As the government of Finland moves closer to launching a liberalised multi-licence regulatory regime for online gambling, warnings on channelisation liabilities are ringing louder.
Finland’s pending market is due to face significant channelisation challenges as it transitions from its grey market status to a multi-licence framework that will put to rest the online privileges of state monopoly Veikkhaus.
A factor that has been cited as weighing the balance in favour of the unlicensed market and hindering channelisation is the prohibition of crypto payments for the gambling sector, a move that has drawn criticism from Kryptokasinot.io.
Kristoffer Kantola, Co-Founder of the affiliate, stated that “Finland has an opportunity to build a balanced and modern regulatory framework for cryptocurrency gambling”, as he warned that the regulatory framework risks being too prohibitive towards crypto-led transactions – a restriction that Kantola believes harms wider channelisation efforts.
He added that the group ‘opposes the ban of cryptocurrencies in Finnish gambling law. Prohibiting cryptocurrencies as payment method would likely result in a significant share of gambling activity remaining on offshore crypto casinos operating outside the regulated market.’
Nordic Law also previously echoed this concern around the lack of flexibility when it comes to crypto payments for the regulated gambling sector.
The group stated: “The channeling rate is already further weakened by several restrictions included in the new regulation, such as the ban on affiliate marketing, restrictions on social media marketing, the ban on bonus play money in customer acquisition and the complete ban on cryptocurrency gambling.
“The latter in particular puts licensed operators in a competitively unequal position, as unlicensed operators are free to offer cryptocurrency gambling and attract these players. The measures recommended by the Ministry of Health further weaken the channeling rate, and this cumulative effect has not been assessed at all in the recommendations.”
Yet despite the warnings, the adoption rate of digital currency remains relatively low in Finland, with recent numbers from K33 Research also detailing that is on a downward trajectory.
This is even the case amongst a younger demographic; the engagement in crypto is on the decline compared to other major European markets, where the trend is moving in the other direction.
The risks presented by crypto payments when it comes to player safeguarding mean it is unlikely to ever be an avenue embraced by the Finnish regulator as it evolves its new gambling framework. Challenges with detection and traceability make it an unalluring prospect for the regulator focused on a steady approach.
This pursuit in many ways represents something of a lost cause for Finland’s gambling stakeholders as they rally in a channelisation battle for the regulated sector.
Furthermore, the adoption rates of crypto and the trajectory of digital currency, in many ways, make it a redundant battle. The fight for channelisation is made up of many battles, and it is vital that the sector picks which hill it will die on; crypto payments isn’t the hill to die on.
Affiliates frozen out
Upon reflection, the decision of the Finnish regulator to prohibit affiliates is one that was far more baffling and could leave a far deeper scar on the industry in its battle for channelisation.
The younger demographic in Finland is steadfast in their social media engagement, with one of the key platforms remaining as Facebook, which is perhaps surprising and a shift from other markets, but speaks to the consistency and stability of engagement for Finnish users in social media.
Under the new regulations in Finland, social media influencers are banned from promoting any type of gambling, a void that will leave a concerning void for unlicensed operators to tap into and grow their market share, a path to engagement that has proven so successful in other highly regulated markets across Europe.
This also speaks to engagement trends across Europe, where black market penetration is elevated by social media influencers and tapping into streamer engagement for unlicensed casinos, a strategy the unlicensed operators have shown a burning appetite to utilise.
In its current form, the Finnish framework enables the gambling market to engage with advertising on traditional media and through sponsorships, but given that the digital attention of a younger audience is largely focused on social media platforms, this could provide a real obstacle to channelisation ambitions for the market.
Calls for gambling marketing regulations to ironed out have been underpinned by the industry, with Jari Vähänen, Co-Founder & Partner at The Finnish Gambling Consultants, outlining that marketing regulation is unclear at the moment and that it should be leaning more towards the digital scope.
“The legislation approved in December remains imprecise regarding marketing, so it isn’t easy to assess the marketing opportunities in the future license-based market for now,” noted Vähänen.
“According to my interpretation, large operators with sufficient funds to participate in ‘brand advertising competitions’ in mass media will have good business opportunities. On the other hand, the upcoming restrictions on digital marketing will pose challenges for smaller operators. Therefore, there is a risk that several companies will continue to operate in the black market.
“I would have liked to allow licensed companies to compete with modern digital marketing tools and would have preferred to limit mass media marketing, because it targets everyone, not just customers interested in gambling.”
iGaming Expert Analysis: Finland is fast-moving towards a regulated sector, but channelisation remains a tough challenge and something the regulator must approach meticulously. When it comes to industry lobbying, the case for crypto is redundant, yet the case for increasing market capabilities is essential.
