Online Swedish Operators Hit By Unregulated Providers

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The regulated gambling service industry in Sweden is under attack; not by an outsider, but by internal forces. The most recent statistics point to an increase in the number of unlicensed and unregulated gambling service providers in the country, many of whom are usurping significant market shares in the industry.

Analysis of the first three-quarters revenues of 2018 by Lotteriinspektionen (Swedish Gambling Authority) shows that while the country has seen in increase in gambling revenues by 1.2% and stands at 16.8 billion SEK, a majority portion of this earnings comes from unlicensed operators who operate outside the jurisdiction of Swedish Law. The Lotteriinspektionen also confirmed that while licensed agencies continue to fall in profits and market shares (having earned 2.4% lesser revenues than in 2017), unlicensed service providers have seen an increase in earnings by 12.4%, with their current revenues closing at 4.5 billion SEK. Now, unlicensed operators account for 54% of the total Swedish gambling industry.

2017 too saw its fair share of illegal earnings. The contribution of unlicensed operators to the Swedish gambling industry last year amounted to 300 million SEK. With no legal obligations to pay taxes or be ethical in their operations, there is fear that this unregulated market will slowly corrupt the Swedish gambling industry as a whole.

In terms of the preferred platform for unlicensed players; the online market reigns supreme. 2018 saw an increase in the size of the brick and click gambling market by 12.9%, while there was a shrinkage in the brick and mortar market by 8.2%.

The extensive economic damage experienced by licensed service providers has sparked an outrage in the country, prompting relevant parties to demand stringent action by the Swedish Government against illegal gambling centers and websites. Currently, the Swedish Government is drafting a new law to restructure the currently-monopolistic Swedish gambling industry. Authorities believe that the high prevalence of home-grown players and lack of foreign participants may be the root cause of the problem and opening up the market to outsiders may bring in the competitive spirit that may curb illegal gambling services for good.

The new law is expected to come into effect around January 2019. The law is said to include a tax rate of 18% for non-state-owned operators post-gaining of the Swedish gambling license. The law also has terms regarding player protection, operating regulations and data management in tune with both EU regulations and the General Data Protection Regulation (GDPR).


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