Swedish trade association BOS has criticised a government proposal to ban the use of credit cards for online gambling.

The industry body argues that such legislation would “hand yet another competitive advantage” to the unregulated gambling market.

BOS pointed to the issue of channelisation and estimated that unlicensed operators currently occupy a 41% market share for the online casino vertical in Sweden.

“The risk is great that unlicensed gambling will overtake and gain a larger total market share than licensed gambling in 2024,” said BOS secretary general Gustaf Hoffstedt.

“The government needs to change focus and show that it is on the same side as the licensed gambling companies and the safeguarding of consumers,” he added.

BOS has further accused the Swedish government of ignoring the conclusions of its own investigation into the prospect of a credit card gambling ban.

The government’s Over-indebtedness Inquiry – conducted last year – concluded there were “insufficient reasons” to prohibit gambling with credit cards.

The resistance was based on potential technical difficulties with banking providers, which caused doubts over the likelihood of being able to practically implement the ban.

“It is sad that the government does not listen to its own expertise and instead proposes a ban on credit cards when gambling, contrary to what the government investigation has concluded,” said Hoffstedt.

“Interestingly, the government does not propose a corresponding credit card ban for the purchase of alcoholic beverages, which in Sweden is only offered by a retail monopoly owned and operated by the government itself,” he added.

The ban is proposed to enter into force on 1 April 2025.

Online gambling with credit cards is banned in many online gambling markets, including the UK, Ireland, Australia and Norway. The UK veto extends to digital wallets.

The Swedish online gambling trade association BOS has received significant backing in its opposition to the government’s proposed tax hike.

Last week, BOS strongly opposed the government’s plan to raise taxes from 18% to 22% of GGR for licensed gambling companies.

BOS’ argument centred on the government’s oversight of market factors, predicting that hiking the tax rate for licensed operators would reduce Sweden’s channelisation rate.

This stance gained support from major players like Kindred, Betsson, LeoVegas, and 888, which all expressed similar concerns.

Even beyond the gambling industry, groups like the Swedish Media Publishers’ Association and the Swedish Professional Football Association criticised the proposed tax increase.

The full list can be accessed here.

The primary focus of these objections revolved around the potential negative impacts on the channelisation rate and the resulting growth of the black market.

Industry heavyweights echo concerns

However, Kindred for instance also highlighted broader effects on consumer protection, media, and sports funding due to the proposal’s oversight.

The operator also highlighted that by increasing the channelisation rate to the widely accepted goal of 90% from the current 77%, the state’s tax revenue could rise by about SEK519m, matching the proposed increase.

Meanwhile, 888 stressed the pivotal role of regulation and taxation in determining a market’s success.

“Both of these elements may easily distort competition and consequently this would result in having less operators investing in markets that have strict regulatory limitations and higher tax rates,” the operator said.

888 added that higher tax rates often limit operators, catering to a narrow consumer base, while lower tax rates “give operators the flexibility to grow their player base, and consequently create broader benefits to the industry and its consumers.”

No measures to combat the black market

LeoVegas stressed that neither the government nor the Swedish Gaming Authority has introduced any measures or proposals to counter a downward trend in channelisation figures and combat the black market.

The operator warned that increasing the excise tax rate would further disadvantage licensed Swedish gambling companies.

Moreover, LeoVegas noted that the licensed gambling industry in Sweden has “not yet stabilised after five years of functioning under a regulated regime.”

“With this in mind, a tax increase starting as of next year, will most likely have serious negative repercussions on an already vulnerable market,” the operator said.

Betsson, in its objection, disputed comparisons to Denmark, referencing the correlation between tax increases and declining channelisation rates, as confirmed by Danish tax minister Jeppe Bruus.

Betsson proposed prioritising resources for Spelinspektionen to reduce unlicensed gambling before reconsidering a tax increase.

“When these measures yield results, a new dialogue/investigation on the degree of channelisation can be resumed and reviewed whether there would be room for a tax increase and what such a tax increase would lead to,” Betsson said.

Strains on sports and media partnerships

The Swedish Professional Football Leagues Association expressed concerns about the potential negative impacts of a higher gambling tax on Swedish sports.

The organisation anticipated difficulties in establishing partnerships with gambling companies, leading to a significant decrease in income from sponsorships, directly affecting clubs’ financial stability.

“Football cannot live solely on the commitment and voluntary efforts of players, managers and supporters – money is also needed,” the association said.

Similarly, the Swedish Media Publishers’ Association cautioned that the increased costs resulting from the tax hike might prompt licensed gambling companies to cut back on their marketing within traditional media channels.

This reduction, the organisation explained, might significantly lower advertising revenue from gambling ads, thereby hampering media companies’ capacity to maintain high-quality journalism.

The Swedish Gambling Authority (SGA) has invited trade associations BOS and SPER to discuss how the organisations can work together to “effectively reduce the attractiveness of illegal gambling”.

The associations were invited to discuss the matter with the SGA yesterday (12 December), with a view to collaborating on ways to strengthen Sweden’s licensed market.

The SGA provided the trade bodies with an overview of its effort and initiatives to combat the unlicensed market and invited them to offer their advice to improve and streamline its efforts.

Unlicensed gambling on the rise in Sweden

According to a survey carried out by BOS earlier this year, the Swedish online gambling market is currently facing a “critically low” channelisation rate of just 77%.

The SGA has previously expressed its goal to reach a channelisation rate of more than 90%.

The survey, however, showed a much lower rate than that, with channelisation in the online casino vertical dropping as low as 72%.

At the time, BOS general secretary Gustaf Hoffstedt said: “It is possible to reverse the trend, and from the industry’s side we are prepared to join hands with the state to achieve the goal of improved channelisation in Sweden.”

Prior to the release of those figures, a 2021 report published by Sweden’s State Treasury showed that 85% of gambling in the country during 2020 took place with licensed operators, marking a decline from 2019’s reported rate of 90%.

Collaboration commentary

“The SGA has a number of new tools at its disposal to shut down illegal gambling in Sweden,” said the regulator’s director general, Camilla Rosenberg. 

“Despite this, there are further opportunities for efficiency in the work and we welcome, as always, the industry’s input in an ongoing dialogue on a very important issue. Everything to ensure a healthy and safe Swedish gaming market with high consumer protection.”

SPER CEO Maria Wennerberg Sedigh added: “SPER appreciates discussions between the industry and the Swedish Gambling Authority on the important issue of gambling on unlicensed companies. 

“Cooperation between the relevant authorities and the industry is necessary for the licensing system to function satisfactorily.” 

Meanwhile, BOS secretary general Hoffstedt said: “The gambling industry and the SGA have a common interest in discouraging unlicensed gambling from Sweden. 

“If we are to succeed in this, we cannot each sit in our own chamber, but then we must gather our forces.”

Swedish online gambling trade association BOS has warned against a government proposal to increase the tax rate on licensed gambling companies from 18% of GGR to 22%.

In September, Sweden’s government proposed an increase in the gambling tax rate as part of its 2024 budget proposition, suggesting that the higher rate would still be compatible with its long-term aims for the country’s gambling market.

Those aims include a high channelisation rate in the legal market of over 90%, as well as a high level of consumer protection and strong tax revenue generation.

The government suggested the tax hike could bring in as much as SEK540m annually in additional tax revenue, and therefore proposed introducing the new rate from July 2024.

Unrealistic expectations

In response, BOS suggested the government had failed to properly consider the ramifications of the increased tax rate.

The government’s expectation for the increased rate to generate more than SEK500m annually in additional tax revenue did not account for several key factors, the association said.

First, it suggested there would be an increased cost to the government as a result of higher rates of problem gambling, caused by a greater number of customers opting to use unregulated operators instead of staying within the regulated market.

There is also “a complete lack of calculations on the extent of lost tax revenue due to the fact that the tax increase results in reduced channelisation, as well as in general reduced gambling on the licensed market because the price of gambling products is raised,” it said.

Further, the increased tax revenue “has to come from somewhere,” and BOS suggested the money would be taken away from advertising revenue in traditional media and sports sponsorships.

Channelisation the key aim

According to BOS, the government’s primary concern regarding the gambling market should be to achieve a high channelisation rate in line with its previously stated target of over 90%.

Since first introducing that target, BOS suggested, the government has distanced itself from the goal and softened the language used around it, opting instead to refer to the figure as an “expectation, assessment or forecast”.

BOS “strongly recommends” that the government reconsider the 90% target as a concrete objective, as any attempt to distance itself from the goal “harms the government and the legitimacy of the licensing system, and what is worse harms Sweden’s gambling consumers.”

The association suggested that a high rate of channelisation should be the government’s key objective with regards to the gambling market, as it will allow it to reach all of its other goals in the sector.

Those goals include strong consumer protection, the minimisation of harmful gambling, keeping crime out of gambling, generating strong tax revenue, creating strong market conditions and maintaining a high level of legitimacy for Sweden’s licensing system.

An increase in the tax rate would undermine all of those goals at once, BOS argued.

Head in the sand

In its proposal to increase the tax rate, the Swedish government suggested that the original 18% tax rate introduced in the licensed market had been introduced at a lower level “for precautionary reasons”.

Since then, the government suggested, “the gambling market has stabilised and channelisation has increased significantly. In addition, measures have been taken to exclude unlicensed gambling from the Swedish market.”

BOS said this description of the current situation in Sweden’s gambling market was one in which “the government is quite alone.”

Indeed, BOS added, the claim is based only on data gathered up until 2021, and “it is unfortunate that the state has not produced more recent data than this” and that it “has not taken on board new data presented by actors other than the state.”

A report recently produced by BOS, for example, showed that far from its stated target of 90%, the channelisation rate in Sweden was in fact around 77% up until March 2023.

“It is a channelisation rate that testifies that the Swedish licensed market is in a very serious situation,” BOS added.

That report also showed that in the online casino vertical specifically, the figures were even more stark, with a channelisation rate of just 72%.

“That in such a situation there is no room for measures that further damage channelisation – which a tax increase on gambling does – should be obvious,” BOS added.

BOS recommendation

In its own recommendation to the government, BOS pointed to a previous report from consulting firm Copenhagen Economics, which suggested an optimal tax rate for Sweden’s gambling market of 15-20%.

Any tax rate above 20% would lead to decreased channelisation and a resultant decrease in overall tax revenue, it suggested.

“There is no reason to believe that the state can now, compared to the years before the Swedish re-regulation of the gambling market, be able to deviate from the presented tax range without damaging the licensed market. 

“On the contrary, today’s critically low channelisation bears witness that the tax in this sensitive situation should under no circumstances be increased. 

“Instead, the government and the Riksdag should urgently devote themselves to reforms that strengthen channelisation,” BOS concluded.

Sweden’s government has proposed an increase in the rate of gaming tax paid by licensed operators from 18% of GGR to 22%.

Proposed tax hike

The proposal was put forward by the Swedish government in its 2024 budget proposition on 20 September.

According to the government proposal, previous research suggested that a tax rate of “just over 20%” could be considered compatible with Sweden’s goal to achieve channelisation of more than 90%.

The current tax rate of 18% of GGR was introduced in 2019 as part of the re-regulation of Sweden’s gambling market.

At that time, according to the government, “a lower tax level was proposed for precautionary reasons.”

Since then, the proposal said, “the gambling market has stabilised and channelisation has increased significantly. In addition, measures have been taken to exclude unlicensed gambling from the Swedish market,” it added.

Therefore, the government suggested, “the reasons for caution when setting the tax level should not be as strong now as during the re-regulation.”

The proposed increase was judged by the government to be a suitable level to strengthen its tax income, “without it leading to too great an impact on the companies and the size of the tax base.”

The new rate is planned to be introduced on 1 July 2024.

The government predicts that the increase would generate additional tax revenue of SEK270m in the second half of 2024, and SEK540m per year thereafter.

BOS response

So far, the proposal has garnered a negative reaction from representatives of Sweden’s licensed gambling market.

In response to the proposed increase, Gustaf Hoffstedt, the secretary general of online gambling association BOS, said it was “deeply disappointing,” adding that “it shows that the government does not understand or has taken to heart what kind of market it is set to govern. 

“Even less has the government understood the vulnerable position that market is in.”

BOS studies recently showed a channelisation rate of 77% in the Swedish market, with specific verticals such as online casino coming in even lower at 72%. 

Hoffstedt pointed out that those numbers also appear to be declining, meaning the rate of channelisation in Sweden is falling.

Even a report published by Sweden’s State Treasury in 2021 showed a channelisation rate of 85%, marking a decline from 2019’s reported rate of 90%.

“We are already far from the state’s goal of at least 90% channelisation, and if this tax increase is approved by the Riksdag, we will soon be down to the channelisation we had before Sweden re-regulated its gambling market in 2019,” Hoffstedt added. 

“Sweden’s government must perform much better than this. There is still time to withdraw the proposal,” he concluded.

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 survey commissioned by Swedish online gambling association BOS suggests the rate of channelisation in Sweden’s regulated gambling market is just 77%.

The survey was undertaken by Swedish market research firm SKOP, using responses from 3,000 selected players who have gambled online at some point during the last quarter.

Separate results were collected for different verticals within online gambling, covering lottery games, online casino, online poker, horse racing betting, sports betting and bingo.

Survey results

The results of the survey showed an overall channelisation rate of 77% across all online gambling verticals.

Of all the verticals included in the survey, online casino showed the lowest rate of channelisation at 72%. Online poker, which was assessed separately, also showed a rate of 72%.

Sports betting showed a channelisation rate of 84%, while horse racing betting specifically saw a rate of 89%.

Online bingo channelisation was assessed at 88%, while the highest channelisation rate was recorded in lotteries and draw games, at 91%.

The results paint a worse picture for the regulated market than those previously released by the Swedish Gambling Authority (SGA).

A 2021 report published by Sweden’s State Treasury showed that 85% of gambling in the country during 2020 took place with licensed operators, marking a decline from 2019’s reported rate of 90%.

BOS commentary

“There is no doubt that the Swedish licensing system is in a serious situation,” said BOS secretary general Gustaf Hoffstedt following the release of the survey results.

“Far too much power has been spent on the part of the state to force the licensed gambling companies to implement measures that have not been well received by gambling consumers. I’m thinking of things like Sweden’s de facto ban on bonuses and the ban on betting in lower football divisions. 

“This has not been appreciated by the gaming community, around a quarter of whose gaming now leaks out of the licensing system into the unlicensed gaming market. In the unlicensed gaming market, both consumer protection and tax payments to the state are non-existent,” Hoffstedt added.

Hoffstedt went on to suggest that a “shift in mentality” is required on the part of the Swedish government if the rate of channelisation in the country is to be improved.

To do so, the state must move its focus from restricting the actions of licensed companies towards tackling those operating in the market without a licence, he said.

“It is possible to reverse the trend, and from the industry’s side we are prepared to join hands with the state to achieve the goal of improved channelisation in Sweden,” Hoffstedt concluded.

Sweden’s Supreme Administrative Court (SAC) has delivered a verdict that could drastically alter the fines imposed on licensed operators.

An historic case involving Genesis Global has now been re-referred to the Swedish Gambling Authority (SGA) after the SAC ruled that penalties should not be based on gross turnover.

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 Swedish penalty fees have been grotesquely high and now the Supreme Administrative Court is giving Sweden a second chance to settle on a more reasonable level.”
BOS secretary general Gustaf Hoffstedt

“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.

The Swedish government has promised the Swedish Gambling Authority (SGA) a cash injection of SEK2.4m (€210k) for 2023 to ensure a safer gambling market and tackle organised crime.

The pledge comes as part of the upcoming spring amendment budget and will enable the SGA to handle a large influx of permit applications and manage critical supervisory tasks.

Angelika Bengtsson, sports policy spokesperson for Sweden’s second largest political party the Sweden Democrats, emphasised that active supervision of the gaming market is vital to combat criminal activity and protect vulnerable groups.

“By excluding unlicensed gambling, we want to counter organised crime and strengthen consumer protection. Unlicensed gambling evades tax revenue, leads to problem gambling, and contributes to match-fixing,” she added.

According to the government, the gaming market’s rapid turnover and expansion has increased the risk of criminal activities such as money laundering and match-fixing, with the greatest risks coming from unlicensed gaming companies.

To tackle these issues, the government has submitted a bill titled ‘Measures to ensure a healthy and safe gambling market’ to the Riksdag.

Financial markets minister Niklas Wykman: “The unlicensed gambling companies can do great damage and must be removed from the Swedish gambling market.”

The bill proposes giving the SGA the ability to more effectively block payments both to and from unlicensed operators that target the country, as well as the possibility of covert supervision.

The Dutch regulator (KSA) recently faced industry criticism after using the tactic of covert supervision to impose fines on unlicensed operators including Videoslots.

Sweden’s financial markets minister Niklas Wykman said: “The unlicensed gambling companies can do great damage and must be removed from the Swedish gambling market.”

He suggested the increased resources would strengthen the SGA’s ability to use its new supervisory tools to shut out unlicensed operators.

The 2023 funding proposal is based on an agreement between the Swedish government and the Sweden Democrats.

Wykman is responsible for the country’s gambling policy.

Last year, The Swedish Trade Association for Online Gambling (BOS) shared three important targets with the minister, including the protection of licensed gambling companies against the offshore market.

While the end of Finland’s gambling monopoly model seems ever more likely, Swedish trade organisation BOS has insisted on change at state-run gambling operator Svenska Spel.

“The current gambling system needs to be changed,” Velipekka Nummikoski, vice president of Finnish state-owned gambling and lottery monopoly Veikkaus told Finnish news agency STT yesterday (28 December).

“A situation where Veikkaus has a formal but not actual monopoly” is not in anyone’s interest, Nummikoski said.

In August, Veikkaus CEO Olli Sarekoski kickstarted a fresh discussion on Finnish gambling regulation.

He stressed that Finland needs to start thinking about bringing all gambling under the same regulation as Veikkaus’ online revenue and market share dropped significantly.

This move would mean dismantling Veikkaus’ monopoly and switching to an international licensing model.

“The discussion has been heating up for quite some time now and there appears to be very little disagreement,” Antti Koivula, partner and legal adviser at Finnish gaming law firm Legal Gaming, commented on LinkedIn today (29 December).

Koivula previously told iGaming NEXT that he expects Finland to have a licensing system in place by 2026.

With three months to the Finnish parliamentary elections, Koivula now wrote that the main question is whether the current government will initiative the process prior to the elections, or if the industry will have to wait for the next government to do it.

Meanwhile in Sweden, Gustaf Hoffstedt, secretary general of the Swedish trade association for online gambling BOS, urged the government to sell the betting and online casino part of governmental gambling operator Svenska Spel in 2023.

In an opinion piece for Swedish newspaper Dagens Nyheter, Hoffstedt stressed the state should have no particular advantage in this market and that the presence of Svenska Spel is an infringement on commercial gambling.

There are currently 70 licensed operators in the competitive market fighting for market share, and Hoffstedt argued that competition is already fierce and would remain so without the state’s presence as a commercial casino operator and bookmaker.

“Normally, the state engages in business activities when the market itself has failed, above all in terms of competition,” Hoffstedt wrote.

“However, no one who has followed developments in the Swedish gambling market can claim that there is too little competition between the 70 companies that operate in competitive gambling,” he added.

Hoffstedt concluded that the Swedish government needs to establish a “fundamental distinction” between being the ruler setter of the Swedish gambling industry and a commercial operator.