Finnish gambling monopoly Veikkaus has signed a multi-year and multi-million-euro deal with gambling technology firm IGT without a competitive process, local news outlet Yle reported Monday.
Yle’s investigative journalism program MOT found that Veikkaus entered into a multi-year deal with IGT for a core gambling system that powered the operator’s lotteries, other popular games, and sports betting products both online and at Veikkaus’ many retail locations across Finland.
The agreement came with an initial eight-year term and the option to be extended for up to three four-year periods. Veikkaus did not hold a competitive process to select its gambling technology partner.
MOT journalists discovered that in the summer of 2018, the gambling monopoly’s management team discussed a deal to maintain the company’s primary gambling system. The discussions resulted in Veikkaus’ board being presented with two options for inking a long-term deal with IGT without holding a bidding process.
According to an external law firm which looked into the matter, none of the two options were entirely legal. The law firm’s analysis showed that a direct procurement would have been “blatantly illegal” and could have attracted the attention of Finnish competition authorities.
On the other hand, a modification of the existing agreement between Veikkaus and IGT would have been “overall probably illegal”, but it might have also had some elements that did not breach laws.
Veikkaus Director of Legal Affairs and Corporate Social Responsibility Pekka Ilmivalta told Yle that “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.”
Veikkaus Tried to Conceal Deal to Avoid Scrutiny
According to MOT investigative journalists, Veikkaus tried to conceal its new agreement with IGT to avoid scrutiny from competition authorities. However, the gambling operator explained that it did not believe there was need for “active” external communications about the deal. Veikkaus confirmed that it wanted to “keep a low profile” in order to minimize the risks associated with its deal with the major gambling technology provider.
Veikkaus further told MOT that “the known acquisition risk was taken into consideration during negotiations on the agreement in autumn 2018.” The Finnish gambling monopoly’s CEO, Olli Sarekoski, has not commented on the matter yet.
News about what could be an illegal extension of Veikkaus’ deal with IGT emerge amid growing pressure on the only operator that is allowed to provide gambling services on the territory of Finland.
Over the course of several months, Veikkaus was subjected to heavy criticism over excessive and sometimes rather insensitive gambling advertising campaigns as well as over the protruding presence of its gambling machines at supermarkets, bars, and other public spaces across Finland.
The company promised to up its social responsibility game and set up an ethics board that would guide it through the process. It also announced plans to remove roughly 3,500 of its slot machines this year and another 4,500 over the next five years. It currently manages 18,500 gambling devices.
Source: MOT: Gambling monopoly Veikkaus hid multi-million-euro deal
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