SGA told to reconsider turnover-based fine formula in “remarkable” ruling
The country’s current gambling regulation states that penalties must amount to a minimum of SEK5,000 and a maximum of 10% of the operator’s turnover in the previous year.
However, under advice from the accounting board, the SAC assessed that turnover would not be appropriate for determining the penalty fee in this case as it includes player winnings.
While not expressly stated by the SAC, its verdict suggests that gross gaming revenue (GGR) would be a more appropriate metric for the SGA to use when calculating fines.
Swedish trade association BOS has always argued that penalties should be based on GGR and not turnover, as an operator’s GGR is often less than 10% of its gross turnover.
It welcomed the decision of the SAC and described the ruling as “remarkable”.
“This decision is very welcome, albeit belated,” said BOS secretary general Gustaf Hoffstedt.
“That penalty fees should be based on GGR and not gross turnover should have been obvious from the start, since it is only GGR that the gambling company has at its disposal and can therefore use to pay any penalty fees.
“The rest of the money belongs to the gamblers and not the gambling company,” he added.The SGA must now re-examine the penalty fee in the case of Genesis Global and crucially, must also consider the significance of the ruling in relation to other cases involving financial penalties.
BOS suggested the SAC verdict could have a prejudicial effect on future penalty rulings and could even impact all previous penalty fees since Sweden re-regulated gambling in 2019.
“We appeal to the SGA not to increase the penalty fee based on GGR tenfold, just to get to the same level as the previous fee based on gross turnover” said Hoffstedt.
“The Swedish penalty fees have been grotesquely high and now the SAC is giving Sweden a second chance to settle on a more reasonable level for penalty fees,” he added.
The ruling is likely to grab the attention of the wider online gambling industry in Sweden and stakeholders will be eager to see what action the SGA takes in the case of Genesis Global.
Genesis Global was originally fined SEK4m in March 2019, three months after the country’s regulated market went live. The SGA was unable to use the turnover formula in the first instance because the market had not yet been live for a year.
The penalty was for failing to integrate Sweden’s self-exclusion register with its white-label brands.
That fine was later reduced to SEK1m on appeal, and the case has escalated since. This is likely to be the final ruling in the case.
Commenting on the SGA’s LinkedIn post, Hero Gaming founder George Westin said: “So you took a case to the Supreme Administrative Court because you thought turnover is the players’ contributions, even though it was reported as net income in all gambling companies’ reports for the past 20 years?
“A crazy waste and no wonder you got a real slap on the wrist,” he added.