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Intensified competition in the gaming market

Svenska Spel competes both with Swedish regulated gaming companies and foreign gaming companies without permits – and an illegal market. Competition is most intense in online gaming.

Gaming consumption has not changed significantly over the past few years. While some gaming forms have declined, such as bingo and restaurant casinos, other games and faster games, for example sports games, ­lotteries and online casinos have increased.

Social considerations motivate regulation

According to Swedish law, it is essentially illegal to organise gaming for monetary gain for the general public. The State has granted exemptions for a few gaming companies that ­conduct regulated operations in which social considerations, supervision and inspection are assigned priority. The Swedish Gambling Authority bears overall responsibility for ensuring that the Swedish market is legal, safe and reliable.

Over the last ten years, the number of people in Sweden with gaming problems has been 1–2% of the population. However, possibilities for obtaining help have been limited due to uncertainty as to who bears responsibility for care and treatment. In 2013, the National Board of Health and Welfare took over the issue regarding care and preventive initiatives to combat gambling addiction and were also tasked with investigating how to provide gambling addiction care. Many indicators point to the diagnosis being classified in the same way as alcohol and drug addiction, which would give individuals with a gambling addiction the right to care under the Social Services Act.

Intensifying competition

Competition in the Swedish gaming market continues to increase. Both domestic, regulated companies and foreign companies with multinational operations are active in the ­market. The wholly state-owned Svenska Spel, the state­-controlled AB Trav and Galopp (ATG), Folkspel, bingo halls, PostkodLotteriet, Kombispel and Miljonlotteriet are the largest Swedish operators. Private operators of restaurant casinos also account for a minor share of the market.

There are a number of foreign-based gaming companies that target Swedish players. Examples include the UK company Ladbrokes, which is based in Gibraltar, and Unibet, Pokerstars and Betsson, which are all based in Malta. They lack permits to operate in Sweden and are not subject to the same laws, tax regulations and restrictions that apply to companies that comply with Swedish gaming regulations. They compete in similar forms of gaming such as poker, bingo, sports games, number games, lotteries and online casino games. The ongoing consolidation of online gaming at international level means fewer but larger companies.

Problems with match fixing are increasing in line with the pace of growth in international gaming. Read more here about Svenska Spel’s efforts in 2013 to stem this problem.

Online casinos advance their positions

The gaming form that has accounted for the greatest growth in the gaming market is online casinos. Svenska Spel lacks ­permits for an online casino, which is one of the gaming forms assessed as entailing a high risk of developing a gambling addiction. The Internet offers a wide and growing range of slot machines and table games, which, in physical terms, are strictly limited to Svenska Spel’s casinos and Vegas in Sweden.

In Svenska Spel’s assessment, online and mobile casino games generate at least as much net gaming revenue as ­Svenska Spel’s four casinos combined, in other words
SEK 1,167 million. For some operators, revenue from online ­casinos account for between half and two thirds of total ­revenue.

Extensive marketing by foreign-based gaming companies in the Swedish media continues to increase. The marketing of online casinos accounts for a significant share of this increase. Between 2004 and 2013, the foreign gaming companies’ share of total gaming market advertising investment increased from 18% to 60%. During the same period, Svenska Spel’s share of total advertising investment declined – from 47% to 18%.

Extensive illegal gaming market

In parallel with the known gaming market, there is an unknown illegal market with gaming machines and gaming clubs operating without a permit. The Swedish Gambling Authority estimates that there are a few thousand illegal gaming machines nationwide that have a combined turnover of several billion annually. Organised crime syndicates are often behind the ­illegal gaming machines. Police crackdowns are conducted every year and machines confiscated, but the operations have proved difficult to stop.

The Supreme Court ruled that gaming machines that offer monetary gains and that are linked to foreign servers are illegal. This means that only state-owned companies can secure ­permits to organise games for monetary gain on gaming machines. In other words, the law supports taking action against illegal gaming machines.

Gaming policy in the EU

In September 2013, the European Parliament adopted a resolution on online gaming. The main message in the resolution was to respect the principle of subsidiarity and to continue to allow Member States to regulate the gaming industry within their national borders. At the same time, the resolution encourages cross-border collaboration between Member States to combat illegal gaming. Finally, the Parliament called on the European Commission to launch infringement procedures against those Member States that appear to breach relevant principles in the EU treaties with regard to gaming.

The European Commission has a number of unconcluded infringement cases against many Member States with regard to gaming, including Sweden, that date a number of years back.

In November 2013, the Commission declared once again that it was dissatisfied with conditions in Sweden and invited Sweden to implement measures to ensure that practical application of the regulations would comply with the requirements of EU law. The Commission has questioned whether the regulations are truly motivated from a consumer protection perspective or other acceptable motives under EU law. If, following the government’s response to the criticism, the Commission does not deem that the Swedish regulations comply with EU law, the Commission can proceed and report Sweden to the European Court of Justice. In parallel, the Commission has ­i­­nitiated a new case against several other Member States and concluded a ­similar case against Finland. For example, the Commission finds that the Finnish gaming monopoly complies with EU law.

New gaming regulations delayed

The European Court of Justice has ruled that every Member State must independently determine its approach to regulating the gaming market. A license system or more restrictive regulations, such as a monopoly, are permitted. The rapid changes in the gaming market have underscored the need to modernise and tighten gaming regulations in Sweden. Based on the ­gaming policy goals that the regulations are to contribute to achieving, the regulations are unsatisfactory in their current formulation.

In June 2013, the government notified that extensive changes, as previously announced, would not be implemented for the gaming market during the current mandate period. Instead, the government will appoint an inquiry to analyse the effects of the systems in other countries, for example ­Denmark, Norway, Germany and Finland over a period of one to two years. Thereafter, a proposal for new gaming regulations will be put forward. The government has expressed the intention of tightening up the Swedish Lotteries Act and the ban on advertising to make them more effective against the marketing of foreign gaming companies in Sweden.

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