Sweden: how effective is Spelinspektionen in preventing players from playing at unlicensed casinos?

News Team July 12, 2024

On July 5, the Swedish regulator, Spelinspektionen, banned yet another iGaming operator from the Swedish market for targeting local players without a license. While casinos without a Swedish license aren’t illegal in Sweden, targeting the Swedish market without proper authorisation is prohibited.

The challenge of channelisation

The Swedish gambling operator, Aktiebolaget Trav och Galopp (ATG), recently published a report estimating the unlicensed market in Sweden to be worth between SEK 3.7 billion (€327 million) and SEK 7.4 billion (€654 million) annually. The report also noted a tenfold increase in website traffic to unlicensed operators since 2019. Among the 20 most visited unlicensed iGaming websites, seven allowed players to use Swedish banks for direct deposits and withdrawals. The most popular site in 2023 attracted over 15,000 visits in just three months. As Bruno Berlafa, webmaster at , explains “The government has set a goal that 90 percent of all gambling should take place via licensed companies. According to ATG, the current level shows that it is far below this target as they estimate it to be between 68 and 81 percent.” Moreover, the rate decreased from 69-82 percent in Q1 2023 to 68-81 percent in Q4 2023, which has been deemed “critically low” by various stakeholders and licensed iGaming operators. They call for increased pressure from the authorities on the unlicensed market. This low channelisation rate, referring to the movement of players from the unlicensed or illegal market towards the legal market, exposes licensed providers to strong competition from unlicensed operators. A published by the Swedish Trade Association for Online Gambling in April 2020 found that the competition is particularly fierce for casinos, as unlicensed sites are quite similar to licensed ones and easily accessible. Licensed sports betting platforms face medium-high competition, while horse betting, lotteries, and bingo encounter lower competition from unlicensed operators.

Spelinspektionen’s measures against unlicensed operators

On July 1, 2019, the gambling market in Sweden was regulated, and a licensing system was implemented following the Swedish Parliament’s approval of the new Gambling Act. This legislation set a channelisation rate of 90 percent as the political goal of the reform. Spelinspektionen, the Swedish gambling regulator, plays a crucial role in maintaining a safe, legal, and transparent gambling market. One of its main missions is to maximise channelisation, as a lower rate results in lost tax revenues and reduced investments in sports and other organisations. In July 2023, the Swedish Parliament (Riksdag) granted Spelinspektionen additional powers to fight unlicensed gambling operations. The regulator can now impose immediate payment blocks on transactions involving Swedish financial services and unauthorised gambling entities. Spelinspektionen can also use false identities to purchase gambling services, allowing it to monitor companies in both regulated and black markets. To enhance enforcement, Spelinspektionen has allocated more resources to its surveillance teams. Financial institutions licensed by Sweden’s Financial Authority are now required to document all transactions involving gambling operators, facilitating oversight and more effective regulatory enforcement. Further reforms are expected through proposed amendments to Sweden’s Gaming Act of 2018, aiming to ban all credit-related transactions in Swedish gambling activities by spring 2025.

Raising awareness

Spelinspektionen is also raising awareness to increase channelisation. A survey conducted by Företagsutveckling AB, in collaboration with CasinoFeber, revealed that a key factor for players when selecting a betting site is whether the operator has a Swedish license. However, 61% of players did not know how to verify a site’s licensing status. This lack of knowledge was higher among older players (aged 50-75), with 72% unaware of how to verify the operator’s status. Conversely, 56% of those spending 2,500 SEK (€222.30) or more monthly knew how to verify a site’s licensing.

A declining market?

In 2023, Sweden’s licensed operators reported a Gross Gaming Revenue (GGR) of SEK 27.1 billion (€2.4 billion), marking the first decline since the sector was re-regulated on January 1, 2019, with a decrease of just over 1 percent compared to 2022. Despite this decline, the Företagsutveckling AB survey revealed increased participation, with online gambling engagement rising from 12% of Swedes in 2022 to over 16% for online casino players and 20% for sports betting by 2024.

Channelisation across Europe

Sweden is not the only country struggling with channelisation. A study from the University of Leipzig, published in 2023 in collaboration with the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV), revealed that half of German players place bets with unlicensed and illegal iGaming operators. Almost 30 percent of German betting traffic goes to unlicensed EU providers, and nearly 20 percent to unlicensed offshore providers. In December 2023, the French regulator Autorité Nationale des Jeux (ANJ) estimated that the gross gaming revenue (GGR) generated by illegal gambling ranges between €748 million and €1.5 billion. This represents between 5% and 11% of the total gambling market, which was worth a record €12.9 billion in 2022. Similarly, the European Gaming & Betting Association (EGBA) reports that the illegal online gambling market in Italy generates an annual revenue of around €1 billion.