Sweden Receives Dozens of Applications for New Gambling Licenses

Sweden Receives Dozens of Applications for New Gambling Licenses

Sweden opened up the license application process for its new legalized online gambling market on August 1st. It didn’t take long to gauge the high level of interest by firms wanting to become part of its industry, either, after twenty-two organizations filed their applications on the first day possible, with several more having trickled in to the Swedish Gambling Authority (Lotteriinspektionen) over the past couple of weeks. According to reports, the regulator is now expecting to receive more than 70 applicants before the market’s official launch on 1 January 2019.

Background

Sweden has long had a tightly controlled gambling environment with only state-run entities, like Svenska Spel, able to offer large-scale real money gaming products. For the past decade or so, the European Union has been grumbling about Sweden’s closed market, but these noises were ignored by the Swedish authorities until 2013 when the EU started to initiate legal proceedings against Sweden.

Rather than letting its fate be decided by EU bureaucrats, the Swedish parliament (Riksdag) subsequently passed a bill called “The Re-Regulated Gambling Market” in June 2018, which calls for the setting up of a legalized internet gambling scene with both Swedish and offshore companies able to offer betting products starting Jan. 1, 2019.

Details of Sweden’s Gambling Regulations

There are currently six different types of licenses being offered by the regulator, with their prices varying between 400,000 Krona ($43,500) and 70,000 Krona ($76,233). Operators who obtain licensure in Sweden will then have to hand over 18 percent of their gross gaming revenue in taxes, which compares pretty favorably to tax rates around the world. In fact, among major countries, only the United Kingdom, with its 15 percent point of consumption tax, has lower taxes on internet gaming.

Another advantage is that peer-to-peer games will not be segregated from the rest of the world, meaning Swedish online poker players will be able to log in and play against opponents worldwide.

Additional responsibilities of licensed online gambling businesses will include having to promote responsible gaming and being prohibited from creating advertising that appeals to children. Naturally, customers will also have the ability to self-exclude from all gambling through the Swedish Gambling Authority, and do so nationwide in a single action via a pause action on their accounts.

In language not typically found in gambling regulations from other jurisdictions, the Swedish Gambling Authority states on its website: “A bonus may only be offered by a license holder on the first gambling occasion.” Reload and VIP bonuses thus appear to be prohibited. Furthermore, it’s not clear whether other types of rewards, like poker rakeback and sports free bets, are considered bonuses. If so, this means gamblers will likely be tempted to find and join new casinos at regular intervals in order to secure additional benefits. Alternatively, it would make unlicensed entities more appealing as they would be able to reward their customers better and more often than the legal gambling firms are allowed.

About the Contenders

The companies that have submitted their Swedish online gaming paperwork include some big names with historical roots in the country. Kindred, Betsson and LeoVegas are a few of the enterprises that have long transacted in Sweden but were headquartered elsewhere. With the new licensed gambling regimen in place, they might be convinced to move part or all of their operations to Swedish soil. After submitting its application, the Kindred Group, which owns Unibet, 32Red and several other online gambling properties, issued a press release about its intentions in Sweden, with CEO Henrik Tjärnström stating:

“It is very satisfying that we finally can take this important step towards fair and equal terms within the Swedish market, competing on the same level as other operators. Kindred has always applied great effort to understanding what our customers want, giving them a great experience in a safe and secure environment with the highest responsible gambling standards.”

MRG and Expekt are a couple of the other organizations that have completed the registration forms to obtain their Swedish online gaming licenses. Currently there are believed to have been around 30 applications submitted, with that number expected to triple or more by the time the market goes live on Jan. 1.

Svenska Spel: Unfair Advantage?

Svenska Spel, which is currently the only body legally authorized to offer online poker in Sweden, had to prepare its license application just like any other business. However, this state-backed corporation also runs land-based casinos and bingo halls, which are not taxed and which no other organization can operate legally within the country.

Some have argued that letting Svenska Spel conduct online activities is a type of unfair competition because the entire company will benefit from the tax-free status of its offline dealings. Furthermore, studies have shown a synergy between brick-and-mortar and internet gambling spend, which is a benefit that no other licensed enterprise will be able to take advantage of. Kindred Group has called for Svenska Spel to be privatized or perhaps to be split into two with one division being able to offer online betting products and the other being confined to offline gaming.

“Here, the government has a responsibility it can’t avoid,“ remarked Peter Alling, Head of Public Affairs, Nordics, at Kindred. “Failure to deal professionally with the split, not adhering to basic competition regulations, will seriously endanger the outcome of the reform.”

Size of Market

According to official statistics released by the Swedish Gambling Authority, regulated gambling revenue in the country of 9.9 million people was about $1.87 billion in 2017, which works out to a total gambling spend per resident of around $240. The size of the market would therefore indicate that it has plenty of potential profits awaiting those new operators who choose to enter post-re-regulation. Of slight concern is the fact the market last year hardly improved on the $1.865 billion generated in 2016, with some analysts unsure whether more operators will help grow or saturate the market.

More positively, however, unlicensed betting on gray market sites adds another $608 million to this total each year, with even this high figure for gray market gambling revenue almost certainly understated. Consequently, as more and more gaming sites that are now unlicensed obtain the approval of the Gambling Authority to transact legally in Sweden, we’re likely to see regulated gambling revenue grow in Sweden, probably surpassing $2 billion per year.