Open letter to Minister for Public Administration Ardalan Shekarabi
Ardalan’s pyrrhic victory risks torpedoing Swedish gambling regulations
– If players leave, companies will follow suit
On January 1, 2019, new gambling regulations were introduced in Sweden. Minister for Public Administration Ardalan Shekarabi spearheaded the reform, with cooperation from the opposition, resulting in broad support in the Swedish Parliament. The overall mantra was that the state should regain control of the gambling market after decades of gambling moving to companies that operated in Sweden without a license. Parliament’s preferred method of effective gambling market control is what is known as channelling, i.e. regulating what percentage of Swedish consumers choose to play with Swedish-licenced companies.
As expected, this resulted in a crossroads where companies, with the aim of maintaining a long-term business model, welcomed more insight into operations and greater control over players’ behaviour in exchange for a well-functioning and sustainable gaming market. In order to ensure responsible gaming, companies were required to implement a number of measures, such as age verification, bonus limits, limits on deposits and time played, as well as extensive processes to prevent money laundering and unhealthy gambling habits. This became a matter of importance for the 90 companies that chose to apply for a Swedish gaming license and together laid the foundation for a new Swedish gaming market that focused on strong consumer protections.
But not everyone jumped on the Ardalan train. Many companies felt there was more to gain from staying out of the system and continuing to offer games beyond the reach of taxes, controls, and other responsible gaming measures – the so-called black market.
Today, only a year later, it turns out that the “package” that the licensed companies chose to buy and sign onto has changed character completely and thus risks losing all its appeal, benefitting companies that chose to operate on the black market. We must remember that it is the customers who choose where the best product is. In a digital world, that power does not lie with the state, or with us as corporations for that matter.
We operate in a digital world and have direct access to all the relevant data needed to evaluate what measures can help strengthen our players’ safety and security while still providing attractive offers and products. The sad thing is that the government, with Ardalan Shekarabi at the forefront, does not want to talk to us about how we can work together and, with help from the insights we possess, develop a well-functioning Swedish gambling market. This became especially clear when the Minister, on April 23, proposed new emergency restrictions, proclaiming that, “The Government sees major risks in the gambling sector right now.” But the overall gambling industry (private and state) doesn’t see the same pattern at all. Instead, we see how gambling has diminished compared to what it looked like before the covid-19 crisis struck.
This week, the independent research firm Copenhagen Economics published a report describing how more and more players are choosing to spend their time with companies operating on the black market. This can be seen as nothing other than a failing grade for the government, which has completely failed to defend its own licensing system. The biggest drop was among online casinos, where approximately every fourth krona gambled goes to an unlicensed company instead of a company with a Swedish license.
Minister Shekarabi knows about this; he also has access to statistics that reveal a reduction in channelling. But for some inexplicable reason, he doesn’t seem worried that more and more players are going to the uncontrolled black market. The purpose of the re-regulation, which had broad support in the Swedish Parliament, was to create a more sustainable gambling market that functioned well in the long term. Now the minister is about to create a “Wild West 2.0” in the gambling market, and he’s doing it in the name of consumer protection. It is now clear to us that Ardalan Shekarabi does not share our ambition to create a sustainable and safe gambling market since his latest proposal is perhaps the best advertisement yet for players to abandon licensed companies in favour of the black market.
Every company, regardless of industry, wants to be where the customers are. If the customers leave, the companies will follow suit. The Swedish gambling market not only provides safety and security to players but also contributes billions annually in much-needed tax revenue and investment in sports. By slowly eroding the Swedish gaming market month by month, the government risks bringing about major cuts in security, tax revenue, and societal investment.
We can only be left to wonder why Ardalan Shekarabi wants to torpedo his own gambling regulations.
Pontus Lindwall, CEO, Betsson AB
Henrik Tjärnström, CEO, Kindred Group
Gustaf Hagman, Group CEO, LeoVegas
Therese Hillman, CEO, NetEnt AB
Ulrik Bengtsson, Group CEO, William Hill Plc