Four years since the re-regulation of the Swedish gambling market – trends and outlook
Expert insight provided by Petter Larsson, Hans Ericsson and Stefan Widmark, Westerberg & Partners 

The passing of 2022 marks the four-year point since the re-regulation of the Swedish gambling market on 1 January 2019. While some of the most obvious growing pains have been addressed, the Swedish gambling market still faces many challenges and unresolved regulatory issues. 

In this article, we summarize how the first four years since the re-regulation have formed the Swedish Gambling market, recollect the most topical issues, and make a brief outlook of what lies ahead.

Market Competition –Dominance by Large Operators
While the Swedish gambling sector anticipated a high number of mergers among licence holders in the initial years after the re-regulation, that number has remained surprisingly low and there are currently approximately 100 licence holders on the competitive part of the Swedish Gambling market. However, the Swedish market is currently dominated by a handful of large licence holders. For online gambling and betting, the five biggest licence holders make up for 67 per cent of the GGR. An educated guess for this dominance is that the regulatory burden, which will assumably increase, has proven costly for smaller operators. The upcoming year will serve as a first indication of the continued interest to compete on the Swedish gambling market since many of the issued five-year licences in 2019 will expire by the end of 2023. However, a market survey conducted by the Swedish Gambling Authority (SGA) indicates that nearly all current licence holders will look to renew their current licences.

Image and Reputational Challenges
Not unlike other jurisdictions, one of the biggest obstacles for operators on the Swedish market is the reputational challenge that has proven to come with the territory.  

The issue is not to be taken lightly as several Nordic banks have been distancing themselves from certain operators. The issue has primarily affected foreign based operators and generally seems to relate to the Nordic banks’ CSR approach, which is seemingly challenging to align with the public perception of the gambling sector, but also ‒ to some extent ‒ AML issues.

This issue has become a major challenge for many licence holders, including some of the largest operators on the market, as they have been blocked from the well-established payment applications operated by Nordic banks which are frequently used by Swedish customers. It remains to be seen whether the banks’ approach will tilt the balance between domestic and foreign operators, but the issue is currently a top priority considering the customer’s high appreciation of the blocked payment services.

Channelling challenges

The question of how to direct customers to licensed operators has been one of the most debated issues in the Swedish gambling community during the first four years. According to recent data, the share of the total value of bets with licensed operators on the competitive part of the Swedish market amounted to 87 per cent in 2021 as compared to less than 50 per cent prior to re-regulation in 2019. However, that number does not reflect the portions of customers gambling on unlicensed platforms. Both the SGA and the gambling operators are of the conclusion that the value of gambling with unlicensed operators is attributable to a significantly lower share of the customers. If true, that trend is alarming from a gambling abuse perspective considering the lack of RG protocols with the unlicensed operators. 

As regards the measures taken during the first four years to target unlicensed operators, the current remedies available have proved to be disappointing. During 2019 – 2022, the SGA held that 31 unlicensed operators had provided unauthorized gambling services to the Swedish market and reported the cases to the police. However, all criminal matters were closed by the Swedish public prosecutor. Furthermore, 24 of the 31 injuncted unlicensed operators have continued to direct their services towards Swedish customers. Notably, all 24 of these operators are based in Curaçao whose authorities have not adhered to the SGA’s requests to cooperate in this respect.

In September 2022, the Swedish general election resulted in a shift of parliamentary power where a new government was appointed for the upcoming four years. While it is too soon to tell whether a new approach will be adopted by the new government, the past two years with the implementation of temporary Covid restrictions indicates that the previous unified approach between the political right and left blocs prior to re-regulation is not as certain anymore. However, the new Parliament’s adoption of the main parts of the previous government’s legislative bill to amend the Gambling Act indicate that no new radical change of direction is to be expected in the near future.

The recent amendments to the Gambling Act are highlighted by the implementation of mandatory B2B licenses for gambling software in Sweden with effect on 1 July 2023. The main objective for this new regime is to prohibit gambling software providers to provide services to unlicensed B2C operators. 

In summary, the next chapter for Swedish gambling sector is about to ensue. The upcoming year and the operators’ reactions to the recently implemented regulatory requirements and remedies will serve as a good indication of the next challenges and market developments. In turn, this will set the agenda for the SGA’s enforcement.