Swedish gambling regulator gains further powers as illegal operators withdraw SEK 2.5 billion

Sweden's gambling regulator received broadened powers of enforcement in order to fight operators who lack licenses, as the country lags behind its 90% channelization target five years after the market was opened up, the newest government statistics indicate.

Sweden's Spelinspektionen is now able to make undercover test purchases and introduce speedier payment blocking actions, abilities that take effect as illegal sites produced some estimated SEK 2.5 billion ($238 million) in turnover in 2023 alone, compared to the turnover of just over SEK 17.3 billion ($1.65 billion) from licensed operators.

Despite developments that pushed channelization from 77% in 2022 to around 85% to 86% in 2023, Sweden remains behind its political goal of retaining 90% of all gambling in the regulated market. Deficits are greatest in the online casinos segment, in which only 79% of betting switches to licensed operators, compared with 97% for the sports betting market.

"The upgraded instruments of the state are a necessary measure towards the security of Swedish consumers and equal competition," Spelinspektionen stated. The new powers of the regulator also include the right to conduct mystery shopping so as to uncover illegal operators targeting Swedish players.

This is most pronounced among high spending players, who continue to be lured by "casino without license" operators who provide higher stake and less restricted play than licensed operators. Even so, surveys show 97% of Swedish punters most recently played on a licensed site, the other unlicensed group still represents a disproportionately large share of all betting value.

Sweden's self-exclusion register, Spelpaus, registered over 100,000 individuals from the market launch in January 2019 and displays notable take-up of measures of player protection. The combined register allows the player to be excluded from all the approved gaming websites via a single registration.

The chase to regulate comes during Sweden's licensed gaming industry, generating SEK 27.1 billion ($2.58 billion) in 2023 gross gaming revenue, decreasing only 1% from 2022, the first decline ever since the country ended its state monopoly and introduced competitive licensing.

Authorised operators also pay an 18% fee on gross gaming revenue, sending roughly SEK 4.8 billion ($457 million) annually to the treasury. State-owned Svenska Spel and ATG also pay massive dividends, with Svenska Spel alone paying the treasury over SEK 2 billion in 2022.

Internet currently provides 60% to 65% of Swedish gambling revenue, the highest percentage in Europe at 68%, testifying to the fast pace of the market's conversion to the digital platform following the process of liberalization.

Not all its European neighbors have the same tolerant approach to gambling advertising and sport sponsorship as Sweden, though, and only demand that advertising be "moderate" and not aimed at children. Licensed operators like state-owned Svenska Spel actually sponsor Swedish sporting teams and leagues, although there still exist controversies over the necessity for tighter advertising controls.

"We favor creating an attractive regulated market that protects the consumer but makes the illegal alternatives less appealing," the Spelinspektionen spokesman added. "More rapid identification and shut down of illegal operators will be facilitated through the new enforcement tools."

Sweden's approach is in direct contrast to recent Dutch moves, prohibiting largely all gambling advertising and, from July 202,5 save sponsorships of sports, or Germany's hard limits of a mere €1,000 per month on deposits that have resulted in an estimated 50% of online play being directed to illegal websites.

Industry commentators favor Sweden's balanced model, offsetting protectionist elements like compulsory deposit limits and a single welcome bonus limit against fair taxes and freedom from advertising restrictions, which offers a long-term solution for other jurisdictions looking to derive channelization maximization and harm minimization. This year, the gambling market will hand over SEK 4.8 billion ($457 million) in direct taxes and contribute to the programmes and sport development of the government in addition to securing thousands of jobs within the licensed market.