How Sweden’s new gaming and betting market works and its potential impact on the sports industry

Published 10 April 2019 | Authored by: Jamie McDonald, Maria McDonald

A new Swedish Gambling Act1 (the Act) entered into force on 1 January 2019. The Act represents a complete overhaul of the legislative framework in Sweden regarding gaming and betting. Previously, only two monopolies, Svenska Spel and AB Trav & Galopp (ATG), and certain non-profit organisations were allowed to operate gambling services. Now, private gambling operators are able to apply for licences to offer online commercial gambling and/or betting to Swedish consumers.

In this article, we will examine the Act more closely, with a particular focus on what impact the new gambling market may have on sport.

Background to Gambling Legislation in Sweden

By law, Sweden operated a monopoly system prior to 2019, but the market had been “grey” for many years with a multitude of international operators and brands targeting the Swedish market online from abroad. According to statistics2 from the Gambling Authority, SEK 6.7 million ($720,000) of the total turnover of SEK 23.4 million ($2,500,000) generated in the Swedish gambling market in 2018 came from operators without a Swedish licence.

International operators acted in Sweden on the basis of licenses held in other jurisdictions such as Malta and Gibraltar, and exercising their right to provide services cross-border within the EU3, leading to the creation of the grey market. Such operators were therefore relatively free to provide their services in Sweden, with the Gambling Authority instead targeting Swedish advertisers and marketing companies for aiding and abetting gambling operators without a Swedish licence, but with varying results4.

As such, legislative changes were long overdue, but the new law was implemented very quickly. Following the presentation of a public investigation5 on re-regulation published in March 2017, subsequent public consultation6 and mandatory notification to the European Commission, the Gambling Act was voted through in parliament on 14 June 2018. This left both the government and the Gambling Authority little time to issue secondary legislation as the licence application window opened on 1 August 2018.

The Gambling Act - an Overview

As of 1 January 2019, six different kind of licences are available, including one for commercial online gambling and one for betting. Those two licences can be granted to any operator, including private gambling operators, who satisfy the formal requirements. Some key features of the legislation include:

  • Products included in the competitive section of the market are online casino (table games and slots), online poker, online bingo as well as online and land-based betting7.

  • A betting licence covers any betting, including betting on sports, horse races and electronically simulated events and betting on the outcome of lotteries (if consent of the entity providing the lottery has been obtained)8

  • A licence will be valid for up to five years9.

  • The tax is set at 18 percent of gross gaming revenue10.

  • Bonuses may only be offered “the first time the player uses an operator’s products11.

  • An early proposal to require software providers to apply for a licence was removed from the final version of the draft law and consequently B2B operators do not require a licence.

  • It is mandatory for players to set deposit limits12 (daily, weekly and monthly13).

  • Licence holders must take measures necessary to prevent and reduce problem gambling where possible and players shall have the opportunity to self-exclude from gambling with all licenced operators through registration in the National Self-Exclusion Registry14.

  • Basic provisions on advertising have been included in the law, including rules on moderation and not specifically targeting the underaged15

  • Payment providers could be ordered by a court to block payments from unlicensed gambling operators on the instruction of the Gambling Authority16.

  • Match-fixing becomes a criminal offence with penalties of up to 2 years imprisonment or, for the most serious offences, up to six years imprisonment.

  • The Gambling Authority may request an ISP provider to display a warning message to inform players that the website is not licensed in Sweden17.

  • State-owned Svenska Spel has been divided into two separate companies but with a joint holding company. One of the companies has received a licence to compete with other online operators and the other company will remain the sole operator of lotteries (with the exception of lotteries organized by non-profit organisations).

  • Horserace betting operator ATG will be allowed to enter the competitive market and has received licences to operate online casino as well as general betting. The company will remain under state-control until a solution to ensure the continued funding of the horse racing industry is found.

  • No provisions on “return-to-players” (RTP) or restrictions on in-play betting or betting on lower leagues.

  • Betting on occasions where the majority of participants are under 18 years of age, spread betting or betting on events that are offensive or inappropriate are prohibited18

What has happened since the Act came into force?

As of 11 March 2019, 116 licences had been granted to gambling operators and of those, 44 include the right to provide betting to Swedish consumers19. Amongst the licence holders, many of the major global brands can be found, including bet365, Bwin, Expekt/Betclic and Unibet.

The short timeframe during which the Gambling Act and its secondary legislation were implemented, meant that not all aspects of the new framework could be sufficiently investigated, and the consequences of the new laws could not be analysed in any great depth. Consequently, the Swedish government has amongst other initiatives, commenced an investigation to analyse the new conditions for sports organizations and horse organizations following the re-regulation20. In particular the investigation will look into a financing model to compensate sports for the provision of betting on their events and what other measures that should be taken to strengthen the Swedish gambling regulations. The instructions from the government also include an assessment of Svenska Spel and its adaption to the new laws as well as an assessment on how to further counteract any damage caused by gambling. The result and proposal from the investigator shall be presented on 31 October 2020 at the latest.

Naturally, the granting of licenses to international operators has led to increased advertising activity from such operators as they seek to further establish themselves in the competitive re-regulated market. This increased activity, particularly on TV and in social media has been met with criticism from the government, who have described it as “unacceptable” and “unsustainable21. The Minister for Public Administration, Ardalan Shekarabi, held a meeting with operators22 on the 14 February 2019 to discuss the issue, during which he issued an ultimatum to the industry to reduce both the volume and aggressiveness of advertising through self-regulation by 31 March 2019, or be faced with tighter legal restrictions. Accordingly, the two trade associations BOS and SPER, who jointly represent the major licenced operators in Sweden, delivered a joint manifesto and marketing guidelines23 to the Minster on 28 March 2019. Despite these efforts from the industry, the Minister was not impressed, and has made clear that he intends to initiate measures to restrict the advertising of gambling24. No indication of the scope of such measures, or the time scale for their implementation has been given as of the date of this article.

Impact of the Act on Sports

Commercial

For sports, the new market has meant both new commercial opportunities and challenges.

One of the biggest fears from sports organisations25, especially at grassroot level, has been the risk of revenue loss since small-scale lotteries and bingo events which are popular fundraisers in Sweden could be negatively affected by the increased online competition. On the other hand, an obvious opportunity is the increased potential for sports sponsorship. The Act made it possible for Swedish Elite Football to sign an agreement with Kindred Group (via the Unibet brand) to become the main sponsor of Allsvenskan and Superettan (the top two divisions in Swedish football). The agreement is a six-year long cooperation with start on 1 January 2020 and is initially worth SEK 900 million ($97 million). The agreement also has an option for another six years, which, if triggered, would provide a total contract value of SEK 1.8 billion ($194 million)26.

Sponsorship by gambling operators is not new, of course. Despite not being licensed in Sweden, operators have long-targeted Swedish sports stars and events to increase their brand awareness in the market. For example, football star Zlatan Ibrahimovic is a shareholder in Bethard27 and has also been the company’s brand ambassador since 2018 and several other Swedish athletes also have gambling companies as main sponsors.

Interesting to note is that certain athletes and organisations have, on principle, opted to not accept sponsoring or advertising money from the gambling industry, including skiing star Charlotte Kalla28, state broadcaster Sveriges Television29 and the major football magazine Offside30 who all have announced that they will not accept sponsoring or advertising money from the gambling industry. It is not yet clear whether such stances are part of any wider trend to resist the ubiquity of gambling-related sponsorships, but the outcome of the above-mentioned measures being taken by the Minister of Public Administration with respect to advertising may give some indication of the direction of travel in this regard. The view of the authors, however, is that the relatively small size of the Swedish sponsorship market makes it unlikely that sports properties, particularly at the lower level, will turn-down betting sponsors to any significant extent.

Aside from the overall impact on the sponsorship market of the new regulations, we may also see a shift within the market in terms of the size and types of deals being concluded. The Unibet football sponsorship described above indicates a move by the operators to target the highest profile properties, which may previously have been reluctant to engage with “grey” operators. This in turn may mean less income for smaller teams and properties, which were generally more willing to engage with operators without a Swedish licence prior to re-regulation. It may be that this situation balances out in time, particularly if a combination of public fatigue and government action causes higher-profile properties to be less open to betting sponsorships, but, again, the size of the Swedish market makes this less likely.

Sports Integrity

Match-fixing allegations rocked Swedish football in May 2017 when a high-profile match between AIK and IFK was postponed after claims that AIK’s goalkeeper had been offered financial incentives to “under-perform31 . The key-accused in the AIK-IFK case, a former English Premier League player was, however, ultimately found not-guilty by the Stockholm District Court in December 201832. Previously, Sweden had somewhat naïve approach to match-fixing, but awareness is now growing. Between 2012 and 2017, 54 cases of suspected match fixing were reported and 48 of those related to football. So far, only four cases have led to a criminal conviction33. With match-fixing itself having become a criminal offence since 1 January 2019, the hope is that it will become easier to achieve convictions.

This background gives some context, therefore, to the Swedish Football Federation’s decision to appeal all issued betting licences under the Act34. The reason given for the appeal was that the federation did not believe that the new market did enough to prevent match fixing and that the Gambling Authority should have limited the possibility to offer in-play betting and betting on lower leagues. The federation was unsuccessful since the appeal courts did not regard them to have sufficient interest in the licence decisions to have a right to appeal them35. While parallels could be drawn between the Federation’s stance and that taken by the English FA in 2017 when it ended its agreement with Ladbrokes and announced that it would no longer have a betting partner36, it should be noted that the Swedish Federation retains state-owned Svenska Spel as its main sponsor37.

Sports organisations and betting operators have now started to come together and they do have an obvious common interest in preventing match fixing. The Gambling Authority has initiated a council on match fixing where representatives from the public prosecutor’s office, police, government, the Swedish sports federation, other specialized sports federations and the trade associations representing the gambling and betting industry take part. The Gambling Authority is also working on regulations on match fixing38.

In parallel, the Swedish Sports Confederation has taken an initiative to continue the dialogue directly with betting operators through a more informal network. The goal being to examine the possibility of information-exchange in cases of reporting or investigating suspected match-fixing.

Conclusion

It is too early to assess the full impact of the Act on the gambling industry in Sweden, and any knock-on effect on sports and sponsorships. What is clear, is that the re-regulated market gives both the gambling operators and sports a better starting point for a wider cooperation. Early indications are of increased high-level cooperation in mutual-interest areas such as match-fixing and prime sponsorships but the proposed government curbs on advertising have the potential to impact the sponsorship market depending on their scope and implementation.

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About the Author

Jamie McDonald

Jamie McDonald

Founder, MCD Sports & Legal

Jamie McDonald is an experienced sports lawyer and business advisor, with particular expertise in the golf industry. He is the founder of MCD Sports + Legal (www.sportsandlegal.com) and also serves as a legal and business advisor to Toptracer, the providers of the revolutionary golf-ball tracking technology seen on TV and now in golf driving ranges. His work focuses on sports sponsorship, event staging, sports technology and media rights and production but he also serves non-sports clients, principally within the tech industry.

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Maria McDonald

Maria McDonald

Partner, Nordic Gambling

Maria McDonald is a partner at Nordic Gambling, a legal firm in the Nordics dedicated to gambling related law. Maria is a Swedish lawyer, specialized in legal matters related to gambling, media and sponsorships but she also has extensive experience of working with dispute resolution, IT and data protection. Maria was previously in-house counsel and Head of Legal for Unibet and Lagardère Sports and has also acted as Chairman of the Danish Online Gambling Association (DOGA) and treasurer of the Swedish Branschföreningen för Onlinespel (BOS)

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