Spelinspektionen: New casino rules may benefit black market

11 May 2020

Sweden’s Gaming Authority (Spelinspektionen) has questioned some of the new player protection restrictions the country’s government plans to introduce as the country deals with the novel coronavirus (Covid-19) pandemic.

Last month, Minister for Health and Social Affairs Ardalan Shekarabi proposed a SEK5,000 (£401/€459/$495) mandatory weekly deposit limit and a SEK100 cap on bonus offers from 1 June until the end of 2020 as the country battles the novel coronavirus (Covid-19).

Shekarabi also said mandatory limits on playing time will be introduced.

While the regulator said that it agrees with the spirit of the rules, it said it feared that the effect of the proposals would be reduced channelisation and therefore reduced player protection.

“Spelinspektionen is generally positive to temporarily strengthen player protection, but questions some of the effects of the proposals,” it said. “However, the regulator estimates that the proposals in question will have a marginal effect on the player protection of the licensed companies.

"This effect should be weighed against the potential negative effects on channeliation, which should not be underestimated.”

Spelinspektionen said the deposit limit rule only applies per operator, meaning players may deposit SEK5,000 with multiple operators, exceeding SEK5,000 in total.

“The Gaming Inspectorate's opinion is that the limit of SEK 5,000 a week is a relatively high amount in itself,” Spelinspektionen said.

While it couldn’t provide figures for deposits, the regulator provided information about the average losses for customers in the Swedish regulated gambling market.

In 2019, the average loss per citizen on regulated igaming sites amounted to SEK3,043 for the year. If this was limited to registered customers, average loss increased to SEK5,072 per person, the regulator said. 

Although the average losses exceeded the deposit limit for gamblers, the regulator noted that a smaller number of players contribute a significant portion of total amounts wagered.

“At the same time, a smaller proportion of players (between 5% and 25%) account for the majority of the gaming market's total turnover (80% to 90%), which means the majority play with significantly lower amounts,” it said.

Spelinspektionen noted that those who were affected by the limit would likely play on other sites, including unlicensed sites, which could pose a danger for player protection.

“This means that, in practice, the proposed restriction will only have an effect on high spending players, who can also be expected to switch to other companies, and also to unlicensed operators,” it said. “That way, those who are actually hit by the restriction can continue to play.

“The fact that players change companies can also make it more difficult for companies to maintain their duty of care and also Spelinspektionen's supervision of this duty. This is because every individual company has no reason to react when information is missing about the player's behavior with other companies.”

The regulator did add, however, that the pause in play created by the limit might have some effect on promoting responsible play, even if players can gamble elsewhere.

“One possible positive effect of the proposed limit that is not included in the proposal is that it, in itself, causes an interruption in play, even for those who choose to start playing with another provider,” it said. “Such an interruption can be positive from a responsible gambling point of view.”

In terms of the limit on bonuses, the regulator said that a period of transition is needed, so that operators may not offer much larger bonuses in late May than they can in early June.

Spelinspektionen also reacted positively to the idea of a mandatory maximum time a player may be logged in. Players who exceed this limit would be automatically logged out. However, it added that - as there was no upper limit on the times that can be said - it felt the government should add a provision requiring operators to automatically contact those who set very long login times.

The regulator said that the proposals risked increasing the level of play with unlicensed operators. It said it has developed a strategy for its work against illegal gambling and will detail what measures are being taken in the near future.

“A possible negative effect of the proposals, which is also noted in the memorandum, is a reduced channelisation,” it said. “Reduced channelisation, in turn, means poorer protection for the players.”

However, it added that fighting the illegal market is only possible with the help of the authorities.

“Spelinspektionen wants to emphasise in particular that the authority has no criminal investigation commission and that illegal gambling activities are criminalised,” the regulator added. “For the criminalisation to have any effect, it is required that law enforcement authorities, ie police and prosecutors, have the opportunity to prioritize the issue.

Overall, the regulator said warned that measures that could decrease channelisation, as the new regulations may, would have a negative effect on player protection.

“It is the opinion of Spelinspektionen that the possible negative effects of the proposals on channelisation should not be underestimated. Player protection will decrease if players migrate to unlicensed providers.”

The rules have proved controversial with operators, with operator association Branschföreningen för Onlinespel (BOS) speaking out against the impact they may have on channelisation. With the release of a report revealing Sweden’s channelisation rate for online casino may be as low as 72%, BOS secretary general Gustaf Hoffsted said Shekarabi “must withdraw” the rules.

The association then published an open letter to the minister and a petition calling for the withdrawal of the regulations. This petition has drawn signatures from at least 12 industry chief executives.