Norway’s next top model? How one of the final monopolies in Europe could fall

The Norwegian Gambling Authority (NGA) surprised the industry in September when it unexpectedly announced that several major operators would be withdrawing from the market. Betsson, bet365, ComeOn Group and Unibet parent company Kindred Group were the biggest names to be included on the list released by the regulator.

For Betsson, its battle with the NGA stretches back to July 2021 when the Stockholm-listed operator was first ordered to exit the country along with its four subsidiaries – Betsafe, Nordicbet, CasinoEuro and Norgesautomaten (no longer a Betsson brand) – with the regulatory body stating that the operator did not have a licence to operate in Norway. 

The operators hit back, with Kindred Group telling EGR in mid-September that it is “totally legal for Norwegian residents to play with overseas gambling companies”. Just a little over a week later, the NGA announced that it would be monitoring nine banks to ensure illegal gambling transactions are rejected in order to protect the current model.

This is just one measure Norway is taking to raise a channelisation rate that is among the worst in Europe. In fact, consultancy H2 Gaming Capital reported in 2021 that “international websites had a 66% share of Norway’s online market” and that the country was losing out on NOK2bn, or £150m today, in tax revenue.

In 2020, the Norwegian Industry Association for Online Gaming (NBO) claimed the channelisation rate for monopoly operators Norsk Tipping, which provides lottery, sports and online casino games, and horseracing betting operator Norsk Rikstoto could be below 50%. Those figures have been disputed by many, including NBO general secretary Carl Fredrik Stenstrøm, who tells EGR: “We have several different reports reporting the channelisation here in Norway and it’s difficult to actually know what it is. You have our figures and you have the figures of the NGA.”

Meanwhile, in September, the European Gaming and Betting Association (EGBA) encouraged Norway to abandon its monopoly model, with it being the only country in the European Economic Area not to have adopted an open licence system. The trade body said: “In Norway, there is a clear demand for alternatives to the current gambling monopoly, as evidenced by the determination of players to actively seek out and access international websites which offer them greater choice. It is crucial for the government to recognise and respond to this demand.”

Using evidence provided by the NGA, Norway’s problem gambling numbers more than doubled from 22,000 in 2013 to 55,000 six years later. Fast forward to 2023 and new research shows approximately 23,000 consumers suffer from some form of gambling addiction in Norway, and 93,000 are at risk of developing gambling-related harms.

In a press release on the regulator’s site, Henrik Nordal, NGA director, said: “We see that we are able to protect many players with effective measures.” The NGA attributes this to the debt register, banks blocking deposits from “illegal companies” and players seeing less advertising for gambling from illegal operators. However, that hasn’t stopped the monopoly model coming under scrutiny. 

In April this year, Finland, which also operates as a monopoly, published the results of its research study into the current framework, and by June the Finnish government had announced a multi-licence commercial market will be implemented by January 2026. Following the departure of a number of operators from Norway, Stenstrøm’s argument remains the same. There’s an acknowledgment of the strong support for the monopoly, especially from the beneficiaries, or NGOs, and the political parties including the Social Democrats and the Centre Party, with a general election due in 2025.

The same can be said in Finland, where civil servants are still holding on to the old traditions of a monopoly system controlled by state-owned operator Veikkaus. But despite potential reservations, Stenstrøm is hopeful for a shift in attitude: “My expectation is that we will see a wind of change through the [Norwegian parliamentary] election in 2025 and that it will take some time after the election as well. But we will definitely move forward to a re-regulated market.”

It’s a constant process, as he admits Norway is learning from “Sweden, Denmark and other jurisdictions in Europe”. That knowledge gathering has led to the future implementation of a self-exclusion register, specifically naming Denmark’s ROFUS as an example. “The proposal is that we are going to implement a self-exclusion system only for horseracing and for Norsk Tipping and Rikstoto.”

On the operators leaving the market and Norwegians gambling abroad, Stenstrøm says that a Liberal Party MP recently asked why banks were stopping Norwegian players wiring their winnings back home when they are gambling on a physical casino abroad. “The minister of culture wrote that you’re absolutely correct, you are eligible to do this and the banks should be educated about this.”

According to the NGA, there are 250,000 Norwegians gambling on offshore accounts. This equates to almost 5% of Norway’s total population (approximately 5.4 million).

Yet Stenstrøm puts the number gambling abroad far higher than that. Despite the regulator declining to comment on the matter, Morten Ronde, a Danish lawyer for Nordic Gambling, says forcing operators to stop accepting Norwegian players is “concerning”. Even with the well-known operators exiting the market, Ronde believes the gap will simply be filled by operators from other parts of the world, such as Asia and Curaçao. He warns that it could lead to people playing with companies that pay less attention to responsible gambling than those that have exited Norway.

“Those are recognisable brands for the Norwegian government,” he says. “So, they will say, ‘Let’s get them to leave the market’. Some of these [other] operators will surely have less focus on responsible gambling than those named brands that were forced out of the market, so I see [channelisation] remaining the same […] because the void will be taken up by other operators.”

It’s an opinion shared by Knut Beckstrøm, head of operations at Frank & Fred Casino, who highlights that players should have the freedom to choose who they gamble with. He also predicts Norsk Tipping will gain more of the market share, but at a cost. “These international brands follow extremely strict rules for player safety, KYC, AML and responsible gambling at least as good as Norsk Tipping does,” Beckstrøm points out. “The winners will again be the black-market operators. That’s where the real channelling will be taking place.”

Keep the status quo     

While the pressure increases externally for a change, there are those internally who are advocates of the current system. Gambling Addiction Norway, established in 2002, stands firmly on this side. The organisation, which works regionally and nationally to prevent gambling-related harm, wants to see the monopoly system stay in place, arguing that players prefer the current setup and that it protects players better than a licensed model. Highlighting measures such as loss limits and time limits as well as the introduction of the payment intermediary and advertising bans, “which really work and make a big difference”, the organisation argues that there are no guarantees the black market would shrink if a change is made.

Lill-Tove Bergmo, general manager of Gambling Addiction Norway, tells EGR: “The monopoly makes it easier and more transparent for authorities to supervise and manage the gambling market in Norway. By far the most prominent justification for this is that a licensing model will have to include many providers, a lot of different games and the marketing pressure will increase.”

Bergmo praises the work of the monopoly system when it comes to banning casino games in Norway and the strict control it is able to enact over the market. While not making the case for the monopoly model, Ronde recognises its benefits. “You know where most of the gamblers are spending their money. We’re able to regulate that, we’re able to control and monitor the spend. That’s a key factor because if you want to apply responsible gambling measures, AI and other things, you need the gamblers to spend their money on those operators you can control.”

Such control includes blocking the DNS addresses of all foreign operators that market or target Norwegian players, which was first suggested back in 2018. The plan is to implement it from 24 January 2024. Stenstrøm says he finds it “very, very difficult to accept”. He argues that protecting the monopoly is not a reason to implement DNS blocking and that “it is important to remember it is legal for Norwegian players to gamble abroad”.

He adds: “Coming to the payment ban, we see other jurisdictions had considered it, but decided not to implement it. I understand Sweden considered it, but decided not to since it is expensive and after 10 years you have a high leakage.” 

Ronde believes payment blocking is having an impact but only to some extent. This way of combating the black market will force people to look for other solutions, for example using cryptocurrencies and prepaid cards. “I think what has happened is that it’s probably become even more grey and maybe even more irresponsible than it was before, where it was tier-one operators who were offering gambling in Norway.”

Similarly, Beckstrøm questions the impact payment blocking has on revenue and customers but is clear of what it is doing to the market. “It’s had an effect when you take away trustworthy ambassadors or bloggers who promote your brand in different scenarios. I’m against this ban as much as I am against the bank ban.”

It’s just an illusion

Denmark switched to a regulated licensed model in 2012 and in that time has achieved a channelisation rate of over 90%, according to the Danish Gambling Authority in 2022. The country’s setup is brought up frequently as it was one of the countries Finland researched when arguing whether to remain or move away from its monopoly model. Sweden, France, the Netherlands and Norway were the others.

Ronde understands why the country is used as a role model. “It’s an illusion to think that you can maintain a gambling market where there’s only one gambling operator. It is also an illusion to think you can block out all those who are targeting the market without a licence.”

Stenstrøm says for Norway to match Denmark’s achievements, it must work together and have a “long-term strategy”. However, Beckstrøm doesn’t think the likes of Denmark or Sweden are prime examples of how it should be done. “Sweden might have a slightly better model than Denmark, in my opinion. I do like that the KYC and AML checks are made automatically with implemented tools like BankID, etc. But as long as you are not allowed to give bonuses or other incentives to loyal players, you will still see more than half of the market’s revenues going to the black-market casinos, which is the case in Sweden.” 

Should Norway embrace the multi-licence commercial model, Ronde warns there will be criticism and negativity from the general public, which must be addressed from the beginning for it to succeed and avoid “what has happened in the Netherlands and maybe, to some extent, Germany”.

He explains: “I hope both Norway and Finland, when they get there, will open up in a proper and regulated way and address those concerns from the beginning, then I think it would be a success.” According to Stenstrøm, Norway’s politicians “truly believe” that a multi-licence model is the way forward and that serious companies want to make the change and pay tax.

“They want to be in a regulated market, and they are sure they will advocate for what they think is the best way to have high channelisation.”

For Beckstrøm, who claims the comments about problem gambling being halved are “borderline ridiculous”, the solution is one that has yet to be mentioned. Believing Poland’s model of a monopoly on online casino but a licensed framework on sports betting is not the answer, he knows that a change is inevitable. “With the right government in Norway, combined with the NBO, we could get the best model in all of Europe.”

But he adds everyone is going in the wrong direction, “licensed or not”. His solution? “Why not have one licence for Europe and the EEA? Like we have in so many other industries. That follows the same regulations, same rules, same competition. With a legal entity set up in each market you want to operate in and pay your taxes where the players play.”

With Finland preparing for change, it does remain to be seen whether Norway will join the rest of Europe and adopt a model many have wanted for years.