Kindred calls Sweden Gov't proposal "an open invitation to illegal gambling sites"

Kindred Group on Friday submitted its opinion on the memorandum on enhanced player protections as a result of Covid-19, highlighting its concerns over a sharply reduced gambling market and weaker consumer protections as a result of the latest Swedish government's proposal.

On 23 April, Social Security Minister Ardalan Shekarabi presented a draft regulation for how to strengthen player protections as a result of Covid-19, including a limit on how much punters could gamble in online casinos for the duration of the coronavirus outbreak. Kindred criticized the absence of impact assessments in several areas, and shared the concerns of several experts that the licensed gambling market will be “significantly reduced as a result of the government's continued tightening of Sweden’s gaming regulations, which will lead to an expansion of the illegal gambling market,” the company said in a release titled "Government proposal an open invitation to illegal gambling sites."

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

“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. This is a negative development for customers, for the licensed gambling companies, and for society as a whole,” he added.

In its opinion, Kindred said the Minister’s proposal is based on an “alarmist hypothesis,” as there is no evidence in either the draft regulation or gambling companies' own data showing an increase in problem gambling due to Covid-19, but actually a drop in gambling activity was seen. 

The firms remarked new figures published by the independent research firm Copenhagen Economics showing that every fourth krona played goes to the unlicensed market for online casino games, and the industry forecasts that this percentage will increase by between 30 and 40% if the government’s proposal is adopted, with tougher restrictions on the licensed market increasing the risk of additional problem gambling.

Furthermore, Kindred said it welcomes an increased focus by the government on combating the black market, but remains “disappointed about the probable outcomes, as these proposals and tools have been available to the Swedish Gambling Authority (Spelinspektionen) for some time, yet nothing has happened in practice. On the contrary, we see things going in the wrong direction.”

The company questions that the government has notified the EU Commission of the regulation and called for urgent action, choosing to treat online gambling radically different to other business sectors. 

“The Gambling Authority should focus on channelling, as that is a basic prerequisite for a well-functioning licensing process. Therefore, it is important that the government demonstrate greater confidence in the Gambling Authority and give the agency more space to carry out its work,” Kindred suggested.

The company also warned that as the government has not taken into account the overall regulatory framework or conducted any impact assessment on the need for technical changes, license holders cannot change technical systems in the manner prescribed if they only have until 1 June to implement these changes: “This forces licensees to choose which rules to violate. Not all rules can be followed if the proposal is implemented.”

Finally, Kindred suggests introducing measures that protect the integrity of the licensed market and properly protect vulnerable players. These include:

• quickly implement B2B-licenses for suppliers and customer acquisition companies;
• consider further regulation of the instant loan industry;
• carry out powerful public awareness campaigns;
• clarify the Gambling Authority’s mission by requesting player data from gambling companies to facilitate fact-based assessments.