Online gambling traffic to unlicensed websites from Sweden has grown more than tenfold since 2019, according to a new report from AB Trav och Galopp (ATG).
The report describes a “dramatic increase” in traffic to unlicensed operators since the launch of Sweden’s regulated online gambling market in 2019.
Channelisation decreasing
Since 2019, the rate of channelisation in the regulated market has been decreasing, according to ATG.
The Swedish Gambling Authority (SGA) has a stated channelisation target of 90%, while the actual rate in Q3 2023 was calculated by ATG to be between 70% and 82%.
Those figures are based on certain estimates relating to the value of black market traffic.
The lower end of the estimated channelisation rate is based on an assumption that the average spend per visit is 20x higher with unlicensed operators than with licensed ones, while the higher end is based on a multiple of 10x.
Those estimates, combined with the number of visitors accessing unlicensed operators from Sweden, led ATG to conclude that Sweden’s unlicensed online gambling market is worth between SEK3.4bn and SEK6.7bn annually.
Average channelisation rates were calculated across verticals. In sports betting, channelisation was estimated to be higher, at between 78% and 88%, while in online casino it was thought to be much lower, between 59% and 74%.
Visitor numbers growing
This chart from the report shows the number of visitors to unlicensed casinos growing rapidly since the launch of Sweden’s regulated market.
Crucially, ATG said, during the temporary period of stricter rules introduced as a result of the Covid-19 pandemic (July 2020 to November 2021), traffic to unlicensed operators tripled.
The report therefore suggests that stricter measures introduced to protect Swedish citizens from gambling harms could have led to a significant drop in channelisation rates.
Among the most highly-visited websites in Q3 were several owned and operated by Malta-based Infiniza Limited.
According to industry sources earlier this year, Infiniza was the only online casino operator linked with new payment provider Finshark, which was thought to be enabling money transfers between Swedish customers and unlicensed gambling operators.
That revelation caused some controversy, as it followed on from a previous directive from the SGA ordering payment provider Zimpler to discontinue offering a similar service.
Of the top 20 most-visited unlicensed operators in ATG’s report, six were operated by Infiniza, including unlimitcasino.com, refuelcasino.com, goldroll.com and spinero.com.
Another operator, North Point Management Ltd, accounted for a further five of the top 20 most visited unlicensed brands from Sweden.
Other operators on the list included Red Rhino Ltd (platincasino.com), Brivio Ltd (gg.bet), BP Group Ltd (justspin.com), Hitz Gaming OU (winnerz.com), Oring Ltd (twin.com), Mozzart LLC (mozzartbet.com) and TechSolutions Group NV (22bet.com).
Together, the top five operators listed account for more than half of the measured traffic in the report. Their levels of traffic can be seen increasing sharply since each entered the market.
ATG conclusions
“The results of our quarterly surveys are alarming and indicate that a significant percentage of problem gamblers in Sweden are linked to unlicensed gambling sites,” said ATG CEO Hasse Lord Skarplöth (pictured).
“Our investigation shows the weakness of the current regulatory framework and how difficult it is to keep the unlicensed companies away.
“As long as it pays for gambling companies to act without permission in the Swedish gambling market, we do not have consumer protection to be proud of.”
Skarplöth concluded: “ATG will do what we can to help ensure that the fight against the unlicensed gambling companies continues day by day, month by month.”
Sweden’s Administrative Court has annulled a decision taken by the Swedish Gambling Authority (SGA) last year to issue ATG with an official warning and a SEK6m penalty fee.
The decision was made in November following “serious shortcomings” in ATG’s AML measures, after the SGA identified eight cases in which the operator had failed to sufficiently identify its customers and their source of funds.
Alongside ATG’s SEK6m penalty fee, Kindred Group subsidiary Spooniker was hit with a SEK10.9m fee and another operator, PinBet, was issued a penalty of SEK2m for similar failings.
New ruling
Now, the decision against ATG has been overturned by Sweden’s Administrative Court.
The operator lodged an appeal with the court after the penalty was issued. The court then said it had made a partially different assessment of the case from the SGA’s original ruling.
In its original decision, the SGA determined that the failings at ATG were both “serious and systematic,” thus resulting in the SEK6m penalty.
The Administrative Court ruled, however, that while some of ATG’s failings did constitute violations of the Money Laundering Act, they were not shown to be “systematic or repeated”.
Given ATG’s customer awareness work in general, it said, the shortcomings “did not entail a clearly increased risk of the business being used for, for example, money laundering”.
“The violations are not, either individually or collectively, so serious as to warrant a warning and a penalty fee,” the court concluded and thus annulled the SGA’s original decision.
That judgement can now be appealed by the regulator to the Court of Appeal in Jönköping.
ATG commentary
In a statement published by the operator, ATG referred to the ruling as “a very important victory for us”.
“Today’s decision also raises a number of larger questions,” said ATG CEO Hasse Lord Skarplöth.
“The SGA has requested to raise the limit for penalty fees to over SEK10m in future cases. My opinion is that that request should be strongly questioned after today’s decision from the Administrative Court.
“The same applies to the SGA’s strategy, which differs from the rest of the world of authorities – one should spend more time supporting than punishing the actors within the licensing system, and put resources into defending the Swedish licensed market and chasing the unlicensed gambling companies.”
Skarplöth’s comments reflect sentiments expressed in other areas of the Swedish market. Trade association BOS recently released a statement echoing his view on the SGA’s focus as a regulator.
BOS general secretary Gustaf Hoffstedt suggested that in order to encourage channelisation of customers into Sweden’s regulated market, “a shift in mentality on the part of the state is required, from hunting, fining and limiting the range of games for licensed gambling companies to hunting the unlicensed ones instead”.
A recent survey on the Swedish iGaming market found that 12% of the country’s population has played at an online casino in the past 12 months.
The study was carried out by Raketech’s affiliate site Casinofeber in collaboration with Reflect Företagsutveckling AB, an independent research institute led by Martin Johansson, who is a former head of analysis at Svenska Spel.
The survey was conducted on a sample size of 4,382 participants. Of those surveyed, roughly 500 individuals identified as online casino players, with an additional 500 stating they had either played previously or were open to the idea of doing so in the future.
The survey discovered that 44% of Swedish online casino players engage in gaming on a monthly basis, and that men constitute 69% of all casino players.
Shared characteristics
According to the survey, the typical online casino player in Sweden has some shared characteristics.
The average female casino player is 43 years old, and most are married or in a relationship (64%).
They have attended college for less than three years (63%), work full-time (52%), and have a monthly income between €2,700 and €3,600 (29%).
Similarly, the average male casino player is 42 years old, married or in a relationship (60%), and has attended college for less than three years (66%).
The majority work full-time (64%), and a large proportion has a monthly income between €2,700 and €3,600 (32%).
Playing frequency
The survey results indicate that 21% of online casino players in Sweden participate in gaming at least once per week, while 34% only play a couple of times per year.
Interestingly, the study found that older players engage in gaming more often than younger players do. Of those over the age of 50, 9% play every day or almost every day, and 23% play once per week. In contrast, only 10% of young people play once per week, and a mere 3% play every day.
Favourite site
In the survey, online casino players were asked which sites they had played on in the last 12 months, and the results show that Svenska Spel dominates the market with a massive 40% of the vote, likely due to its large customer base.
Following in second place is LeoVegas with 23%, and ATG’s online casino with 16%. Unibet and Bet365 received 13% each.
Additionally, the survey asked participants about their casino preferences and found that the majority of players selected a particular casino based on the ease and seamlessness of the platform.
Playing incentive
The survey found that the desire to win money is the most common reason players choose to engage in online casino gaming, followed closely by the excitement factor.
In addition, the social aspect was also a significant factor, with many players indicating that they enjoy betting with friends and colleagues.
Slots are the clear favourite game type among Swedish casino players, receiving 52% of the total vote when respondents were asked what type of game they preferred to play.
When grouping card games with blackjack and poker, the card-related category received 36% of the vote.
The survey results indicate that a majority of online casino players (78%) are aware of self-exclusion scheme Spelpaus, with women more likely to have heard of it than men.
Additionally, 13% of players have used Spelpaus to suspend their gaming activities.
Ex-players and potential players
Of the survey participants, 5% said they do not play at online casinos, but expressed interest in trying online casino gaming, with 58% of potential players being men.
According to the survey, 48% of potential players show the most interest in playing blackjack, while 47% are inclined towards playing slots.
The study also identified a group of ex-players – those who used to play at online casinos but have not done so for 12 months and express no desire to play again. This group accounts for 7% of the Swedish population, with 61% being men.
Of these ex-players, 23% now participate in other real-money online games. The most common reason given for stopping playing is a loss of interest.
The full survey is available here.
Players in Sweden contacted by Kindred Group over suspected problem gambling behaviour were found to have reduced their gambling by 75.5% on average.
Where the data comes from
In autumn 2022, Kindred Group, Svenska Spel and horse betting operator ATG all agreed to publish key metrics on their work in responsible gambling every six months to the Swedish Gambling Authority (SGA).
“Our decision together with ATG and Svenska Spel to openly publish important customer behaviour data, in addition to our journey towards zero ambition, will make it easier for our stakeholders to follow and understand how we, with the help of regulation, technology, research and human interaction, work to prevent harmful gambling,” explained Kindred Group CEO Henrik Tjärnström.
“We believe that a more fact-based and open dialogue contributes to a more sustainable industry and we hope other operators will follow.”
As a result, the three operators agreed to publish key data points every six months allowing others in the industry to track the progress of responsible gambling measures and the impact upon the market.
The first datasets have been made available today (25 January).
Key figures from Kindred
Data shows that during the period from 1 July to 31 December 2022, Kindred reached out to 0.5% of its active customers due to suspected or detected problem gambling behaviour.
Of those contacted, 76.8% reduced their gambling activity as a result, revealed the operator. Among those who reduced their gambling, deposits were lower by an average of 75.5%, according to the data.
Further, 1.4% of those who were contacted chose to self-exclude from Kindred’s platform for a period of less than six months, while 0.5% chose to self-exclude for a period of six months or longer.
Svenska Spel data
Data from Svenska Spel shows a higher percentage of customers being contacted as a result of risky gambling behaviour than Kindred.
Of the state-owned operator’s sports betting and casino customers, 4.2% were contacted as a result of risky gambling behaviour, compared to 0.5%.
Of those contacted, 75% went on to reduce their gambling, according to the data. Those who did reduced their deposits by an average of 49%.
A lower percentage of customers using Svenska Spel’s Tur lottery products were also contacted, at 0.3%, with 76% of those customers reducing their gambling, while reducing deposits by an average of 53%.
Together, the figures showed that overall, 1.5% of Svenska Spel’s total customer base was contacted due to risky gambling behaviour, with 75.1% reducing their gambling by an average of 49.8%.
Overall, 9.5% of those contacted chose to self-exclude for a period of less than six months, with 3.4% self-excluding for six months or longer.
ATG data
Data from ATG displayed the operator had contacted 1.4% of its customers due to risky gambling behaviour.
Of those contacted, 52.4% reduced their gambling, while those who did reduced deposits by an average of 64.9%. Exactly 1.5% decided to self-exclude for a period of less than six months, while a further 2.2% self-excluded for six months or longer.
“Responsible gambling is ATG’s most important sustainability issue. We want our customers to feel good about their gaming and play for fun,” said ATG CEO Hasse Lord Skarplöth.
“The new key figures give an insight into part of all the work that is done within responsible gambling at ATG.”
The Swedish Gambling Authority (SGA) has imposed financial penalties on Kindred, ATG and PinBet for serious shortcomings in their anti-money laundering measures.
Kindred subsidiary Spooniker received a warning and a sanction fee of SEK10.9m (€926,394), while horseracing and betting operator ATG was ordered to pay SEK6m (€550,879) and PinBet was issued a penalty of SEK2m (€183,626).
In all three cases, the SGA analysed the operators’ AML/CFT processes and reviewed the transaction history of randomly selected, high-depositing customers.
The investigation into Kindred covered the period between January 2019 and February 2022.
When reviewing the customer history, the SGA found that in 10 cases, the operator had either failed in meeting enhanced due diligence requirements, had not taken sufficient measures to assess the AML and CFT risk, or had not acted quickly enough to close the players’ accounts.
In response to the penalty, Kindred highlighted that since 2021, it had implemented several improvements to further strengthen its AML processes.
The operator said it had expanded its AML team to manage increased requirements related to appropriately identifying and managing customer risk, while also improving its AML procedures.
As a result, the number of risk-assessed customers and suspicious transaction reports sent to the financial police had increased.
Kindred stressed it fully shared the SGA’s ambition to prevent money laundering and terrorist financing.
However, the operator said it would welcome “increased clarity from the SGA” and guidance on objective and effective AML risk parameters that should be considered when assessing a customer’s risk profile.
Kindred is considering a potential appeal of the warning and sanction fee.
In a separate investigation, the SGA analysed ATG, or AB Trav och Galopp, between 1 January and 31 March 2020 and between 1 January and 31 March 2021.
The authority reviewed 13 customers, and found in eight cases where ATG had failed to sufficiently ascertain the identity of its customers and their source of funds.
ATG said it did not share the SGA’s opinion fully. The company said that that even if there were some shortcomings, which were the “result of the human factor,” it believed it still had sufficient measures in place to manage AML and CFT risks.
Nonetheless, ATG stressed that in 2022, it had introduced various systems to better control its customers of different risk categories.
The company also adopted a system that automatically sends KYC questionnaires to its medium-risk customers and carries out further investigations based on the customers’ answers.
The SGA’s investigation into PinBet, meanwhile, covered the period between June 2020 and January 2022.
The SGA reviewed the transaction history of 12 customers and identified shortcomings in 10 cases.
PinBet said it believed the SGA was correct, but emphasised it had taken several measures to improve its work in countering the financing of money laundering and terrorism, including improving its systems, policies and procedures, as well as training its staff.
In addition, PinBet said it had restructured its legal, regulatory and compliance functions and departments to further strengthen its regulatory framework internally.
ATG, Svenska Spel and Kindred Group have joined forces and pledged to publish data about dangerous gambling behaviour among their customers.
The trio said the aim is to increase public awareness and contribute to a fact-based dialogue about what is being done to reduce gambling harm.
Four data points will be published bi-annually. The three gambling operators pledged to individually report the percentage of customers who were contacted following the detection of harmful gambling behaviours, as well as the share of customers who reduced their gambling as a result of the contact.
In addition, they will communicate how much these players reduced their gambling on average, while also stating the share of contacted customers who choose to self-exclude themselves following contact from the operators.
Kindred CEO Henrik Tjärnström commented: “These key metrics, which we will report every six months, will make it easier for our stakeholders to follow and understand how we, with the help of regulations, technology, research and human contact, work to counteract harmful gambling.
“We believe that a more fact-based and open dialogue contributes to increased trust in our industry and makes other operators more inclined to follow suit.”
Kindred CEO Henrik Tjärnström: “We believe that a more fact-based and open dialogue contributes to increased trust in our industry and makes other operators more inclined to follow suit.”
According to a 2021 survey by the Swedish Public Health Agency, Swelogs, 56% of the country’s population said they had gambled for money in the past year.
The operators stressed that even though gambling is a widespread and popular source of entertainment, repeated surveys have shown that public trust in the gambling industry is low and has been now for several years.
Kindred began to publish its share of overall revenue derived from harmful gambling behaviour back in February 2021 in an attempt to provide more transparency.
However, the operator recently admitted that reaching its target of zero revenue from harmful gambling by the end of 2023 “is challenging”.
“While we remain firmly committed to our ambition of zero revenue from harmful gambling, this recent initiative between ATG, Svenska Spel and us creates further transparency in the Swedish market.
“I am convinced it will encourage the gambling industry, and those associated with the industry, to work harder towards a more sustainable form of entertainment,” Tjärnström added.
The operators highlighted that through new research in the field of gambling addiction, gambling operators today knew more about the psychological driving forces behind problematic gambling and which interventions could effectively prevent and address harmful behaviours.
ATG, Svenska Spel Sport & Casino and Kindred account for more than half of the regulated gambling market in Sweden.
The Swedish Gambling Authority (SGA) has imposed a SEK2m (€188,000) penalty on domestic sports betting and casino operator ATG for a self-exclusion breach.
The operator’s self-exclusion function for Swedish customers logged in via a mobile bank ID was unavailable between 13 January 2022 and 28 January 2022.
This breach was triggered by a technical malfunction following an update the operator’s log-in system.
The fault was discovered by ATG on 27 January and was fixed one day later. The operator estimated that around 100 users were affected by the technical glitch.
Swedish gambling law states that a licensee must give registered players the opportunity to suspend themselves from games for a certain period of time or until further notice.
It also stresses that the function for self-exclusion must be clearly visible and accessible from all pages on the operator’s website, or where there is information about the gambling account or information about gambling responsibility.
SGA: “The Swedish Gambling Authority does not consider it excusable that a technical error causes a deficiency of this nature without ATG immediately discovering the error.”
As a result, the SGA imposed a notice and a penalty fee of SEK2m. The fee was decided based on ATG’s gross revenue for 2021, which amounted to SEK25bn.
“According to ATG, the cause of the shortfall was a technical error that occurred in connection with an update of the login system,” said the regulator.
“The Swedish Gambling Authority does not consider it excusable that a technical error causes a deficiency of this nature without ATG immediately discovering the error.
“The bug was only discovered 14 days later, and a larger amount (estimated at 100) players may thus have been affected by the error.
“Even when ATG corrected the error immediately after they discovered the error, the time period is not insignificant in the context.
“The offence is not to be judged as trivial or excusable,” the SGA added.
Sweden’s national self-exclusion register is provided by the Spelpaus.se scheme.
ATG, or AB Trav och Galopp, holds a licence for commercial online gambling and betting in Sweden’s regulated market via the atg.se and atg.tillsammans.se domains.
Scout Gaming continued to make a loss in Q3 2021 despite a reduction in costs as annual revenue also decreased during the reporting period.
While the Nasdaq First North-listed firm’s losses did narrow to SEK9.2m compared to the SEK13.3m deficit in the same period of last year, total revenue during Q3 fell by 18.7% to SEK12.2m, compared to the SEK15.0m recorded in Q3 2020.
Scout said the periods were not directly comparable, as a sporting schedule heavily impacted by the Covid-19 pandemic saw an unusually high volume of sporting events rearranged to take place during Q3 last year.
The business paid total operating expenses of SEK21.4m during Q3, a 24% drop-off year-on-year, consisting of SEK11.7m in personnel expenses, SEK6.8m in other external expenses and SEK2.9m in depreciation, amortisation, and impairment of property, plant and equipment.
Looking to the future, the DFS and betting solutions provider has taken an active decision to increase its marketing-related expenses to accelerate the growth of its fantasy sports product outside of the US, which contributed to the quarterly SEK9.2m loss.
After further costs of SEK2.7m on financial items, Scout declared a profit before tax of SEK11.95m, which after a tax benefit of SEK20,000, left the supplier with a loss for the period of SEK11.93m, compared to a SEK13.4m loss in the same period last year.
For the year-to-date, these figures gave Scout total revenue of SEK39.5m, an increase of 31.9% on the first nine months of 2020.
The company’s overall loss for the year-to-date stands at SEK38.1m, down slightly from a SEK40.7m loss in the same period last year.
As of 30 September, the business held SEK66.8m in cash and cash equivalents, and total assets of SEK92.8m. Including the impact of a directed share issue worth SEK54m, net cash flow for the quarter was SEK39.4m.
One of the company’s highlights during the quarter was the launch of a social gaming version of its fantasy sports platform. Scout has signed three agreements in the US market to provide the product to clients.
It has also launched with new clients in Europe, including the provision of real-money fantasy sports games to Norway’s national lottery operator, Norsk Tipping, and fantasy esports to video gaming lifestyle brand, Razer.
Scout said it will also launch its products with Sweden’s ATG before the end of 2021.
After the quarter end, Scout agreed a further partnership with the Kaizen Gaming-owned sportsbook brand Betano in the Brazilian market for the provision of fantasy sports and fantasy player odds products. This deal was designed to grow its presence in South America, in addition to expanding its footprint in the US.
“During the quarter, we have worked intensively to launch our tier-one clients,” said Scout Gaming CEO Andreas Ternström.
“One of the challenges we have experienced is the time between signing agreement and the launch of our customers, which we are working actively to minimise. Larger customers follow stricter processes and project plans and can therefore sometimes take a longer time to launch.
“One of the measures we take to speed up the process is to execute implementations through third parties, which I hope to return to in more detail in the near future,” Ternström concluded.