Veikkaus Faces Criticism For Avoiding Competitive Bidding Process In IGT Deal

Veikkaus Faces Criticism For Avoiding Competitive Bidding Process In IGT Deal January 29, 2020 January 29, 2020 Paul Butcher
 Industry January 29, 2020 by Paul Butcher

Veikkaus, the gambling monopoly in Finland, has reportedly clinched a deal worth millions of euros with the multinational gambling company IGT without going through a competitive bidding, raising concerns of impropriety. The deal is estimated to be worth tens of millions of euros. 

Veikkaus’ top executives began searching for a deal to maintain their core gambling system which is used in Finland to administer lotteries and sports betting. The search began in 2018 and Veikkaus presented their board with two options: sign with IGT through a direct procurement deal, or through a modification of a previous agreement.

A competitive bidding process was never brought up. Both options are not above-board legally, but a direct procurement deal is more explicitly illegal, running afoul of clear statues formulated by Finland’s competition regulators. 

Veikkaus Denies Wrongdoing

According to an investigation conducted by the journalism program MOT, Veikkaus, represented by its CEO Olli Sarekoski, signed a 20-year deal with IGT in autumn 2018. The duration of the deal will initially last for eight years, with time extensions that both parties can agree to, for up to 3 four-year periods. 

Veikkaus denied any wrongdoing with their IGT agreement. According to Pekka Ilmvivalta, their director of legal affairs and corporate social responsibility, the competitive bidding process was unnecessary as the agreement was simply a continuation of a previous deal. 

MOT stated that Veikkaus attempted to seal the deal stealthily, away from the prying eyes of competition regulators. Veikkaus confirmed this assessment, but rejected any sinister motives. Rather, Veikkaus’ executives believed that it was not necessary to announce the IGT deal in order to minimize their risk profile. Sarekoski has yet to provide any public statements on the issue.

IGT Deal Latest in Veikkaus’ Troubles

Veikkaus has faced strong criticism in recent years for what some perceive as their disregard for public safety in their role as Finland’s gambling monopoly. Problem gambling is a serious problem in the country, and Veikkaus’ advertising and marketing tactics have been seen by some as overly aggressive. Additionally, Veikkaus’ slot machines are widely available in public spaces.

In response, Veikkaus has reduced their slot machines by 3,000, and created an ethics board to regulate their advertising tactics. They also pledged to lower executive bonuses if problem gambling rates are not reduced in Finland. Stats shows that over 2 billion euros are spent in Finland each year on gambling; Veikkaus pays 1 billion euros to the state each year to fund NGOs and charity programs.

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