A licensing system alone will not solve the problems of the gambling market   

According to a study by the FCCA, gambling policy targets related to a high channelling rate and preventing gambling harms can be achieved both with a monopoly system and a licensing system. The choice of system alone, however, is not enough: other regulatory changes are also needed. The FCCA has published a research report examining the impact of gambling regulatory reforms in the Nordic countries.  

Finland’s current monopoly-based gambling system, is not working as intended. A significant proportion of gambling takes place in online games outside the system. People with gambling problems in particular play games outside the system. The number of people with gambling problems seems to have increased in recent years. Because of online gambling, the previous measures of regulating gambling, such as monopolies and restricting supply, no longer work as they used to.

Finland is currently preparing to move to a licensing system for online gambling. The details of the regulation and its practical implementation should also be carefully planned in the forthcoming system reform in Finland.

The Nordic experience shows that moving to a licensing system for gambling alone does not guarantee that the objectives of reducing gambling harm will be achieved. A licensing system can be an effective way to increase the channelling rate, but this rate can also be increased by strengthening the monopoly system. ‘Channelling rate’ means the amount of gambling that takes place using services regulated by national legislation.

Lessons from the Nordic experience

The Nordic countries have responded in different ways to changes in gambling. Denmark and Sweden have moved from a monopoly-based to a licensing system and Norway has sought to strengthen its monopoly system by making it more difficult to gamble outside the system.

According to the FCCA study, all three countries appear to have achieved the objectives set for the changes. The experiences of Sweden and Denmark suggest that the solution chosen in Finland, namely to switch to a licensing system, is also a good way to increase the channelling rate if implemented correctly.

However, the move to a licensing system does not in itself guarantee that other objectives will be met, such as preventing gambling harm or that the state will receive significantly more revenue from the gambling market.

Gambling market regulation must be carefully planned

Channelling gambling inside the system does not reduce gambling harm if gambling is not safer inside the system than outside.

"For example, limiting the amount spent on gambling can be an effective way to reduce the harm caused by gambling . But if you want to increase government revenue, you should set the lottery tax high enough. The Danish example suggests that it is possible to set a moderately high tax level without lowering the channelling rate."

Senior Adviser Joel Karjalainen

Further information 

Joel Karjalainen

Senior Adviser

Samuli Leppälä

Research Director