The Swedish trade association for online gambling BOS has urged for legislative changes in Sweden after the Swedish Gambling Authority (SGA) spared Malta-licensed Infiniza from legal action.
The SGA determined that Infiniza’s online casino websites are not targeting Swedish players, and the regulator therefore concluded an investigation into the operator without further action.
This was first reported by Swedish financial newspaper Dagens Industry (DI).
According to the DI article, the investigation focused on Infiniza’s use of payment provider Zimpler and dates back to 2021.
Last July, the SGA instructed Zimpler to stop servicing gambling firms lacking a Swedish licence, with a particular reference to those using the Swedish identity verification system BankID.
New payment providers
However, Infiniza hit the headlines shortly after in September 2023 when following Zimpler’s exit, the company switched to a new payment provider Finshark.
Infiniza’s association with Finshark raised eyebrows since all Finshark-associated casino websites appeared to be owned by the Malta-licensed company.
Last month, NEXT.io reported instances where players used Swedish mobile numbers and BankID verification to deposit funds on Infiniza-owned casino sites.
This time deposits were routed to Krofort, an instant payment provider lacking displayed licence information.
In its decision, obtained by NEXT.io, the SGA concluded that Infiniza had stopped targeting the Swedish market with its gaming offerings, citing changes in its marketing strategies and payment methods.
However, the SGA also warned that if Infiniza resumed targeting the Swedish market without the required licence, the authority could launch a new supervisory investigation against the company.
However, the SGA informed NEXT.io that due to confidentiality legislation, it could not disclose whether a new investigation had been initiated or was ongoing.
Last year, when assessing Zimpler, the SGA stated: “It is clear that Zimpler cooperates with and offers its payment service solution containing BankID to gaming companies that lack a Swedish gaming licence.
“In light of the fact that BankID is an e-identification service that is only used by Swedish customers, the SGA assesses that the gambling companies [in question] are targeting the Swedish market,” the regulator added.
According to Gustaf Hoffstedt, secretary general of BOS, the SGA’s actions show the “major shortcoming of the Swedish gambling law.”
He criticises the fact that the law allows gambling companies to accept Swedish consumers as long as they are not actively targeting them, “despite the fact that the gambling operator [Infiniza] accepts Swedish gambling consumers on a large scale.”
Hoffstedt asserts that Infiniza is one of Sweden’s largest black market operators, with a substantial portion of its operations focused on attracting Swedish consumers while avoiding paying Swedish gambling taxes.
BOS argues that this loophole needs to be closed, advocating for a legal amendment that would make it illegal for unlicensed gambling companies in Sweden to accept Swedish consumers altogether.
Hoffstedt adds that BOS has been lobbying for this legislative change for years.
In an article in DI, Hoffstedt also criticised the pattern whereby payment intermediaries change their practices in response to scrutiny.
“That’s exactly how it goes: if someone shines a spotlight on the fact that payment intermediaries ‘blue’ are not okay, payment intermediaries become ‘red’, then ‘green’, then ‘purple’ – and it goes on forever.”
Despite all efforts, BOS has yet to receive a response to their proposal from the relevant authorities.
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.
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.
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.
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.
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.
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.
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.
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%.
“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 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.
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.
The Swedish Trade Association for Online Gambling (BOS) believes the country embarked on a “wise path” after Sweden’s Riksdag approved the introduction of a new B2B system.
Last week, Sweden’s parliament passed new gambling regulation, including the introduction of supervisory regime for gaming software suppliers.
While some details of the new regulation are still to be announced, here is what we known so far:
It’s a permit, not a licence
The Swedish Gambling Authority (SGA) refers to a B2B permit, not a licence.
The application process will open on 1 March 2023, with the new regime now proposed to enter into force on 1 July 2023.
According to the SGA, there is no special tax for the permit.
The permit is expected to cost SEK120,000 (€11,000).
The exact amount has yet to be confirmed, although this will happen shortly, an SGA spokesperson told iGaming NEXT.
Once granted, a permit will be valid for a maximum of five years, while companies based outside the European Economic Area (EEA) will require a representative to physically reside in Sweden.
Game software only
The new regulation covers game software suppliers such as live casinos, liquidity programmes, random number generators, slots providers, online poker platforms and sportsbooks.
Suppliers in possession of a permit will not be allowed to work with unlicensed operators targeting the Swedish market.
For context, the main purpose of introducing the B2B regime was to ensure a high level of channelisation and to prevent illegal gambling.
The SGA believes that if suppliers are prevented from catering to unlicensed gambling operators, those operators will have no choice but to exit the Swedish market due to limitations on software supplies.
By contrast, software that is developed for activities including performance analysis, marketing, customer management and administration, or that forms part of the licensee’s general IT structure or business applications, does not require a permit.
A light-touch regime
Gustaf Hoffstedt, secretary general of operator trade body BOS, hopes the Swedish B2B system will have a “light touch” character.
“The fact that the SGA talks about a B2B permit system rather than a B2B licensing system lends support to that view,” he said, while pointing out the proposed B2B fee is just over a tenth of what a corresponding B2C permit costs.
Low fees, as well as easy-to-understand compliance, are crucial to attract “all serious players, big and small,” he added.
The Swedish government has appointed Niklas Wykman as the new minister responsible for gambling policy.
Last week, Sweden’s parliament narrowly approved centre-right Moderate Party leader Ulf Kristersson as prime minister, who then appointed his cabinet.
Wykman will serve as minister for financial markets and will be charged with overseeing the government’s gambling policy.
Wykman is a member of the Moderate Party and has been a member of the Swedish parliament, the Riksdag, since the 2014 general election, representing Stockholm County.
He studied mathematical statistics in Stockholm and worked as a team leader at a call centre prior to his political career.
The Swedish Trade Association for Online Gambling (BOS) said it looks forward to having a discussion with Niklas Wykman about how gambling policy can best be developed in Sweden.
BOS secretary general Gustaf Hoffstedt: “It would be welcome if Wykman, as the first minister in any Swedish government, dares to highlight the gambling industry’s important business and political significance for Sweden and Europe.”
BOS secretary general Gustaf Hoffstedt had “three important messages” for the minister.
“Firstly, the licensed gambling companies must be protected at the expense of the unlicensed ones,” said Hoffstedt.
In addition, the Swedish government should “concentrate on making laws that the rest of us must follow, rather than acting as a commercial gambling company itself” [Svenska Spel].
“Thirdly, it would be welcome if Wykman, as the first minister in any Swedish government, dares to highlight the gambling industry’s important business and political significance for Sweden and Europe,” added Hoffstedt.
Sweden held a general election on 11 September, which saw Sweden’s governing parties, led by the Social Democrats, lose their majority.
Talking about a potential change in government after the election, Hoffstedt said on the iGaming NEXT podcast that the partial privatisation of state-owned operator Svenska Spel, the possibility of increased marketing restrictions for licensed operators, and a potential liberalisation of the highly restricted bonus system are all now very real possibilities.
Under the previous government, social security minister Ardalan Shekarabi was responsible for gambling policy.
He made few friends in the online gambling industry after driving the implementation of several restrictive proposals, including a ban on welcome bonuses and deposit caps during the Covid-19 pandemic.