Finland's Path to Gambling Licenses: Concerns Over Migration to Black Market

Finland is on the verge of a massive shift in its gambling history. The Nordic country, which boasts one of the highest gambling participation rates in the world, is moving away from its long-standing state monopoly. Starting July 1, 2027, a new licensing model will come into effect, opening the market for private online casino and sports betting operators. Until now, the state-owned company Veikkaus held all the cards, but its market power is visibly crumbling. While Veikkaus enjoyed a Gross Gaming Revenue (GGR) of 1.8 billion euros in 2017, this figure plummeted to approximately 931 million euros by 2025. This clearly indicates that Finnish players have already moved elsewhere.

Concerns among experts and mainstream media are growing that the planned regulations might be so strict that the regulated market ends up losing out to offshore alternatives. The debate primarily revolves around the balance between robust responsible gambling measures and economic attractiveness. If the hurdles for licensed operators are too high, customers will migrate to unregulated spaces where no safeguards exist. In Finland, the so-called channelization rate—the percentage of gambling occurring within the controlled market—is currently estimated at only around 50 percent. A decade ago, this figure stood at a proud 90 percent.

Numbers and facts

Despite its small population, the Finnish market is highly attractive for operators. A total GGR of approximately 1.9 billion euros is projected for 2026. Of this, about 1.1 billion euros will come from gaming offerings and 269 million euros from sports betting. The online sector is particularly impressive, with nearly 81 percent of Finland's total estimated GGR being generated through digital channels. The new law stipulates that licensed online operators must pay a flat tax rate of 22 percent on their GGR. Additionally, annual supervision fees will be required, ranging from 4,000 euros to as much as 434,000 euros depending on turnover. The latter applies to companies with an annual GGR of at least 50 million euros.

Looking across the border to Sweden serves as a warning for many observers. Sweden opened its market in 2019 and aimed for a channelization rate of 90 percent. However, the Swedish gambling regulator Spelinspektionen admitted that this target might have been overly ambitious. While there are now around 100 active licenses there, the black market remains persistent. Daniel Valiollahi of the Swedish online gambling association BOS has criticized that authorities often lack the necessary powers to take action against operators based abroad.

Background

There is significant political pressure for this liberalization to succeed. The goal is not just transparency but also securing tax revenues that the government is losing due to the weakening monopoly. However, the proposed restrictions on bonuses and marketing are met with skepticism. Jarkko Nordlund of Veikkaus pointed out that the upcoming framework currently lacks truly effective mechanisms to block payments to black market operators. Critics are therefore calling for the Finnish regulator to be more proactive than currently planned.

"The objective is not simply to regulate gambling, but also to persuade players to remain within the regulated market, where authorities can enforce responsible gambling measures and consumer protections." - Unnamed Quote, Helsinki Times (via FocusGN)

The challenge lies in the fact that the use of the Finnish language on websites will be strictly monitored in the future. Previously, it was legal for grey market operators to run Finnish-language sites as long as they didn't market directly in Finland. This will change starting in 2027. Nevertheless, the question remains whether technical blocks or financial sanctions against offshore firms with no physical presence in the EU can actually be enforced.

Why it matters for German players

The developments in Finland are highly relevant for German players because Germany took a similar path of strict regulation with the State Treaty on Gambling 2021 (GlüStV 2021). Finnish concerns mirror the discussions held in Germany. In Germany, the 1,000 euro monthly deposit limit and the 1 euro stake limit per spin on slots often cause frustration. Additionally, the LUGAS system monitors play breaks and limits across different platforms. Those who feel restricted by these strict German rules are often tempted to seek unlicensed alternatives. Finland now faces the same task: creating a system that is safe but doesn't suppress the gaming experience to the point where users defect to crypto-casinos without any protection.

What it means for GGL-licensed casinos

Casinos holding a license from the German Joint Gambling Authority (GGL) are in constant competition with the black market. The Finnish situation demonstrates that high tax rates (in Germany, 5.3 percent on every slot stake) and rigid bonus requirements can jeopardize channelization. GGL-licensed providers must highlight their added value through legal certainty and fast player protection, while also hoping that authorities take decisive action against illegal operators. Finland's plan to use the land's language as a criterion for illegality could serve as a model for the GGL to take even tougher measures against overseas providers targeting German customers. Ultimately, the Finnish example shows that a legal market only functions if legitimate offers remain competitive.