August 27, 2019 | Jon Hautamäki
The Lotteries Act of Finland
Before summer we published an article concerning the state of gambling in Finland, in which we discussed the current gaming monopoly in Finland and whether there still are valid grounds to maintain the monopoly.
In this article we present in general the current gambling regulation in Finland meaning foremost the Lotteries Act of Finland and certain issues regarding the interpretation of said act.
As a summary, the Lotteries Act defines the coverage of the lottery concept in detail. In general, the main features of lotteries are the participation charges, a win based partly or wholly on coincidence, and a profit of monetary value.
However, the fulfillment of the above specified elements of a lottery is not fully unambiguous. Thus, there can be identified a need to discuss in more detail the interpretation and scope of the lottery concept.
Pursuant to Section 2 of the Lotteries Act, lotteries are defined as activities with a participation charge, through which a participant may receive a profit of monetary value, based wholly or partly on coincidence. However, such postage, local, long-distance or similar costs incurred on a participant for participation in the lottery, and which does not benefit the lottery executor, are not considered as participation charges. In its opinion (PeVL 23/2000 vp p.2), the Constitutional Law Committee of the Parliament of Finland stated that in situations open to interpretation, the definition rule in Section 2 of the Act must be applied in a restrictive manner.
More detailed descriptions of the above-mentioned elements can be found in the preparatory materials of the Lotteries Act. Cash and card payments, checks, payments via the telecommunication and information network (naturally also including cryptocurrencies nowadays) are all classified as participation charges. Coincidence is described as a basis for the formation of profit that cannot be influenced in advance. The profit is based on coincidence when the effects of chance on the determination of victory cannot be excluded by the most knowing or skillful player. Money-changeable chips or vouchers, goods, gift or purchase cards exchangeable for goods or services, are all in addition to money classified as profit of monetary value.
The lottery forms regulated by the Lotteries Act are, as defined in Sections 3 and 3a, money lotteries (betting games), goods lotteries, slot machines, special slot machines (identified slot gambling), non-money lottery machines (goods as prize), casino games, bingo games, totalizator betting (horse race gambling), guess competitions and combination games (a combination of the mentioned games).
According to the policy of the Gambling Administration Department of the National Police Board of Finland (later Gambling Administration), it is essential to distinguish between competitions based on skill and competitions based purely on coincidence. If the winner’s skill is irrelevant, the competition is classified as a lottery. Equally, in the case KKO:2008:119, the Supreme Court of Finland stated that the well-founded premise for defining the concept of lotteries is, that in competitions such as sports competitions where the participant’s personal skill has a significantly greater impact on the determination of victory, the competition is not deemed to be a lottery as per the Lotteries Act. In addition, the Finnish Government’s proposal (HE 197/1999 vp. 61) states that the scope of the Lotteries Act excludes various competitions based on participants’ knowledge or skill, such as chess and darts, as well as competitions in the field of art and valuation. It is in any case undoubtedly clear that coincidence as well has an impact on the formation of victory regarding these kinds of competitions.
In addition, the lottery concept under the Lotteries Act does not include the provision of an occasional benefit in connection with marketing, i.e. the so-called “marketing lottery”, where participation is not chargeable on any other means than through purchase of a commodity or the execution of a bid. Such lotteries, mainly regulated in Chapter 2 of the Consumer Protection Act, must however not be contrary to good practice and may not involve inappropriate procedures against consumers. As actions against good practice has in Finnish case law been deemed, for example, lotteries in the context of marketing health care products, as well as use of alcohol or weapons as lottery prizes. It has also been considered as inappropriate to use lotteries clearly as a dominant part of marketing, e.g. by guiding the consumer to make impulse purchases.
The significance of skill and coincidence in the determination of victory was subject of interpretation in the case KKO:2008:119 cited above. The decisive factor was, according to the Supreme Court, that the fact that the main victory of the competition was linked to the catch of one particular rainbow trout, could be considered to be entirely dependent on coincidence, due to the low probability of capture. Thus, in the case, the elements of the lottery concept were found to be fulfilled. The situation would have been different regarding the definition, if the competition had been considered to be a so-called skill-weighted competition.
A timely category of lotteries worth mentioning is the so-called loot boxes, also known as loot/prize crates. This form of virtual lotteries, i.e. virtual surprise boxes or card packages built into video, mobile and PC games, have become very popular during recent years among the global trend of electronic sports. By opening these boxes or card packages, the player will receive randomly assigned game-related virtual prizes.
Regarding loot boxes, the Gambling Administration has stated (POL-2018-22730) that when the elements are met for participation charges, coincidence and a profit of monetary value, it is likely that an illegal lottery within the meaning of the Lotteries Act is at hand, which also are illegal to execute in Finland. However, the Gambling Administration emphasizes that loot boxes as such are not against the law, as long as the mechanisms to fill the lottery features are remedied. One way to do this is to make sure that unlocking the loot boxes is free of charge.
While a game publisher or gaming platform often prohibits its players from trading content gained from loot boxes on marketplaces available at third-party sites, trading may still be technically feasible. There is therefore no need to consider such prohibition conditions when assessing the liability of a game provider. Discussions of the role of loot boxes in the game industry has lately risen to the surface worldwide, for example when the game publisher Electronic Arts in the beginning of this year was forced to end providing card packages regarding the FIFA 2019 game in Belgium.
We thereby follow the worldwide and domestic development of this industry with high interest.
In the preparatory materials for the Lotteries Act there is also found support for such an interpretation that a win based partially on coincidence, as the case is regarding sports betting, is not intended to be an absolute element concerning the lottery concept.
It can therefore be stated that the fulfillment of the elements of the lottery concept is accompanied by a certain degree of interpretation and room for manoeuvre, and that it is only through a case-by-case assessment possible to determine if a certain activity is subject to the lottery concept within the meaning of the Lotteries Act.