The Swedish Gambling Authority (SGA) has reprimanded Betway’s Swedish unit for having negative equity in 2019 and the regulator warned the company needed to fix its finances in order to get a licence renewal from the end of 2023.
The Swedish unit is part of Super Group, which listed on the New York Stock Exchange last Friday (January 28) after it concluded its merger with special purpose acquisition company (SPAC) Sports Entertainment Acquisition Company.
The Betway unit got a warning rather than a more serious penalty because its parent company issued a capital guarantee, the SGA said on Tuesday (February 1).
The Swedish unit needs to fix its finances by the expiration of its licence at the end of 2023 or face non-renewal, the authority said.
“The Swedish Gaming Authority assesses that Betway's financial situation constitutes a significant risk in the company's operations and emphasises that Betway would not be granted a renewed licence with a negative equity regardless of an issued capital guarantee,” the SGA wrote.
“This is based on SGA's legal position that negative equity can only be accepted the first time an applicant is granted a licence,” the regulator added.
But a Betway spokesperson said parent company Super Group is a “financially sound, profitable business”.
“Betway Group had negative equity in 2019, but had a positive recovery in 2020 and 2021, both years showing positive equity and strong results,” the company said.
“We are therefore confident that we can meet the requirements of any licence application and satisfy the SGA going forward,” Betway said.
Betway’s Swedish unit lost €50.3m in 2019, which gave it negative equity of €4.8m, according to the regulator.
In Sweden, negative equity on that level could push a company into liquidation, but the Betway unit is based in Malta, where that status is acceptable if a company can prove it can maintain an ongoing business, the regulator said.
The loss totals also suggest how much pain online gambling brands felt in the year after Sweden licensed online gambling in January 2019. Operators faced a raft of new restrictions and had to compete madly for gamblers’ attention.
In 2019, Super Group lost nearly €18m on revenue of €476m, but in 2020 it turned a profit of €149.2m on revenue of €908m, according to documents filed with the Securities and Exchange Commission.
Today the Betway brand is active in at least five US states, including New Jersey and Pennsylvania, and is licensed in about 25 markets around the world.
In December, it was penalised 100,000 Swedish krona (€9,600) for unauthorised bonus offers.