Swedish operators slam Covid-19 restrictions

A consultation on proposed restrictions for Swedish online casino licensees has seen operators and industry associations condemn the new rules, echoing gambling regulator Spelinspektionen's assessment that the controls would only benefit unlicensed operators.

Proposed by Minister for Health and Social Affairs Ardalan Shekarabi, the restrictions would set an SEK5,000 (£401/€459/$495) mandatory weekly deposit limit and a SEK100 cap on bonuses while the country deals with the novel coronavirus (Covid-19) pandemic. Mandatory limits on time spend gambling would also be imposed, while the government pledged to explore potential restrictions on return to player (RTP) rates. 

This has already prompted a dubious response from gambling regulator Spelinspektionen, which warned that such restrictive conditions would prompt players to move offshore, in turn harming player protection efforts and undermining the government's goal of channeling players to legal offerings.

This was supported by operator contributions to the consultation, which ended on 8 May. 

Henrik Tjärnström, chief executive of Unibet operator Kindred, called the proposals “an open invitation to illegal gambling sites”.

“We are extremely concerned that the [regulated] Swedish gambling market continues to shrink, a trend confirmed by both the Swedish Agency for Public Management (Statskontoret) and research firm Copenhagen Economics,” Tjärnström said. “What the government is now proposing will result in a continued decline in the gambling market and an erosion of consumer protections.

The operator said that there was no data to support the idea that problem gambling has increased since the pandemic started.

“The overall gambling industry (private and state-run) has experienced a drop in gambling activity,” Kindred said. “We are left to wonder on what evidence the Minister has based his alarmist hypothesis.”

In addition, Kindred cited a report commissioned by operator association Branscheforenigen for Onlinespel (BOS) and compliled by Copenhagen Economics, which said that the channelisation rate for online casino may be as low as 72%.

The operator also said the government had not carried out an impact assessment of the technical changes required for the new regulations.

“Licence holders cannot change technical systems in the manner prescribed if they only have until 1 June to implement these changes,” Kindred said. “This forces licensees to choose which rules to violate. Not all rules can be followed if the proposal is implemented.”

“We need to be careful about introducing regulations that move customers away from regulated gambling companies towards unlicensed sites where Swedish authorities have no ability whatsoever of ensuring a high consumer protection,” Tjärnström added. “This is a negative development for customers, for the licensed gambling companies, and for society as a whole.”

Meanwhile, Svenska Spel chief executive Patrik Hofbauer argued existing regulations set out each operator's responsibilties to customers, meaning that additional controls were unnecessary.

“With the duty of care that applies to gaming operators, we are already bound to take action [to protect players] as and when necessary,” he said.

Hofbauer added that a measure that could prove to be effective in fighting problem gambling on both licensed and unlicensed sites would be a ban on short-term borrowing by players, such as payday loans. 

“It's time to put a stop to lending to gambling addicts,” Hofbauer said. “Set a requirement for lenders to check a person's total debt in real time before new loans are granted and withdraw the permits of credit institutions that do not carry out secure lending.

“This is a particularly powerful measure, as it also discourages problem gambling on illegal gambling sites.”

The biggest threat to players came from offshore providers, and not from the regulated market, he continued. Instead of putting the onus on operators, Hofbauer said it was therefore up to Spelinspektionen to do more to tackle illegal gambling in the country.

“Spelinspektionen already has several tools to counter illegal gambling, including payment blocking and warning messages,” he said. “It is time for the authority to start using these tools.

“In addition, we would like to see B2B licences for gaming suppliers. This would allow game developers to have their license revoked if they provide services to gaming companies that engage in illegal gaming activities.”

In its response, online gambling trade association BOS said the reason given for the regulations – an increase in online casino play – was news to its members, which had seen little evidence of a spike in activity.

“Our members have a hard time seeing the dramatic increase in online casino that Social Security Minister Ardalan Shekarabi repeatedly says they are experiencing,” BOS said. “We are looking for independent sources to substantiate this claim.

“When we asked our members, on average, a very slight increase [of 1%] for online casinos was reported.”

BOS also echoed Kindred’s assertion that the government had not made an effort to determine a reasonable amount of time for the introduction of the regulations.

“The Ministry of Finance has not consulted with the industry on the practical consequences of introducing these proposed measures, and what timeframe is reasonable for their introduction. The Ministry of Finance has seriously underestimated the time it will take to implement these new controls.”

BOS added that the measures seemed certain to further damage the level of channelisation to the Swedish legal market.

“If the government proceeds with these proposals, it can prepare for a channelisation level so low that it threatens the licensing system, and an increase in problem gambling linked to unlicensed gambling,” BOS warned. “In this scenario, the problem players are left entirely to their own fate.”

The association then claimed that the regulations amounted to a violation of European Union laws.

“We believe that the measures proposed are a violation of EU law in that they discriminate against licensed gaming operators, that they are not effective for the purpose they are purported to serve, and that they deviate from the principle of proportionality,” it concluded.

BOS has already made its opposition to the rules clear. With the release of the Copenhagen Economics report into channelisation, BOS secretary general Gustaf Hoffsted said Shekarabi “must withdraw” the rules.

The association then published an open letter to the minister and launched a petition calling for the withdrawal of the regulations. This petition has drawn signatures from at least 12 industry chief executives.