Regulation

Swedish report proposes tighter ad controls, permanent slot stake cap

| By Robin Harrison
The Swedish Gambling Market Commission (Spelmarknadsutredningen) has delivered its long-awaited report on the regulation of igaming, though the conclusions suggest further pain ahead for the country’s licensees.
Swedish channeling down from 2019

The report was commissioned in June 2018 to examine additional measures to those set out in the Gambling Act that came into force from January 2019. 

The scope of the inquiry was then amended in April 2019 to look at solutions to limit gambling advertising, following a surge of operator promotions in the wake of the market opening.

It was led by special investigator and former member of parliament Anna-Lena Sörenson, and also considered potential levies to ensure fair returns to horse racing and other sports. The prospect of a mandatory levy on operators taking bets on horse racing was dismissed by Sörenson in October. 

As with the potential levy on horse racing, the inquiry dismissed calls for a statutory levy on sports. It argued that with 90% of betting stakes placed on international sports, this would do little to benefit local sports. Furthermore, it added, it would risk reducing consumer interest and sponsorship for professional sports in the country, by making betting on local events more costly.

“The inquiry’s overall assessment is that it would not be appropriate to introduce either the funding model that has been considered for the horse sector or special copyright-like protection for sport in order to compensate the sports movement for its events being used as an object of gambling,” it said.

Despite rejecting the levy calls, the inquiry has concluded by recommending a series of more stringent controls on the market. 

First, it recommended additional measures to stamp out unlicensed activity – something being explored in a separate investigation – such as a licensing system for software providers and strengthening controls to stop offshore businesses operating in the country. 

In particular this would comprise the express prohibition of promoting unlicensed gambling, as well as extending the prohibition on broadcast advertising for illegal gambling to cover foreign stations and video sharing platforms.

However, it then looked to tighten controls on the licensed market. It suggested that the country’s gambling regulator Spelinspektionen should develop a risk classification for gambling products, that could inform its supervisory efforts. 

The games seen as having the highest level of risk to players, meanwhile, would be banned from advertising between the hours of 6am and 9pm. 

The SEK5,000 deposit cap temporarily imposed on casino games, it added, should be made permanent. Spelinspektionen would then be able to review how effective the measure is after a few years in force, and make a decision on raising or lowering the limit.

Spelinspektionen, the inquiry concluded, should also ramp up efforts to clarify the duty of care expected of operators in their dealing with customers.

Furthermore, it proposed passing a new law to set out reporting requirements for operators, that would allow both Spelinspektionen and other relevant authorities to better track developments across the regulated market, and make changes where necessary.

Finally, the inquiry argued in favour of relaxing bonus requirements for gaming businesses that generate funds good causes, such as lotteries. 

It explains that there is little risk of players developing problems, and to ensure they can compete against private operators, they should no longer be restricted to offering players a single bonus upon sign-up. 

While it touched upon loot boxes and the prospect of regulatory restrictions on the video game mechanic, the inquiry concludedthat the Gaming Act is not the appropriate place for such controls. Instead, it said, Sweden should look to develop these rules at European Union, rather than national, level. 

“This has been a complex assignment that has touched on a large number of different issues linked to gaming regulation, which in some cases have required difficult trade-offs,” Sörenson said. “I believe that the proposals we come up with today can both contribute to strengthening consumer protection and make regulation more appropriate.”

Minister for Social Security Ardalan Shekarabi added that the Swedish state had a “great responsibility” to protect consumers, both by shutting out unlicensed operators and ensuring licensees behaved responsibly. 

“Spelmarknadsutredningen’s report will form an important basis for the Government’s forthcoming measures.”

The prospect of new restrictions on a licensed sector that has faced strict measures since the launch of regulated igaming in 2019 was greeted with dismay by operator association Branscheforenigen för Onlienspel (BOS). 

“Sweden has invested in a licensing system with 102 operators that offer a high level of consumer protection, they pay around SEK4bn annually in gaming tax, invest in workplaces and staff, sponsor Swedish sports and contribute to Swedish technology know-how,” BOS secretary general Gustaf Hoffstedt said. 

“Banning licensed gaming companies from marketing their services to Swedish consumers while leaving unlicensed companies free to offer their services to Swedish consumers is a bad proposal. 

“This only leads to reduced consumer protection and to erode the Swedish gaming market.”

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