Sweden’s goal to limit the supply of services to the black market by licensing suppliers will be “easy to circumvent” and companies remain confused about how many permits they should apply for, say several people close to the market.
From July 1, companies supplying services to gambling operators in Sweden will need to be licensed, with the Swedish Gambling Authority (SGA) having already announced several approvals ahead of the deadline.
But confusion has dogged the process, with suppliers complaining days before the application window opened that they would seemingly need to apply for an individual licence for each entity in the Swedish marketplace, in some cases amounting to tens of applications per parent company.
The regulator has since clarified that the law does not allow for full umbrella licences, but that some companies will be exempt from needing to apply if another entity has full control of their product. The move, termed "soft umbrella" licensing, calmed some earlier concerns, but industry insiders say there is still uncertainty around the process.
Some suppliers have applied for a single licence, while other similar companies have applied for upwards of ten permits, with neither certain they have interpreted the law correctly, according to one source close to the Swedish market.
Suppliers believe they could simply provide the SGA with details of their organisational structure to allow them to apply for just one umbrella permit that covers all business activities in Sweden without compromising regulatory oversight, a major international supplier told VIXIO GamblingCompliance.
Despite these frustrations, and in spite of the need to repeat information in multiple applications, the same supplier described the licensing process as “going OK” so far.
“We believe the process so far to be smooth, except for uncertainty over so-called soft umbrella permits,” said Gustaf Hoffstedt, the chief executive of BOS, a trade group representing several large online gambling companies in Sweden.
A spokesperson for the SGA confirmed that it would not accept umbrella permits and said that it was "happy to answer questions from suppliers".
However, the stated goal of the supplier licensing project to prevent black market operators leeching customers from the licensed online market was described as “naive” by a supplier who spoke to VIXIO.
Suppliers with a licence in Sweden are forbidden from also supplying their services to operators that target Sweden illegally.
But legal experts have warned that the system will be relatively easy to cheat by supplying services through different corporate entities.
“It is a good first step,” said Elvin Sababi, a lawyer with the Nordic Gambling law firm. “Unfortunately it will be quite easy to circumvent if additional measures are not introduced in the future.”
A supplier who spoke to VIXIO on condition of anonymity described the objective as “naive” and doubted it would do much to improve channelisation rates.
The SGA spokesperson did not address VIXIO's query over the effectiveness of the policy.