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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.

The Netherlands Gambling Authority (KSA) has suggested that more fines against unlicensed operators will be forthcoming this year.

In a H1 2023 update provided by the regulator, it said that almost €30m in fines had been issued to unlicensed operators at the end of 2022, which were made public in the spring.

“Various fine reports are currently being prepared,” it added, suggesting that more penalties are still to come this year.

A busy year for the KSA

Among the fines already issued to offshore operators was a demand for €900,000 from Malta-based operator Shark77 in January, and a further €900,000 in fines issued to each of two operators behind the Orient Xpress Casino brand in February.

In March, it issued a €4.4m penalty to MGA-licensed Gammix for failing to comply with an order to cease offering its services in the Netherlands.

Then, Videoslots was hit with a whopping €10m fine (among the largest ever issued by the KSA) for allegedly offering its services to Dutch customers without a licence.

The operator denied the allegations and vowed to contest the fine, after describing the regulator’s investigatory actions as “unlawful”.

And it’s not just operators bearing the brunt of the regulatory action. Affiliate group Red Ridge Marketing was also slapped with a €675,000 fine in March, after it was found to be promoting unlicensed operators to Dutch customers.

Advertising clampdown

In addition to issuing fines to operators for offering services in the Netherlands without a licence, the KSA has also been focused on preventing this at source by clamping down on the ability of offshore operators to advertise in the country.

“In many cases,” it said, “this advertisement targets vulnerable players, for example by providing information about how to circumvent Cruks, the exclusion register.”

At the end of 2022, the KSA began an investigation into “the eight most visited websites that, aimed at the Dutch market, advertised unlicensed online casinos and commented on the circumvention of Cruks.”

The investigation remains in progress, it added, but violations have been found at four of the eight websites, and the regulator will take enforcement action against them as a result.

Further, the KSA said it conducted 32 investigations into social media advertising during the first half of 2023, with any violations reported to Instagram and Facebook owner Meta, after which the relevant pages or accounts were immediately closed.

Keeping an eye on crypto

Finally, the regulator explained that unlicensed operators “are increasingly accepting cryptocurrency as a payment method online.”

As a result, the KSA’s investigators have now added crypto to the list of payment methods available to help them determine whether unlicensed operators are offering services in the Netherlands.

During H1 2023, the regulator carried out six separate investigations using Bitcoin, and said that in all cases a sanction was imposed, and the operators in question subsequently discontinued offering services in the Netherlands.

Costa Rica-based online operator Winning Poker Network (WPN) has been ordered to pay a penalty totalling €75,000 by the Netherlands Gambling Authority (KSA).

WPN decision

The operator was found to have accepted Dutch players on its website americascardroom.eu in September 2022 following an investigation by the KSA.

The regulator ordered WPN to stop accepting Dutch players on the website, and subsequently found during a follow-up investigation that indeed players from the Netherlands could no longer access its services.

Following further investigation in January 2023, however, the regulator found that another website operated by WPN, truepoker.eu, continued to accept Dutch customers, and subsequently imposed a periodic fine of €25,000 per week, up to a total of €75,000, on the operator.

The regulator said it will continue its investigation once the penalty payment has been made with the aim of stopping the operator offering its services in the Netherlands altogether.

If WPN is found to be in violation of Dutch regulations again by offering its services without a licence, further enforcement action can be taken.

GoldWin investigation

Meanwhile, Malta-based GoldWin Ltd, was also subject to a KSA investigation beginning in December 2022, which found that there were no technical measures in place to prevent Dutch customers from accessing its website westcasino.com.

The KSA subsequently ordered the operator to cease offering its services to Dutch players, with a penalty fee of €239,000 per week (up to €717,000) set to be enforced if it refused.

A subsequent re-investigation of the operator found the violation of Dutch regulations had ceased, meaning GoldWin did not have to pay the fee.

The KSA noted that the order remains in force, and therefore if the operator allows Dutch customers to use its services in future, the fee will still be imposed.

“It must pay off for providers of games of chance to offer their games legally,” said KSA chairman René Jansen.

“That is only possible if we take the wind out of illegal supply. We are fully committed to stopping these practices,” he concluded.

Changes set to be introduced to Sweden’s Gambling Act will provide the country’s regulator with enhanced powers for blocking payments to unlicensed operators.

Payment blocking changes

The Swedish Gambling Authority (SGA) previously held powers to order the blocking of online payments to unlicensed operators, but said there were “certain practical difficulties” within the existing regulation which made those powers difficult to enforce.

As a result, the regulator has never been able to use the existing law to order payment providers to block certain payments.

That existing provision will therefore be revoked from Sweden’s Gambling Act, to be replaced with a new stipulation that the SGA can require payment providers to share customer information necessary for the blocking of payments to unlicensed operators.

The regulator will therefore be able to more easily order the blocking of payments, with the aim of increasing the rate of channelisation to Sweden’s regulated gambling market.

The changes will come into force on 1 July 2023 after being decided on by government in the Riksdag.

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

Industry reaction

Johan Strand, CEO of payment provider Zimpler, reacted positively to the development. 

“If Spelinspektionen gets better tools to act against payment suppliers not following the guidelines, consumer protection will be strengthened and the playfield more even for payment suppliers that follow local laws and regulations,” he told iGaming NEXT.

“Zimpler of course favours the efficient blocking of payments to illegal gambling. It’s in our interest to work for responsible gambling, as it makes our business much less complicated.

“We have also proposed further measures to strengthen responsible gambling, for example IP blocking of Swedish consumers from games licensed outside of Sweden, and the introduction of B2B licenses for payment service providers,” Strand concluded.

Covert supervision of licensees

In addition to its new payment blocking powers, the SGA will also be granted permission to undertake ‘mystery shopper’-style supervision of its licensees.

At present, in the absence of legal support to allow the SGA to undertake “hidden supervision,” the regulator is limited in its ability to oversee the online gambling sector.

The government will therefore approve a new measure allowing the SGA to use gambling services online under a secret identity.

This method of supervision has already been used on several occasions – amid some controversy – by the Netherlands Gambling Authority (KSA).

Combatting match-fixing

Further to those measures, new changes to the law will also allow for improvements in Sweden’s work to combat match-fixing in professional sport.

While the government believes that combatting match-fixing should be undertaken by sports bodies themselves, a new proposal will see gambling licensees able to more easily supply certain customer information to sports federations.

Changes to the Gambling Act will therefore clarify that sports associations – and other organisations working with sporting integrity – are permitted to process and share customer data in order to counteract match-fixing.

Americans wager over half a trillion dollars ($511bn) on unlicensed gambling each year, according to a new report from the American Gaming Association (AGA).

According to the AGA, the amount of money wagered with unlicensed bookies, offshore operators, and unregulated gaming machines would generate some $44.2bn in revenue for regulated gaming operators and around $13.3bn in tax revenue if channeled through the legal market.

Online slots and table games account for the lion’s share of unlicensed US gambling spend, with an estimated annual handle of $337.9bn.

The iGaming vertical alone would generate an additional $13.5bn in revenue and contribute $3.9bn to state coffers if players switched to regulated operators, according to the study.

That means the majority of iGaming spend in the US is still going to offshore and unlicensed operators, as estimates for 2022 show the legalised iGaming market is set to generate a comparatively feeble $4.8bn in revenue for licensed operators.

Unregulated gambling machines in land-based establishments such as bars, convenience stores and unlicensed gambling halls also see some $109.2bn wagered on them each year, generating estimated revenue of $26.9bn outside the regulated market.

That costs state governments around $8.7bn in tax revenue annually, states the survey. 

For online sports betting, while the figures are more modest, the AGA determined that US bettors still wager some $63.8bn with unlicensed bookies and sportsbooks each year, costing the regulated market around $3.8bn in revenue and states around $700m in unpaid taxes.

The numbers become even more stark when compared to the size of the legal, regulated US market.

While illegal gambling is thought to cost the public purse a total of $13.3bn in uncollected taxes, the combined regulated US gambling market contributed $11.7bn in taxes in 2021.

Meanwhile regulated operators are missing out on some $44.2bn in annual revenue – nearly half of the $92bn revenue generated by regulated commercial and tribal operators combined in 2021.

AGA President and CEO Bill Miller: “Illegal and unregulated gambling is a scourge on our society, taking advantage of vulnerable consumers, skirting regulatory obligations and robbing communities of critical tax revenue for infrastructure, education and more.”

As for unregulated gaming machines, there are an estimated 581,000 in the US – compared to 870,000 regulated machines in casinos and other licensed establishments. That means some 40% of all gaming machines in the US are unlicensed.

That should be concerning news for players. Based on state regulatory data, regulated slots in Nevada offer a return-to-player (RTP) of some 93%, the RTP on unlicensed gaming machines is thought to be closer to 75%.

“Illegal and unregulated gambling is a scourge on our society, taking advantage of vulnerable consumers, skirting regulatory obligations and robbing communities of critical tax revenue for infrastructure, education and more,” said AGA President and CEO Bill Miller. 

“We have always known that the illegal and unregulated market is expansive, but this report illuminates just how pervasive it is.

“All stakeholders – policymakers, law enforcement, regulators, legal businesses – must work together to root out the illegal and unregulated gambling market. This is a fight we’re in for the long haul to protect consumers, support communities and defend the law-abiding members of our industry.”

Estimates in the report were based primarily on a survey of more than 5,000 Americans and their gambling habits, together with existing data on gaming participation rates and the known size of the regulated US gambling market.