Finland's state gambling monopoly, Veikkaus, signed a multi-million-euro deal with a multinational gambling firm without undergoing a competitive bidding process, Yle’s investigative journalism programme MOT reported on Monday.
According to MOT, in autumn 2018, Veikkaus entered a deal with multinational gambling firm IGT. The agreement was to run for eight years with options to extend it for three four-year periods. MOT calculated that the deal was worth tens of millions of euros.
"This was not a material amendment to the agreement, but a continuation of an old agreement where it was not necessary to have a separate tender," said Veikkaus director of legal affairs and corporate social responsibility Pekka Ilmivalta.
During the summer of 2018, Veikkaus top management discussed a deal to maintain its core gambling system. The system was used to run popular games such as lotteries and sports betting games that were played online and at thousands of locations across Finland.
No legal options presented
As a result of the discussions, the company’s board was eventually presented with two options for signing a deal with multinational gambling technology firm IGT – without a competitive tender.
According to an analysis provided by an external law firm, a direct procurement would have been blatantly illegal and could attract the attention of competition authorities. A modification of an existing agreement on the other hand, would have been "overall probably illegal", but it might also have elements that complied with the law.
The board was not presented with any option that was manifestly legal – in other words, that involved a competitive bid according to procurement laws.
In autumn 2018, CEO Olli Sarekoski signed a 20-year-deal with IGT. There was no competitive bidding involved.
"The known acquisition risk was taken into consideration during negotiations on the agreement in autumn 2018," Veikkaus told MOT as it handed over the files.
According to information obtained by MOT, Veikkaus attempted to conceal the deal from competition authorities.
However Veikkaus’ view was that there was no need for "active" external communications about the proposed agreement. The company confirmed it wanted to "keep a low profile" with regard to the deal to minimise risk.
CEO Olli Sarekoski did not respond to requests for an interview.
Veikkaus under scrutiny
The state gambling monopoly has come under fire in recent times for a series of missteps, including what some saw as a cavalier approach to advertising, and the prevalence of slot machines in public spaces.
The company committed to setting up an ethics board to guide advertising and also announced that it would be removing 3,000 slot machines. It also said it would trim executive bonuses if problem gambling does not improve in Finland.
Finns spend roughly two billion euros annually on gambling and every year Veikkaus hands over one billion euros to the state to bankroll NGOs as well as charitable causes.
You can listen to our All Points North podcast about the gambling in Finland and the Veikkaus monopoly via this embedded player, Yle Areena, Spotify, iTunes or on your normal pod player using the RSS feed.