Sweden’s licensed operators have again expressed concerns about payment providers serving unregulated operators within the country. 

In September 2023, operators claimed that Finshark, a financial services company, facilitated money transfers between Swedish consumers and gambling operators without a Swedish licence.

Some licensed operators called on the Swedish Gambling Authority (SGA) to conduct an investigation, citing similarities to a past directive that led Zimpler to discontinue a similar service.

Pay-and-play

Four months later, the industry asserts that the situation not only persists, but has worsened, with the alleged addition of a new pay-and-play feature. 

At the centre of the allegation are casino websites owned by Infiniza Ltd, a Maltese company in possession of an MGA licence since 2018. 

Screenshots obtained by NEXT.io reveal that players can sign in with a Swedish mobile number from Sweden and deposit funds using the Swedish identity verification system BankID with various Swedish banks, including Swedbank, Nordea and Handelsbanken.

The recipient of the deposit is Krofort, which is described on its website as an instant payment provider; however, there is no licence information displayed.

Industry sources who spoke to NEXT.io allege that Infiniza is the only operator with online casino brands linked with Finshark and Krofort, which gives them a competitive advantage over regulated operators.

Last year, licensed operators highlighted the advantage gained by grey-market operators who, much like their regulated rivals, can access fast payment services.

They stressed that this advantage is especially significant because Swedish customers anticipate quick withdrawals, raising concerns about why the SGA has not taken any action.

NEXT.io has contacted the SGA and Infinizia for comment.

Payment blocking

On 1 March 2023, the SGA launched a new B2B licensing regime to clamp down on B2B suppliers who provide their products to unlicensed operators which target consumers in Sweden without being bound by the regulatory framework.

While payment provision does not fall under this regime, the regulator has been granted enhanced payment blocking powers.

Shortly after, in July 2023, the SGA directed Zimpler to cease providing payment solutions using BankID to unlicensed operators. 

While Zimpler terminated its relationships with EU-licensed gaming companies without a Swedish licence, it also opted to appeal the decision “as it affects Zimpler and raises legal issues that are crucial to clarify, not only for Zimpler but for the entire industry.”

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.”

Premium slots and table games provider Habanero has been granted a licence from the Swedish Gambling Authority (SGA) in a move which will further boost its presence in Europe.

The supplier is now permitted to provide its entire full catalogue of games to operators in the region, including the likes of perennially popular player favourites such as Hot Hot Fruit, Mystic Fortune Deluxe and Santa’s Village.

Marking the latest milestone for Habanero, it follows the provider’s MGA licence award as well as approvals in the likes of Romania, the Argentinian-regulated City and Province of Buenos Aires, and Panama.

Habanero is now live in 22 European markets and has major agreements with tier-one operators such as Entain, Sisal, Sportium and Betway.

Commenting on its latest licence, Arcangelo Lonoce, head of business development at Habanero, said: “Being awarded our Swedish licence is both gratifying and exciting for Habanero as we look to scale up our operations in the market and partner with leading stakeholders to bring the wonderful world of Habanero to even more players than ever before.

“This new licence is a testament to our dedication to our adaptability as well as our commitment to navigating and complying with regulatory landscapes worldwide.”

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.”

The Swedish Gambling Authority (SGA) has issued a warning and a SEK9m (€760,527) fine to Videoslots for failing to adequately assess money laundering risks within the business.

SGA investigation

In order to carry out an investigation, the SGA requested information from Videoslots on the 30 customers who made the largest number of deposits between January and March 2020 and January and March 2021, as well as the 50 customers who deposited the largest total amounts during the same period.

It randomly selected 10 customers from the combined lists and made several findings which led it to conclude that money laundering risks had not been adequately taken into account by the operator.

Eight out of 10 of the audited customers made deposits totalling between SEK1m and SEK5.5m during the reviewed time periods, while the other two made deposits totalling between SEK570,000 and SEK620,000.

Unusually high levels of depositing such as these are one of several indicators that a customer’s transaction pattern may present a risk of money laundering, the SGA said.

Videoslots should therefore have taken better action to more quickly ascertain the source of funds and income levels of those customers, it added.

For several of the audited customers, income information was not requested by Videoslots until at least 18 months after they were registered as customers, after which time they had each been able to deposit between SEK570,000 and SEK4.4m.

One customer, for example, deposited around SEK2.9m in just under four months after registration, without Videoslots checking their source of funds or income level.

Even when income levels were assessed, many of the audited customers were found to have deposited amounts which exceeded their annual income several times over in short periods of time.

For example, one customer was able to deposit around SEK620,000 – almost three times their stated annual income of SEK215,000 – in the space of just two weeks.

Two other customers had stated annual incomes between SEK500,000 and SEK600,000 in 2020, and were able to make deposits totalling SEK1.8m and SEK2.2m over the course of the year.

Further, three of the audited customers were flagged by Videoslots as not being able to finance their level of deposits through their stated incomes, but were still allowed to continue depositing money.

Many of the audited customers were also found to have made several thousands deposits and regular withdrawals over the periods analysed.

The checks and balances put in place by the operator were therefore found to be seriously and systematically inadequate by the regulator.

Full details of the findings from all 10 audited customers can be found on the SGA’s website.

Videoslots response

In response to the SGA’s findings, Videoslots said that the 10 audited customers “do not represent the high level of regulatory compliance that Videoslots works to achieve.”

Despite that statement, it added that the measures it took in relation to the customers were sufficient to meet KYC requirements as set out in Swedish regulations.

It added that deposits do not necessarily need to be comparable with a customer’s annual income, as deposits often consist of previous gambling winnings.

Further, it said, “an increasing number of mistakes were discovered by the team performing customer awareness measures” in the quoted periods, namely 2020 and 2021, as a result of changed working conditions during the Covid-19 pandemic as well as technical failures within the business.

Also, customers whose source of funds or level of income could not be ascertained were previously more likely to be dealt with in terms of responsible gambling team rather than AML, it added, as “helping a customer reduce excessive gambling takes time and cannot be done if a customer’s account is closed as an AML measure.”

When the source of funds could not be verified, therefore, customers were monitored and contacted by the responsible gambling department with a view to reducing gambling.

Since then, the operator has changed its approach, it said, and in cases where it has requested but not received source of funds documentation, accounts are now closed.

The company’s department responsible for AML is now three times larger than when Videoslots was granted its Swedish licence, it added. 

The company has also implemented changes within the department including through a change of its manager and supervisor.

“Videoslots now requests more extensive documentation from its high-risk customers,” it added, and “a significantly higher proportion of accounts belonging to high-risk customers have had their accounts closed when they did not meet requirements for additional financial documentation.”

Finally, the operator said it has taken additional steps to limit customer spending, including mandatory loss limits at registration and a net deposit limit of SEK200,000 per month for each customer.

That limit can only be changed if the customer provides Videoslots wth evidence of their source of funds.

Penalty calculation

Despite the actions taken by Videoslots to remedy the situation, the SGA still deemed it necessary to issue a warning and a penalty fee.

Without knowing how much was earned by the company as a result of the violations, the penalty fee amount may not exceed €1m (approximately SEK11.8m).

Given Videoslots’ GGR of approximately SEK401m for the financial year 2020, combined with the “serious and systematic” nature of the violations, the SGA settled on SEK9m as the appropriate figure for the penalty.

The Swedish Gambling Authority (SGA) and Financial Supervisory Authority have issued a joint report on improving illegal gambling oversight.

Within the document, the two organisations highlight avenues where they would be able to improve their regulatory roles through enhanced cooperation. 

The SGA said its experience has shown that unlicensed gambling operators often partner up with Swedish payments providers, which are often businesses regulated by the financial authority. 

As such, the report said there should be increased knowledge exchange between the two organisations in this area. 

This will include the financial regulator sharing its experience with the payments market and its services with the SGA. 

Conversely, the SGA will assist the Financial Supervisory Authority with understanding illegal gambling and the wider regulation of the country’s gambling sector. 

SGA receives new payment blocking powers

From 1 July, the SGA was granted new powers to block payments from unlicensed gambling operators. 

Under the new rules, the SGA is permitted to create new regulations to ensure payment businesses are blocking what it considers to be illegal payments.

Failure to do so can result in sanctions for payments providers.

Shortly after inheriting the new powers, the SGA threatened payments company Zimpler with a SEK25m (€2.1m) fine for not blocking unlicensed operator transactions. 

The report said that it is currently too early to be able to evaluate how successful the new powers have been at achieving their objectives.

It added future work needs to be done to evaluate how the new powers affect the financial regulator’s supervisory role, and what options it has to increase compliance.  

The appearance of a new payment provider has sparked concerns among regulated operators in Sweden. 

They allege that Finshark, a financial services company, is enabling money transfers between Swedish consumers and unlicensed gambling operators.

iGaming NEXT understands some licensed operators have urged the Swedish Gambling Authority (SGA) to conduct an investigation. 

They argue that the situation closely resembles a previous directive from the SGA, which recently ordered Zimpler to discontinue a similar service.

Zimpler’s exit

In July, Zimpler was ordered to stop providing payment services using BankID to operators without a Swedish gambling 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 said.

The SGA warned Zimpler of a SEK25m fine if it failed to comply. Despite initiating an appeal process, Zimpler agreed to terminate these agreements with unlicensed operators.

However, Zimpler argued the SGA’s decision has questionable legality and is seeking to address various legal questions through its appeal, including matters related to “illegal promotion” and the relationship between Swedish gambling laws and EU regulations.

A new entrant

iGaming NEXT understands that following Zimpler’s exit, Finshark has quickly risen to prominence. 

Finshark is led by CEO and co-founder Adnan Sporo, with additional board members including Nathan Alexander Medlock, Martin Jesper Kreuger and Kristian Thomas Sternros.

The company was set up in 2019 and maintains offices in Lund, Stockholm, Sarajevo, and Madrid.

It holds a payment institution licence from the Swedish Financial Supervisory Authority (Finansinspektionen).

Nonetheless, industry sources who spoke with iGaming NEXT have pointed out that all the casino websites associated with Finshark are owned by Infiniza Ltd, a Maltese company in possession of an MGA licence since 2018.

One such operator offering Finshark as a payment option is Goldroll Casino. 

Screenshots taken in August, which were reviewed by iGaming NEXT, show Finshark in the URL where players select their preferred Swedish bank for payments.

A source who spoke to iGaming NEXT on the condition of anonymity said: “Swedish customers are accustomed to rapid withdrawals, making this a significant advantage for any grey-market operator. 

“We fail to understand why the SGA has not yet acted.”

The SGA declined to comment, explaining that it refrains from discussing ongoing supervisory activities and individual cases.

iGaming NEXT has also contacted Finshark for comment.

Swedish-licensed operators combined to generate turnover of SEK6.70bn (€563m) in Q2 2023.

This represented a 1% decrease year-on-year, but a sequential increase of 1.8%.

Commercial online gambling, which includes online casino and sports betting, provided 62% of overall Q2 2023 turnover at SEK4.18bn (€351m).

State lottery and slot games was the next biggest contributor at SEK1.40bn (€117m) following an annual decline of 1.6%.

Second quarter turnover from Casino Cosmopol – the state-owned gaming operator – fell by 13.1% year-on-year to SEK126m (€10.6m).

At the end Q2 2023, approximately 95,000 people were prohibited from gambling via the country’s self-exclusion register Spelpaus.se.

This marks an increase of 1.4% compared to the previous quarter, while year-on-year data was not provided.

The Swedish Gambling Authority (SGA) continuously collects and analyses data to monitor trends in the gaming area, including on turnover for public benefit purposes.

The regulator defines turnover as player stakes minus pay outs. Quarterly turnover figures are also based on tax data from the Swedish Tax Agency.

Zimpler has appealed an order from the Swedish Gambling Authority (SGA) to cease the provision of payment services using BankID to companies without a Swedish gambling licence.

Order background

The SGA issued the order on 6 July as it said: “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 therefore demanded that Zimpler stop offering its services to any unlicensed operators by 31 July, and suggested the company would be issued with a SEK25m (€2.1m) fine if it did not comply.

Zimpler response

Zimpler already announced that it would follow the SGA’s order in May, but added in a statement today (21 July) that it has opted to appeal the decision “as it affects Zimpler and raises legal issues that are crucial to clarify, not only for Zimpler but for the entire industry”.

The process of ending its business relationships with operators that do not hold a Swedish licence began in Q2, with the intention of concluding the process in Q3.

“Zimpler’s decision to terminate the agreements with the affected iGaming companies is part of the company’s strategy to contribute to a sustainable payment market through financial services with increased consumer protection,” it said. 

However, the supplier will appeal the decision as it believes it is “misdirected and incorrect with far-reaching consequences. The decision affects the company negatively because its commercial ability to act is limited in a way that is not supported by law”.

Points to clarify

Zimpler said the decision also contains several legal issues to be clarified in court, in order for payment service providers to be able to conduct their business without risking interventions from Swedish authorities.

One of those questions is to what extent the promotion of a gambling offer which is not in itself illegal can be considered “illegal promotion”.

Further, Zimpler hopes to clarify under what conditions a gambling operator without a Swedish licence can be considered covered by the Swedish Gambling Act, and the significance of the use of BankID in the payment chain when making that assessment.

Finally, the company wants to determine how Swedish gambling legislation relates to the free movement of services, including payments, under EU law.

“The appeal is also a measure to ensure legal certainty in companies’ relations with the authorities,” said Zimpler CEO Johan Strand.

“Companies must be able to plan and conduct their operations with predictable application of laws and regulations. It is a fundamental principle – both in Sweden and within the EU,” he concluded.

A new survey on Swedish gambling behaviour suggests that certain demographics are more likely to use unlicensed operators than others.

The latest survey of Swedish online gambling habits was conducted by the Swedish Gambling Authority (SGA) in May 2023, with the results published this week.

The survey poses several questions about recent gambling behaviour to customers who play at least once a quarter.

Who is using unlicensed operators?

Among its principal findings were detailed breakdowns of how many customers use operators without a Swedish licence, which types of customers are more likely to use them, and why.

Out of all regular gamblers, around 6% said they had intentionally played with an unlicensed operator during the last quarter.

A further 4% said they had unintentionally played on an unlicensed website, while 13% said they did not know if they had accidentally used one or not.

Breakdown by player demographics

Those numbers were broken down further in the report to show the different rates at which certain types of players used unlicensed operators.

For example, when breaking down the numbers by frequency of play, 30% of customers who played “pretty much every day” said they had intentionally played with unlicensed operators.

The incidence among more casual players – those who play once a week, once a month, or once a quarter – was significantly lower, at 4%, 5% and 3%, respectively.

Age was also found to be a key factor in determining the likelihood of using offshore operators.

Of the 18-29 year-old age group, 16% of players had intentionally used offshore operators, while the figures were much lower for older demographics.

Of players aged 30-49, just 6% used unlicensed operators, compared to 3% of those aged 50-64 and 0% of players aged over 65.

Breakdown by game type

The number of players using unlicensed operators also varied depending on what kind of gambling customers engaged with.

Poker was a standout vertical here, with 24% of players saying they had intentionally played with unlicensed operators.

Meanwhile, 18% of online casino players and 15% of online bingo players also said they had intentionally gone outside the regulated market to gamble.

Sports betting, horse betting and lotteries had much lower incidences, with 7%, 5% and 4% of players respectively admitting to using offshore operators.

Why unlicensed operators?

Survey respondents who said they had played (either intentionally or unintentionally) with unlicensed operators were asked what their most important reason was for doing so.

The most popular reason, cited by 39% of respondents, was the superior bonus offers available through unlicensed operators.

Bonuses are strictly limited under Swedish regulations and may only be offered to customers once by each operator, at sign-up.

The 39% of respondents who said bonuses were the most important reason for using unlicensed operators marked an increase from last year’s survey, in which only 32% of players said the same.

Meanwhile, 25% of respondents said they used unlicensed operators because they had self-excluded on Spelpaus and therefore could not play with licensed operators.

The next most popular reason was better odds or more opportunities to win, with 23% of respondents citing this as the most important reason for using offshore operators.

A further 10% of respondents said they did not know which companies held a Swedish gaming licence, while 3% suggested there were other reasons for using unlicensed firms.

Reasons to play with licensed operators

Elsewhere, the report asked customers what their reasons were for playing with licensed entities under Sweden’s regulatory regime.

Safety and security were cited as key reasons for using licensed operators, with 55% of respondents suggesting that was a reason to stay in the regulated market.

Further, 54% said it was important to play with “serious actors” in the market, while 46% suggested that they preferred to play with operators under the control of Swedish authorities.

Just 27% of respondents suggested that being able to play on a site that has Swedish as its language was a reason to use licensed operators.

A further 19% said they used licensed operators because they contribute to Swedish tax revenue, while 21% suggested that licensed entities take more responsibility for preventing gambling problems.

Of the total respondents, 15% said they play with licensed operators for “no particular reason”.

When asked if, knowing that a site does not have a Swedish licence, respondents would avoid the site, 50% said “yes, absolutely.”

A further 24% said they would “maybe” avoid the site, while 12% said “probably not,” 3% “absolutely not,” and 11% did not know.