Market Focus: Sweden

The Swedish gambling industry has historically worked on a monopoly model, in which only two operators were legally allowed to operate in Sweden: Svenska Spel, the state-owned gambling company and its counterpart AB Trav och Galopp (ATG). No other operators were legally allowed to offer gambling to Swedish citizens, although many international operators did so under the protection of superseding EU laws on the free flow of goods and services between member states.

With so much Swedish money flowing out of Sweden without payment of tax to Swedish authorities, together with a loss in market share for both Svenska Spel and ATG, something had to give, and that was the monopoly system. In June 2018, the Swedish Gambling Act was successfully passed by the Swedish parliament, having been previously approved by the European Commission. The act became law on 1 January 2019.

At its heart, the Swedish Gambling Act opens the market to other operators, allowing those which had previously operated on an unlicensed basis to obtain a licence. In addition to this it gives Swedish players, which had previously used unlicensed sites without protection, the full protection of Swedish law.

The Swedish Gambling Act applies to any gambling for money which is provided in Sweden. It also prohibits any gambling without a Swedish licence and likewise any such advertising of unlicensed gambling sites. Games currently included under the Act include retail and online casino gaming, blackjack, poker, sports betting, horserace betting, so-called fantasy betting and lotteries. As well as the main Swedish Gambling Act, there are 16 other pieces of legislation which directly or indirectly can affect egaming operators.

Population: 10.04 million

GDP per capita: $57,232

Internet penetration: 87.8%

Prime Minister: Stefan Löfven

Principal regulatory body: Spelinspektionen (Swedish Gambling Authority)[/box]

The regulator

The body in charge of regulating gambling is the Swedish Gambling Authority (SGA) or Spelinspektionen as it is known in Sweden. The SGA assumed responsibility for the regulation of all licensed gambling with effect from 1 January 2019, following passage of the Swedish Gambling Act into law. The authority is led by a board appointed by the government which retains fully responsibility for the day-to-day operations.

The SGA has three main mission objectives: the creation of a healthy and safe gambling market, the protection of consumers and the reduction of illegal gambling and lotteries in Sweden. In this capacity, it can issue licences to gambling operators and holds overall responsibility for controlling gaming and lottery operations. It is also tasked with educating and informing operators and the wider public about legislation relating to gaming and lotteries. Finally, it is required to provide information to the government about how the gambling market in Sweden is developing on a regular basis. In order to ensure licensed operator compliance with the Swedish Gambling Act, the SGA is empowered to issue fines against operators for non-compliance, and can strip operators of their licences if the infractions are serious enough.

In its regulatory capacity, the SGA also operates Spelpaus, the Swedish national self-exclusion scheme and is charged with ensuring operator acceptance and compliance with player requests to self-exclude. The SGA also has an obligation to provide regular reports to the Swedish government on the progress of the market, its compliance with regulatory objectives and an update on how it plans to regulate going forward.

Licensing

Under the Swedish Gambling Act, there are six types of licences available to operators. These include licences for state monopoly, charities, land-based commercial gambling, cruise ships, online gambling and sports betting. Licences for betting include the right, but not the obligation, to provide both retail and online betting. Social gaming and skills-based gaming do not currently fall under the Swedish Gambling Act and are therefore unregulated. Any type of licence can be granted to operators if formal requirements are met, however licences may not be granted to individuals under the age of 18, those with pre-existing criminal convictions and individuals who have been declared bankrupt.

Individuals or entities not based in Sweden can apply for licences but must appoint a physical representative who is resident in Sweden. In addition, all servers must be located within Sweden, unless the SGA has an agreement with the regulatory authority where the operator is domiciled, or if the operator can grant the SGA access commensurate with its regulatory obligations.

Licences are only granted to individuals or entities which the SGA deems to be compliant with regulations, who have the knowledge necessary to perform a licensed activity and are deemed fit enough to do so. Licences can be granted to B2C operators only, B2B suppliers are ineligible under the act. As part of the process, operators are required to provide information on key personnel, qualified owners (individuals owning 10% or more of the business) and a business plan, together with all required certifications. Operators must also provide a description of each game they wish to be licensed for, together with all game rules.

Licence fees vary depending on the activity, but a commercial online gambling licence and similarly a betting licence costs SEK400,000. The fee for renewing a licence is slightly lower at SEK300,000. All licences are valid for a maximum of five years; however, applicants are required to specify how long their licence concerns. Operator licences can be stripped if any condition of the Swedish Gambling Act is not met or if it is determined in the course of business activities that the operator has breached its licence.

Taxation

Licensed operators are taxed at a rate of 18% on their gross gaming revenue which is calculated on a monthly basis. In addition to this taxation, operators are required to pay a fixed fee annually to cover the cost of supervision by the Swedish Gambling Authority. Payment of this fee is determined on the duration of licence and the turnover of the operator involved.

Under the Swedish Gambling Act, operators must not target or inadvertently target individuals under the age of 18 with any advertising. In addition, operators are required to observe moderation in their marketing practices in order to not encourage problem gambling among players. Operators are deemed to have a duty of care towards players, must ensure they do not gamble excessively and actively assist those players looking to reduce their online gambling. To that end, operators are required to ensure connection with Spelpaus and deal with any self-exclusion requests made by players.

Restrictions

All betting operators are barred from offering betting markets on any events where most of the participants in the events are under the age of 18. Online gambling operators are prohibited from offering repeat bonuses to players and can only offer an initial bonus at player sign-up. Those operators who operate a multi-brand business model must ensure all bonus restrictions and responsible gambling obligations are adhered to across all its brands. Once a bet is made, the operator must display the bet value in SEK, and a majority of the operator’s site must be in Swedish.

Regulations state player withdrawals can only be paid to the same account as that which the player made their original deposit. Payments to unlicensed gambling operators processed by payment providers are prohibited and any company doing so can be ordered by the SGA to block any future transactions being made. In addition to blocking payments, the SGA can order Swedish internet service providers to cease offering access or provide a ‘do not serve’ notice on any unlicensed operator site confirming it does not have a licence to operate in Sweden.

Local expert view

Maria McDonald is partner at Nordic Gambling, a firm in the Nordics dedicated to gambling related law. She is a Swedish lawyer, specialising in gambling, media and sponsorships but also has extensive experience within dispute resolution. McDonald was previously head of legal for Unibet and Lagardère Sports and has also acted as chair of the Danish Online Gambling Association (DOGA) and treasurer of the Swedish Branschföreningen för Onlinespel (BOS). She shares her thoughts on the Swedish gaming market.

EGR Compliance: In your opinion, where are the biggest opportunities for operators entering the Swedish market?

Maria McDonald (MM): There are currently some uncertainties in the Swedish market, relating to how different provisions of the Gambling Act should be interpreted, how the Swedish Gambling Authority will act and how the operators’ business cases will develop. Bigger brands such as Svenska Spel and ATG seem to have so far benefited from the re-regulation but once the market has matured, my belief is that there will be a real opportunity for other, smaller and innovative operators to attract and retain customers from the bigger and more established companies.

EGR Compliance: Where are the biggest deficiencies in Swedish regulation and how would you address them?

MM: In my opinion, the most unfortunate provision in the Gambling Act is the one allowing welcome bonuses but not retention/loyalty bonuses. The reason for implementing the provision is player protection but, even if there was conclusive evidence that bonuses increase gambling addiction, the provision seems to defeat its purpose. People suffering from gambling addiction can shop around with multiple operators, create new accounts and chase bonuses instead of staying with one operator who can monitor the player’s behaviour and intervene if the player shows signs of problematic behaviour. My hope is that this provision will at some point be removed from the Gambling Act.

EGR Compliance: Is the Swedish Gambling Authority doing a good job of regulating the Swedish market?

MM: Yes, in general, I do think that the Swedish Gambling Authority has done a very good job in terms of licensing and managing a newly re-regulated market, especially considering what a challenging year it has been. If anything, I do think there could have been more dialogue between the SGA and the industry and I also feel that the exceptionally high fees that have been imposed on operators in cases, where the Gambling Act is not entirely clear and where there is room for interpretation, are unfortunate. Operators must be allowed to make genuine mistakes and/or disagree with the gambling authority without risking their whole business case for the Swedish market.

EGR Compliance:  Almost one year on from passage of the Swedish Gambling Act, do you think it has been a success or failure?

MM: The gambling act is a success from the perspective that it has done exactly what the government set out to do, i.e. create a re-regulated market with a gambling authority that supervises holders of Swedish gambling licences. However, a lot of operators have applied for and received online gambling and/or betting licences and there is fierce competition. In particular, the former monopolies are doing well, which makes the market share smaller for other operators. While the operators could maybe have foreseen the competition, the interpretation of the law by the Swedish Gambling Authority and the high fees imposed came as a surprise. This has made the business cases uncertain and we are likely to see some consolidation in the market in the coming year.