Videoslots threatened with fine over Swedish deposit cap violation

| By Daniel O'Boyle
The Swedish Gaming Authority (Spelinspektionen) has issued Videoslots with an injunction after discovering players could use reverse withdrawals to circumvent the country’s SEK5,000 deposit cap.

The operator will face a SEK250,000 (£22,000/€24,800/$30,000) per week fine if the issue is not corrected.

During an inspection to ensure operators complied with the country’s controversial deposit cap, Spelinspektionen requested information explaining how Videoslots enforces its deposit cap in July.

In its response, the operator explained that it was impossible to log in without setting a deposit limit of SEK5,000 or less per week. This was supported by a test, inspection and certification report from an accredited testing lab.

However, Videoslots initially chose not to answer a question about reverse withdrawals, where a customer cancels a decision to take funds out of their account.

When it did produce evidence on this matter, Spelinspektionen found that players could effectively deposit more than SEK5,000 in a week by reversing previous withdrawals, which could be as much as two months old. Videoslots said the feature existed due to player requests.

Spelinspektionen noted that the operator also complied with bonus and login time limits, and that it did require players to set a deposit limit of up to SEK5,000 upon login.

However, it said the reverse withdrawals clearly allowed a player to circumvent the law.

“The regulations state that the upper limit for deposits at commercial online gaming amounts is set at a maximum of SEK5,000 per week and that the licensee is obliged to ensure that the limit cannot be exceeded,” Spelinspektionen explained.

The regulator added that Videoslots’ deposit cap amounted to little more than a warning to players, rather than something that was fully enforced.

“With Videoslots’ interpretation of the provision, it would be sufficient for a licensee to state to players, ‘You have a deposit limit of SEK5,000 per week for commercial online gaming,’ no matter how much money can be deposited and used for online gaming in practice,” it said. “Spelinspektionen does not share in that assessment.”

Although it noted that reverse withdrawals were in place before the deposit cap came into force, the regulator said this did not change the fact that they meant Videoslots violated the rules.

The operator argued that the deposit cap was contrary to EU law and said it was pursuing legal action against the Swedish state over the rules.

However, Spelinspektionen rejected this interpretation. It pointed out that the freedom to offer services within the EU may be restricted, in order to protect the public interest, provided the measures are proportional.

The regulator ultimately ruled that the violation was not trivial, and therefore warranted more than a warning. Equally, it added, it was not serious enough to merit a licence suspension.

As a result, it issued an injunction to remove reverse withdrawals. Failure to do so will see the operator incur a fine of SEK250,000 per week until the change is implemented. When the change is brought in, Spelinspektionen must also be notified.

The operator said it will comply and remove reverse withdrawal functionality, but added that it still did not believe that it was in breach of the temporary regulations.

“Videoslots notes the decision made by the Swedish regulator and is pleased that it confirms compliant implementation of the bonus, deposit and time limits put in place by the Swedish government to counter a perceived increase of risks during the Covid-19 pandemic,” Videoslots said.

“According to the decision, these regulations also prohibit the withdrawal-related functionality which remained in question. We will comply and remove this functionality, having already offered to do so during the assessment.”

Videoslots called for greater clarity around the rules, in order to ensure that further operators do not unknowingly break them.

“We do not, however, believe that we were in breach of the COVID-19, or any other regulations, and call for greater clarity to aid responsible operators like ourselves. Furthermore, we maintain our position that these regulations are both unreasonable and unjustifiable.”

Finally, it added that it believed the cap might actually be a negative for player protection, as it may push players towards the unregulated market.

“Not only are they contradicted by facts and damaging to licensed operators, they are also completely counterproductive to their declared aim of player protection and push players into the arms of illegal operators,” it said. “We will therefore continue to challenge these regulations.”

The injunction against Videoslots marks the third time the regulator has taken action over apparent violations of the deposit cap.

In December 2020, it fined both Kindred brand Spooniker and former racing monopoly AB Trav och Gallop (ATG) after discovering a different loophole in each operators’ enforcement of the cap.

At ATG and Spooniker, players could set a higher cap, but those who did could not play casino games. However, a player could simply set a high limit, deposit more money and then lower their limit and play online casino games with more than SEK5,000. 

The deposit cap was implemented in July 2020 and although it was intended to last only until the end of that year, it is now set to be extended until June 2021. It has drawn opposition from across the gambling industry, including operator association Branscheforenigen for Onlinespel (BOS).

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