Sweden: the first year By Hannah Gannagé-Stewart, CDC Gaming Reports December 18, 2019 at 2:45 am A lot can happen in a year in this industry, and the anticipation that preceded the re-regulation of the Swedish market now feels like a lifetime ago, despite the re-regulation only just closing in on its first full 12 months. It was always going to be a bumpy ride, with prospective licensees concerned from the outset that they would be hamstrung by the might of the legacy monopoly operator Svenska Spel. The latter, in turn, was on the defensive against the flood of new competitors. While neither extreme has resulted from the new regime, the market as a whole does seem to have had a little of the wind taken out of its sails (or sales, as the case may be). According to figures released by the Swedish Gaming Authority, Spelinspektionen, in November, overall gambling revenue fell in the three months to the end of September, totalling SEK5.90bn, down from SEK6.11bn in Q2 and SEK5.94bn in the first quarter of 2019 (SEK10 = €0.95). Revenue from the state lottery and slot machines also fell 3.2% from SEK1.41bn to SEK1.37bn over the same period, while state casino revenue remained stable at SEK245m. The regulator’s reports regarding online revenue were a tad confusing. At the end of October it projected a decline, but a week later published figures indicating that commercial online gambling and betting, along with online gaming on ships in international traffic, was up, increasing to SEK3.48bn. It is perhaps unsurprising that online revenues would increase in a newly re-regulated market, with all the hubbub that surrounded it, but the overall decline – which in fairness is a trend that started prior to re-regulation – is more concerning. Numbers are only ever part of the story. To analyse them properly we will have to wait for a full year-on-year comparison to be available. But what has become clear in recent months is how much further Spelinspektionen needs to go in solidifying its influence over the market. There’s no doubt the gaming authority has followed through with the tough stance it promised from the outset – it said it would not tolerate excessive advertising or the use of bonusing to attract players, and it has taken action against operators on both. It has also been tough on AML requirements, which are a mounting burden across many regulated financial industries. However, it was revealed this month that the authority has failed in all but one attempt to collect payment from the operators it has fined this year. Åland Islands-based Paf, known for its player protection bent, is the only operator to have honoured the ticking off it received this year by paying its fine. It’s a pretty toothless regulator that has to admit its penalties are being ignored by the industry it has only just authorised, particularly when a renewed push against illegal operators is on the cards for 2020. In November, Spelinspektionen reported that the licensed gambling market in Sweden now accounts for somewhere between 85 and 87% of the whole, with the rest made up by grey or illegal operations. On first reading that may sound reasonably good for a newly-regulated market. But the regulator still came under fire from Sweden’s trade association for online gambling, Branschföreningen för Onlinespel (BOS). BOS argued that the pressure placed upon regulated operators was undermining efforts to force illegal operators out of the market. The trade body also pointed out that government’s target was at least 90%. It’s a tightrope that every regulator has to walk – how to create a climate in which regulated entities are able hold their own against illegal competitors, but also to retain enough power to rein them in when they step out of line. Spelinspektionen is still seeking that balance. It’s clear that the regulator has no intention of stepping down from its hard-line stance on licensees, though. While BOS may feel that the industry is beleaguered by the regulator, Spelinspektionen plans to keep the current pressure up and to also take greater action against illegal operators. As well as working with local enforcement agencies, it has pledged to sign memoranda of understanding with other regulators, such as the Malta Gaming Authority and the Gibraltar Ministry of Commerce’s Gambling Division. In fact, part of its strategy is to place the onus on licensed operators to expel those profiting without a license. Operators and associated companies are prohibited from working with illegal actors, especially by providing them with payments solutions or gaming content. They are also obliged to report suspect activity. Operators would be naive to anticipate an easier ride from the Swedish regulator in future. It always set up its stall to protect the consumer, and it seems unlikely that protests by industry bodies will reverse that stance. That’s particularly true because as many European jurisdictions follow each other in implementing policies like self-exclusion registers, mandatory deposit limits, advertising restrictions, and clamp downs on bonusing, these policies can no longer be regarded heavy-handed regulatory instruments but must be understood to form the basis of regulated regimes going forward. That said, 2020 is likely to usher in a refining of the regulator’s approach in Sweden. If this year is anything to go by, Spelinspektionen’s teeth are going to have to get sharper.