Sweden is closing down on unlicensed gambling operators. These changes could impact the European iGaming sector.

The Swedish gambling regulator, Spelinspektionen, has recently begun a crackdown on illegal gambling websites. At the same time, it is overhauling its gambling laws to ensure stricter and tougher regulations for those licensed to operate in the country. But what will the impact of this be on the European iGaming industry?

Tightening of Gambling Legislation

A recent report has been submitted to the Ministry of Finance in the country. Led by Marcus Isgren, it includes advice on how to maximise state revenue and limit the work of illegal operators.

Sweden already offers a wide range of licensed casinos, including popular names like LeoVegas and Casumo, all with extensive game libraries. To help players choose safe and fully regulated options, casino comparison sites such as bedrageri.info highlight which operators hold a Swedish license and provide clear guidance on bonuses and game selection.

Currently, the country only directs its laws at operators who are targeting Swedish players. This has created a loophole, where the Swedish market can be served as long as a provider does not have overt Swedish services. This may include advertising, but also runs to factors such as Swedish language options on the website. Proposals are that the law would extend to any service accessible by the Swedish population, regardless of its language and marketing.

Furthermore, the ban would not just go to marketing services for Swedish players. It would also extend to third parties, such as payment processors that help unlicensed operators take funds from players. There will also be changes to criminal laws that make the promotion of unlicensed gambling unlawful.

Crackdown on Illegal Operators

The Spelinspektionen has already begun to issue cease and desist letters to operators. In August, it sent banning orders to two gaming suppliers, known as Solid Software Solutions and Rabocse, respectively. Neither company had a license, yet they were found to be directly targeting Swedish players.

The Gambling Act of 2018 states that for gambling companies to be in breach of Swedish law, they must accept Swedish Krona and/or have Swedish content. In the case of Solid Software Solutions, it was found that they had Swedish customer service phone numbers and a range of reviews in Swedish. Rabocse had several games that were targeted at Swedish players. It also had pages that were in the Swedish language. Neither company has commented.

In September, the Spelinspektionen then handed out penalties and warnings to three more gaming companies. The first of these was a Swedish studio owned by gaming giants Playtech. They were given a warning and a SEK 650,000 fine for having their games on unlicensed websites through third-party content.

The second of these was Kalamba Games, who were fined SEK 60,000. This was due to the game appearing on third-party sites, despite the company employing geo-blocking. The third was EGT Digital Gaming, which received a much smaller fine of SEK 5,000. Its games had been placed on international sites by a third-party provider.

The Impact on iGaming in Europe

Many of these changes have been welcomed, both in Sweden and beyond. The main issue to date has been that Swedish players are very often bilingual. Thus, they can easily use websites that are in English and accept Euro payments. The Swedish Finance Markets Minister Niklas Wykman said that these changes are "a crucial step in creating a safer and fairer gambling market".

The extent of Sweden's offshore operators' usage is quite high. It is estimated that around one in four bets are placed outside the regulated system. Sweden is aiming for a channelisation rate of 90%, meaning this proportion would use their licensed operators as opposed to going offshore. This current level stands at 85%, a decline of 1% from previous records.

This has also been welcomed by ATG, a licensed sports betting operator within the country. In a statement, the Chief Executive, Hans Lord Skarplöth noted that "It sounds technical. But in practice, it is about something simple: would we accept that unlicensed gambling companies could run rampant on the Swedish market, or would we put a stop to it? The investigation shows that it is fully possible to even introduce a participation criterion. Then there are no excuses left."

The impact on Europe's iGaming industry should be minimal. As the continent moves to tighter regional regulations, these moves are natural. Many of the offshore operators are often registered outside Europe, such as in places like Curacao.

What it does mean is that individual software companies must be much more careful about where third parties license their games. In many cases here, the companies fined have not been responsible directly. It has been due to where their games are deployed by third parties. This may mean a much tighter framework when dealing with these entities.

The Swedish market is lucrative, despite the country's small population. Each year, it generates around SEK 17.84 billion. It is unlikely this is going to dissuade operators. Instead, as has been seen in other countries, this will encourage more companies to take the licensed and proper route to Sweden's gambling sector. This could bring increased competition, which may see more choice for consumers.

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