Relief for Swedish operators as court rules fines must be based on GGR and not turnover

Sweden’s highest court, the Supreme Administrative Court, has ruled that fines handed out by the country’s gambling regulator must be based on gross gaming revenue (GGR) rather than turnover.

The landmark ruling comes following an ongoing battle between the Swedish Gambling Authority (SGA) and Genesis Global after the operator was fined for failing to connect to Spelpaus, Sweden’s self-exclusion register.

In 2019, the SGA fined Genesis SEK4m under its penalty fee regulation, which allowed the regulator to demand a minimum of SEK5,000 and a maximum of 10% of the licensee’s turnover from the previous financial year.

Genesis originally took its claim to an administrative court, which partially upheld the SGA’s action, ruling that Genesis had breached the requisite self-exclusion obligations but that the SGA’s estimation of the operator’s turnover was too high and therefore the fine should be reduced.

Genesis took this judgment to the Swedish Court of Appeal, which likewise decided the SGA was correct in issuing a fine but that SEK4m was too high, proposing SEK1m as a more appropriate figure.

Despite these rulings, Genesis and SGA took the appeal to the highest possible court in the country, the Supreme Administrative Court.

In the latest ruling from the Supreme Administrative Court, Sweden’s highest court, it concluded the SGA did have grounds to issue the fine to Genesis based on its failings.

However, as per the lower courts, the Supreme Administrative Court established turnover had not been clearly defined in SGA’s regulations.

Therefore, the court ruled that fines should be based on net turnover, namely GGR, as this would represent appropriate accounting practice.

EGR understands that the original SEK4m will now be retconned following the Supreme Court’s decision.

The final penalty fee will be decided either by the SGA or a lower court.

In a statement following the decision, the SGA said: “All guidance from the highest instance is beneficial for the authority’s continued assessments. In concrete terms, the ruling means that the SGA must re-examine the issue of penalty fees for Genesis Global. 

“The authority also analyses what significance the court’s conclusions may have in other cases regarding penalty fees.”

Gustaf Hoffstedt, general secretary for Swedish gambling trade body BOS, said penalties based on GGR had been the “obvious” route to take but he voiced concerns that fines could suddenly balloon to equate to a turnover-based level of punishment.

“This decision is very welcome, albeit belated,” Hoffstedt said. “It is only GGR that the gambling company has at its disposal and can therefore use to pay any penalty fees. The rest of the money belongs to the gamblers and not the gambling company.

“We look forward to the SGA’s review of sanction decisions made since the Swedish reregulation. We appeal to the inspectorate not to increase the penalty fee based on GGR tenfold, just to get to the same level as the previous fee based on gross turnover.

The Swedish penalty fees have been grotesquely high and now the Supreme Administrative Court is giving Sweden a second chance to settle on a more reasonable level for penalty fees,” he added.