Finland’s National Lottery is operated by the state owned company Oy Veikkaus, and its license allows it to operate lotteries, pools and betting games under the Lotteries Act (1047/2001) which has been in force since 1 January 2002. The company has a Supervisory Board of fourteen members. The members of the Supervisory Board are appointed according to the prevailing parliamentary power relations. There is one representative of the company’s personnel at the Supervisory Board. The term of office of the Supervisory Board is two years.
In Finland, companies pay 26% of income tax. However, it should be noted that gaming companies are not liable for income tax. Veikkaus Oy is not liable for VAT. Veikkaus Oy pays 9.5% of lottery tax on the difference between the money staked in its games and the prize payout (GGRs). In 2004, the company paid approximately €60 million in lottery tax.
The Ministry of the Interior is responsible for the national supervision of lottery operations. There are 59 official supervisors, of whom 11 focus on the supervision of Veikkaus’ gaming activities. The official supervisors supervise the compliance of gaming activities with the approved rules of games and they confirm the pools and betting results on each round.
In Finland, gaming operators reimburse the State for the costs incurred in the supervision of the gaming activities. The supervision costs include the expenses of the official supervisors of the Ministry of the Interior, as well as the IT expenses incurred in the supervision.
Veikkaus Oy paid a supervisory fee of €170,000 to the Lottery and Firearms Unit of the Ministry of the Interior in 2004. The company paid approximately €240,000 of remunerations and expenses to the official supervisors appointed by the Ministry of the Interior for their supervisory duties in accordance with the Decree on Police Service Charges. Further, the IT costs of the supervision paid by the company amounted to €1,260,000.
All the gaming organisations in Finland are liable to pay a fee corresponding to the total amount incurred by the Ministry of Social Affairs and Health in the monitoring and research of the problems (i.e. problem gambling) caused by participation in games. In 2004 Veikkaus paid €12,138 (45%) of such expenses. In 2003 the expenses paid by the company amounted to €16,436. In addition, Veikkaus Oy covers jointly with the other gaming organisations the expenses caused by the Peluuri helpline for problem gamblers.
According to the law 25% of the Veikkaus Oy yearly revenue is allocated to sports. More than 98% (€90 million) of the state budget for sport consists of gaming revenues. The revenue is administrated by the Ministry of Education, which allocates the money to four main targets within sports – federations, facilities, municipalities and education. The grants to the national sports federations are about one third of the state sports budget and cover on average about 25% of the costs in the federations.
aikkaus Oy estimated that in 2005 the total number of indirect employment induced by the gambling activities was around 50,000 people Veikkaus’ sales network is one of the densest in the world in proportion to the nation’s population. There are approximately 2,800 online retail outlets and circa 1,100 instant game outlets. Between them this represents one outlet for every 1,103 adults in Finland.
Finland’s only true casino is Grand Casino Helsinki, run by RAY, which initially opened in 1991. The casino’s profit is distributed to support health and welfare work. More than 1000 voluntary health and welfare organizations receive annual support from RAY for their operations and projects. Estimated number of visitors in the casino in 2004 was over 200 000 and estimated GGRs of about €25 million. Grand Casino Helsinki has about 220 employees.
The current gaming area spans two floors with a combined area of 2600 square meters. Grand Casino Helsinki in 2004 moved to its newly designed premises, from their previous venue at the Ramada Presidentti Hotel. The Grand Casino’s includes 27 tables and 298 slot machines . The prior casino at the Ramada Presidentti Hotel had 147 gaming machines and 18 table games, with a separate poker room.
The following excerpts are taken from the Ray Annual Report 2005:
“Grand Casino Helsinki, which was opened in 2004, achieved its targets for the year. Revenue from the games increased to €26.7 million, which is a rise of 8.7%. This growth mainly came from slot machine games, which produced around 72% of total revenues. Revenue from the table games was 4% down on 2004. This is a general international trend which has been accelerated by the development of products that enable access to table games through slot machines. The number of customer visits followed the same trend as the gaming revenue. A total of 275,000 customer visits were recorded, which is 7.9% up on the previous year. New customers numbered around 40 000. The Show & Dinner product and a range of business and gaming packages also attracted new visitors to the casino. In addition to the increase in the number of visitors, the increasing diversity of the customer base was also significant. Internet poker has produced a rapid rise in the number of poker players, and this change can also be seen in the casino’s poker room. Poker tournaments have been particularly popular. The casino organizes poker tournaments on a weekly basis, with two major international tournaments each year. The average age of poker players at the casino has fallen considerably as a result of the infl uence of the Internet. In 2005 the gaming tables at the casino together produced some €7.3 million. The number of poker players was up by 50% and revenues by 55%, but poker still represented only some 7% of total revenues from table games. Roulette maintains its considerable lead as the most profi table casino table game.” (Source: Ray Annual Report 2005)
Finnish law dictates that all profits of the casino go to charity.
Machine Gambling Outside Casinos
Slot machines first appeared in finland in the 1920s as private sector operations. In 1933 the Finnish Government issued a decree giving charitable organisations the exclusive right to operate slot machines. Raha-automaattiyhdistys – Finland’s Slot Machine Association – generally referred to as RAY, was established in 1938 to raise funds through gaming operations to support Finnish health and welfare organizations. RAY has the exclusive right in Finland to operate slot machines and casino table games, and to run a casino. RAY‘s noncasino gaming operations consist of slot machines located in restaurants, bars, service stations, kiosks and shops; casino games in restaurants; and amusement arcades. RAY’s operations are restricted to Finland.
In 2005, 98 organizations in the health and welfare fields were members of RAY. The decision-making bodies within RAY are the Board of Administration and the General Meeting, at which all the member organizations are represented. The Board of Administration consists of seven representatives appointed by the Government and seven selected by the General Meeting. The funding is distributed each year on a discretionary basis to health and welfare organizations which have applied for assistance. The distribution is governed by the Act on funding assistance, policies drawn up by RAY’s Board of Administration, and by an agreement on funding objectives made between RAY and the Ministry of Social Affairs and Health. (Sources: RAY Annual Report 2005, and GBGC Report)
The following excerpt is taken from the 2005 RAY Annual Report:
“(In 2005,) RAY generated gaming revenues of €648.4 million, which is an increase of 2.1%. Of total revenues, 91.0% were generated by slot machines, 4.7% by casino games and 4.1% by Grand Casino Helsinki. Overall gaming consumption in Finland grew by 2.1%. The organizations with an exclusive right to carry on gaming operations had combined total revenues of €1,337 million. RAY’s gaming sites in premises operated by business partners produced revenues of €522.7 million, which is an increase of 1.1% from the previous year. The greatest revenue growth was recorded at shops and service stations. Total revenue from RAY arcades was €77.3 million, which is an increase of 4.9% from the previous year. The arcades recorded a total of 8.5 million customer visits during the year, which is around 5% less than in the previous year. Within the arcades, revenues from slot machines were €68.6 million, which is an increase of 5.1% from the previous year. Revenues from casino games were €8.7 million, which is 3.7% more than last year. Casino-type games in clubs generated revenues of €21.7 million, or 9% more than in the previous year. Of these revenues, 65% comes from Friday and Saturday nights. Casino games in clubs recorded a total of 59,100 gaming sessions and 311,000 playing hours, which is just under 1% less than in 2004. RAY paid a total of €88.7 million in slot machine space rentals to its business partners. €4.3 million was paid in space rentals to clubs where casino games are located. Direct debiting was introduced for casino game revenues in September 2005, and covered half of the gaming locations by the end of the year.” (Source: RAY 2005 Annual Report)
There are 43 racecourses and approximately 3,000 ‘on-line’ betting offices located across the country. These offices are operated by Suomen Hippos. Suomen Hippos is the central organisation for trotting and the national body for horse breeding in Finland. The association administers and controls horse races as well as keeps a register and maintains studbooks.
Tote betting, the only source of funding of the Finnish trotting sport and horse industry, is carried out by Fintoto Oy, a company owned 100% by Suomen Hippos. Tote betting commenced in Finland in 1928 and Fintoto was established in 2001.
Horserace betting turnover had fallen dramatically during the early 1990s after Veikkaus had been permitted to offer sports betting. However, off track horserace betting has been revived since tote betting was legalised during 1995. Since this time the number of OTB shops has been increasing and turnover has rebounded.
About 18 % of the yearly total turnover of betting (€175 million in 2004) is channelled into the industry for maintaining the racing infrastructure, paying prize money and supporting breeding activity as well as for other measures. According to international studies made by Suomen Hippos, a typical private gambling operator generally provides the industry with under 3% of the turnover. Trotting sport and horse industry as such do not have any alternative sources of funding comparable to other sports. A Lottery tax has been imposed on horse betting, and these funds are shifted away from the horse industry.
In Finland there are 20 regional tracks and 23 other tracks; 75% of the income of these tracks is directly derived from tote betting. Furthermore, there are 16 regional breeding associations in the country; their operations as a breeding authority are strongly supported with betting income.
The prerequisite for the whole activity is an expedient level of prize money at races. In 2004 7.5% of the betting turnover was assigned directly to prize money, and in 2005 the percentage will be about 9% to 9.5%.
There are about 5,000 full-time and 10,000 part-time jobs in the horse racing industry in Finland. There are not expected to be any major changes in the betting sector in Finland in the near future.
Finnish Sports Federation (FSF) is the national sport confederation for all sport associations in Finland, which has 111 national and 15 regional member organisations. On a local level there are some 7,800 sport clubs, which mainly function on a voluntary basis. The first sport clubs were founded 150 years ago and started in a few decades to organise themselves into sports federations. FSF was founded in 1993 combining several different central organisations under one umbrella. No major changes in the structure or the main tasks are to be foreseen in the near future. The input of the health enhancing activities will grow.
Nevertheless, they are already of major importance.
The gaming company Veikkaus was founded and owned by the sports organisations until 1975 when the company was bought by the State. In fact, the revenue had been delivered to the Ministry of Education for distribution from the start. Nowadays there are no structural connections between the beneficiaries and the gaming company.
The revenue from Veikkaus, which holds the license to operate lotteries, pools and betting games, is returned to the State. According to the law 25% of the yearly revenue is allocated to sports. More than 98% (€90 million) of the state budget for sport consists of gaming revenues.
The revenue is administrated by the Ministry of Education, which allocates the money to four main targets within sports – federations, facilities, municipalities and education. The grants to the national sports federations are about one third of the state sports budget and cover on average about 25% of the costs in the federations.
Indirectly the sports organisations benefit from the state support to the sport institutes, which organise sport specific education at different levels. The most important support to the local sport clubs are the municipality owned sports facilities. The clubs are given free of charge or decisively subsidised slots especially for activities among youngsters. The municipalities receive state grants for building and repairing the facilities.
The general sports structure of the European countries is alike, but varies in details. The foundation of sport is voluntary involvement, especially at local level, which should be recognised and supported by the society. Physical activity is a central requirement for youngsters as well as for the elderly. Steering gambling revenues to sport has been crucial for the development of the largest non-profit activity in Finland.
In an effort to revise the fortunes of its fixed odds betting during February 2004 Veikkaus reduced its margins and placed doubles and singles on sale. As a result payouts were increased to 88%. The aim was to increase the popularity of fixed odds betting and attract Finnish customers who have started playing abroad back to the Finnish market.
The lottery operator, Veikkaus, also provides betting services. Both Fintoto Oy and Oy Veikkaus have been licensed to utilise the Internet to provide betting and gaming to Finnish residents since 2002. At present there are four greyhound racing tracks in Finland. These are located at Hyvinkää, Pori, Turku and Tampere.
According to the Finish legislation, bingo can be run by a registered association, an independent foundation or other such organisation that has charitable or other non-for-profit purpose. During the 2002 and 2003, there were 206 bingo license holders. This number includes one off and frequent bingo licenses. The frequent license is usually granted for 2 years.
Media Gambling Services
The Federation of the Finnish Media Industry (representing Association of Finnish Broadcasters, Association of Television in Finland, Federation of the Printing Industry, Finnish Book Publishers’ Association, Finnish Newspaper Association, Finnish Periodical Publishers’ Association and Media Employers’ Association) reported that media companies in Finland are not allowed to offer media gambling services to directly generate profits. Media operators finance their activities by advertising revenue and/or by subscription fees (with the exception of the public service broadcasting company). However, the Finnish Ministry of Interior stated that if the term ‘Media Gambling Service’ is interpreted broadly so as for it to apply to all competitions organised in the media the participation fees of which are used to generate profits for the media, then such games are organised in large quantities in Finland, on the television, for example.
Finnish media operators mainly offer sales promotional games. These games are important for the marketing of the media, but they do not generate direct income for the media. The main income streams for the media industry are related to the content the media provides as basis for subscription and advertising sales. This fact cannot be changed by liberalizing the gambling policies in the Single Market.
However, at the beginning of 2003 Veikkaus launched Lotto on digital TV. Veikkaus, MTV3 Channel and Sofia Digital have developed the new iTV lottery service in which the player uses their remote control to complete a coupon on a digital teletext system, which is always available on every Finnish digital TV channel. The coupon is sent from the digital television via a return channel to Veikkaus’ server. The player pays for the game via the return channel using a gaming account with a password. The prizes are also transferred to the gaming account. It is important to mention, however, that this service has only been a pilot trial which throughout its history attracted only around EUR 1,000 worth of gaming.
Sales Promotional Gambling
Sales promotional games, where the participant does not put anything at stake and therefore does not actually “gamble”, are important to periodicals and newspapers and are widely offered on the market.
According to the Lottery Act non-profit organisations are allowed to arrange even nationwide lotteries with goods or articles as prizes. No money prizes are allowed. Finnish Sports Federation (FSF) arranges 3 to 4 nationwide lotteries yearly. The net income of all FSF lotteries is about €1.5 million. The rest of the sport related lotteries are smaller. The main stakeholders are the local clubs, which receive about 50% of the sale.
In 2004 the State Provincial Offices granted 144 licenses for non-money lotteries. The number of these licenses was 149 in 2003 and 181 in 2002
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