Swedish Suppliers Brace For Compliance Test

November 3, 2023
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Newly-licensed suppliers in the Swedish market have been warned that the regulator is preparing to enforce against those who continue to supply the black market, but doubts remain about the effectiveness of the policy.
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Newly-licensed suppliers in the Swedish market have been warned that the regulator is preparing to enforce against those who continue to supply the black market, but doubts remain about the effectiveness of the policy.

From July 1, companies supplying Swedish gambling operators have been required to hold one or more licences offered by the Swedish Gambling Authority (SGA).

The stated goal of legislators was to crack down on the black market and improve channelisation, which could currently be as low as 59 percent, according to figures from formerly state-owned horse betting operator ATG.

The central condition of the new permits is that licensed suppliers should not supply their products to operators that target Sweden without a local licence.

Although doubts have been raised about how effective enforcement will be in this area, a leading Swedish lawyer has warned that the SGA is preparing to crack down.

Speaking at the Scandinavian Gaming Show in Stockholm on Thursday (November 2), Elvin Sababi, a junior partner at Nordic Gambling, said that the regulator sent a letter to suppliers last week stating that it was aware of licence-holders still serving the black market.

The letter warned that it would soon begin enforcement investigations, said Sababi.

Sweden’s plan to go after non-compliant suppliers is testing new regulatory ground in Europe, said industry figures.

“No regulator has implemented supplier permits with this intention [before],” said Victoria Fernandes, the head of legal and regulatory compliance at Kambi, which holds four licences in Sweden related to supplying sportsbook platforms.

“There is a major loophole in Sweden where you can still take bets from Swedish players if you don’t market or aim your games at the Swedish market,” noted Morten Ronde, managing partner at Nordic Gambling.

“So there’s going to be a lot of unlicensed games in the market until you stop that, so [supplier licensing] was a good step in the right direction,” he said.

Although both Fernandes and Ronde agreed that the policy will ultimately be good for Sweden’s potentially ailing channelisation rate, they suggested it would contribute only a few percentage points of improvement.

Sweden’s government appears to disagree with outside estimates of black market leakage, having declared that the market is healthy and well channelled last month as it announced plans to increase the tax rate from 18 to 22 percent of gross gaming revenue (GGR).

Supplier licensing could also soon spread further across Scandinavia, with Ronde warning that it was likely Denmark would unveil plans for a similar scheme at a government announcement scheduled in two weeks.

The plans could additionally reveal long-rumoured restrictions on advertising, suggested Mikkel Taanum, a lawyer with the Danish office of Bird & Bird.

In neighbouring Nordic country Finland, supplier licensing is also likely to be considered as part of a project to define new gambling legislation that will open the country’s online market for the first time.

Sweden is expected to be the most influential model for the Finnish civil servants tasked with drafting the legislation, ahead of a planned market opening at the start of 2025.

The Scandinavian Gaming Show continues today with a focus on Finland.

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