Veikkaus Faces Public Scrutiny For Hidden Contract with IGT

Veikkaus Faces Public Scrutiny For Hidden Contract with IGT March 13, 2020 March 13, 2020 Carolyn Dutton
 Industry March 13, 2020 by Carolyn Dutton

Veikkaus, which holds a monopoly on Finland’s lottery and gambling industries, has been under fire recently due to an investigation by Yle’s MOT program which revealed that  the company’s central gaming engine was outsourced to International Gaming Technology (IGT) without any bidding process.

The resulting contract between the two giant companies is worth tens of millions of Euros, spread out over 20 years. This is in clear opposition to Finland’s law, which states that all public companies must have a tendering process for the purchase of goods and services worth more than €60,000.

The MOT report exposed the intentions of Veikkaus executives, with the consent of its legal team, to go through with the IGT contract without a bidding process. This was carried out even though everyone was aware that the transaction was illegal. Furthermore, Veikkaus hid the decision from outsiders until after the deadline for appeals to The Market Court, which rendered the IGT contract permanent.

IGT is listed in the New York exchange, and holds a holding headquarters in the UK. IGT has claimed that it has links to the local gaming industries of more than 100 countries.

Veikkaus’ Pekka Ilmivalta, director of legal affairs and corporate social responsibility, has characterized the IGT contract as a continuation of an old agreement, and is therefore exempt from the requirement to conduct a separate bidding process. 

Veikkaus Continues to Hold Monopoly despite Challenges

This is not the first time Veikkaus’ practices have been attacked. Last year, Veikkaus faced public scrutiny for its gambling advertisements, as well as placing more than 18,000 slot machines in bar, supermarkets, and other public places, adding roughly €11 billion in revenue to the company’s portfolio.

Veikkaus has since removed 3,500 of these slot machines in 2020, as a token of good faith for their commitment to minimize the ills of gambling—which the EU has mandated for Veikkaus’ monopoly. Veikkaus has assured the public that its executives will have their bonuses cut if they are unable to reduce problem gambling in Finland.

A number of international online gambling operators have fought hard to get Veikkaus stripped of their rights to have a monopoly on Finland’s gaming industry but have not had any success. 

Veikkaus has also been scrutinized with regards to a previous deal conducted by RAY in 2015. RAY was the predecessor of Veikkaus and signed a 20-year contract in 2015 with Playtech. In 2018, it came to light that Veikkaus paid €13 million for the rendering of digital services to Playtech, rendering the entire deal to be worth at least €200 million. 

Carolyn is our legislation expert, with a background in law she is able to cover the current state of gambling around the world