!”
Finland has recently announced plans to introduce a licensing model. What do you think they can learn from Sweden’s experiences to create the safest, most competitive environment for the players?
“I believe that it is crucial to set up a channelisation goal, as this means everything. It means profitability for the licensed operators. It means tax income for the state. And, and most importantly, it means that the market can more easily reach its consumer protection goals within the licensing system. If the punters are not within the licensing system, then it’s impossible to achieve any of these goals.
“Secondly, when observing other jurisdictions, and to learn from the best, Finland should look at the UK and even more so, Denmark. Those two markets have the highest channelisation in Europe and set a great example of how to create a safe but competitive industry framework.
“They can also look at other territories and learn what NOT to do. For example, the ‘Cool-off’ period that was introduced into Dutch iGaming legislation. Under the Netherlands’ remote gambling legislation, the cooling-off period required operators who were active in the Netherlands before the regulation of online gambling to wait two years and nine months to demonstrate they weren’t offering gambling without a license. That meant that only operators that did not accept Dutch customers in the two years before the market launched could apply for licenses. In my opinion, this was a very poor piece of legislation that in effect punishes licensed operators even before they have opened up in the market. Hopefully Finland can learn from this.”
Although regulators and governments work hard to legitimise the iGaming industry, and create safe playing environments, what role does self-regulation play in this? Do you think operators put enough emphasis on this and how can it be improved going forward?
“No, I don’t believe that we as an industry invest enough in self-regulation. However, I think it’s important we remember that the law comes first. A nation shall be built on law, not self-regulation. So, self-regulation is something that you add on to already established, well-functioning gambling legislation.
“In some jurisdictions, they do not have a strong legislative framework to build from and so in those situations, obviously, self-regulation plays an even more important role and operators must put increased reliance on their own moral compass. But in non-discriminatory jurisdictions such as UK, Sweden, Denmark, and many others, self-regulation can certainly still play an important role.
“Even we ourselves, as an industry association, have presented some suggested marketing guidelines that we require all of our operator members to comply with. They have proven to be so successful that the Swedish courts often refer to our guidelines as best practice when they judge whether a gambling operator has infringed Swedish marketing law or not. So, I certainly believe that self-regulation can and shall play a significant role in a responsible and mature gambling market. But never ever at the expense of the presiding law.”
After speaking with Gustaf, it’s clear that for re-regulating jurisdictions channelisation will be the key to success.
Newly-opening jurisdictions, such as Finland, have a lot they can learn from their Swedish and Danish neighbours and it will be interesting to see how the Finnish licensees can benefit from this and use it as a firm foundation to grow onwards and upwards.