Unlicensed Foreign Operators Threaten Sweden’s Igaming Industry

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Thursday, April 17th, 2014 | Written by Adam Brown

According to the latest report published by Sweden’s gaming regulator Lotteriinspektionen, 64% of all the country’s TV gambling ad expenditure last year, equivalent to SEK 1bn ($152m), was spent by foreign, unregulated operators. The figure is even more astonishing considering those very same non-Swedish companies were not even licensed to offer online gambling within the Scandinavian country.

Online gambling in Sweden

Currently, the only operator permitted to provide internet poker in Sweden is a state-owned company called Svenska Spel. The business’
privileged position is highlighted by the fact that despite having to fight off competition from such industry behemoths as PokerStars, 888 and PartyPoker, Svenska Spel ranks 15th overall in terms of global traffic, with around 600 cash game players over a week.

Svenska Spel’s traffic and revenues would naturally be considerably higher if unlicensed websites were somehow blocked from Sweden’s online gambling market. Despite previously pushing the Swedish government to impose advertising restrictions on unregulated operators, a 2012 Swedish Supreme Court ruling, however, acquitted two of the country’s newspaper editors of violating the Swedish Lotteries Act (1994), such that in spite of unlicensed foreign gambling advertising being considered technically illegal in Sweden, the ruling effectively removed any punishment for breaking the law.

Interestingly, only the country’s licensed media outlets are bound to the Swedish Lotteries Act of 1994, while those in other EU countries appear free to flout the law. As a result, unlicensed gambling operators have steadily been increasing their TV gambling spending each year, and in 2013 expenditure was a huge 38% higher compared to 2012.

Swedish regulator fights back

In order to counteract the threat from “grey market” operators which are estimated to account for around 50% of the online market, regulator Lotteriinspektionen has sought to challenge EU treaties and the constitutional right to free speech as applied to its domestic online gambling market.

Following the revelation that unlicensed online companies spent €119 million on TV gambling ads last year, Lotteriinspektionen decided to publicly criticize the country’s leading organizer of running events, the Stockholm Marathon Group, for signing a deal with Unibet to feature the gambling company’s branding next month at a marathon taking place in Sweden’s capital city. The Stockholm Marathon Group has since been given until April 18 to respond to accusations it has violated Swedish gambling laws forbidding advertising of foreign gambling operators, with a spokesperson for the Swedish regulator, commenting:

“Law has to be enforced, and it can’t be done in any other way. It’s a game of chess. It seems the strategy of the unregulated providers is to stay two steps ahead, but with that said the same Lottery Act still applies and we need to enforce it in our capacity as regulator.”

Meanwhile, Lotteriinspektionen has threatened The Stockholm Marathon Group with a fine of €220,286 if the marathon goes ahead featuring Unibet’s logo, a figure which apparently reflects the amount offered by the online gaming operator for the advertising.

Media outlets insist gambling monopoly contrary to EU edicts

Nevertheless, Swedish media outlets do not seem willing to roll over just yet, and have continued to claim Sweden’s gambling monopoly Svenska Spel is itself in opposition to the European Commission edicts. The EU insist such monopolies are only permitted if their primary purpose is to temper and reduce the gambling habits of its citizens, but as pointed out by calvinayre.com:

“Svenska Spel has dramatically increased its promotional efforts in recent years, a trend critics say amounts to encouraging Swedes to gamble more in a bid to boost the state’s tax revenue, which hardly resembles the actions of a body trying to keep a lid on such activity.”

Svenska Spel pledges €280,000 towards tackling gambling problems

At the beginning of this year, Sweden’s gambling monopoly Svenska Spel announced it would take a “big step towards a healthier gaming market” by creating a study group at the Lund University’s Faculty of Medicine to research the causes and effects of problem gambling in Sweden.

Subsequently, Svenska Spel allotted €280,000 over the next five years towards the prevention of gambling problems, with Svenska Spel head of Corporate Social Responsibility, Zenita Strandänger, explaining: “We want the Swedish gaming market to develop in a way where the gambling companies care about the customer and where customers are given the opportunity to control their gambling.”

However, Strandänger also highlighted shortcomings in Sweden’s gambling regulation, in particular the ability of overseas operators to accept bets from Swedish citizens, as severely hampering efforts to tackle problem gambling. Strandänger emphasized the fact unlicensed online gambling sites beyond the government’s control had a different agenda to Svenska Spel, and as joint-stock companies were more concerned about putting their profits first.