Regulation

The Swedish Gambling Authority needs to tackle the black market – and fast 

Mikael Pawlo, chairman of Mandalorian Technologies, says the regulator needs to start  imposing “severe measures” on unlicensed operators 

The internet has no borders, they say, but it seems online gambling is an exception. This is an industry where borders are being raised at a speed that would stun even President Trump. However, if the regulation and the serious parts of the igaming industry are supposed to survive, borders need to apply not only to good actors but also to the bad faith actors.

Sweden has a new gambling legislation since 1 January 2019. Forty-one investigations are ongoing by the Swedish Gambling Authority (SGA). Out of this, there are zero investigations regarding unlicensed casinos offering games to Swedish players. The Swedish Gambling Authority is focusing on marketing, bonuses, offering games to youth or carried out by youths, and self-exclusion from playing. According to the authority, 91% of gambling is carried out by licensed operators. This is 9% carried out by unlicensed operators on a market worth some SEK12.7bn (€1.18bn) That is a huge chunk of unlicensed games. However, what I hear through the grapevine in the industry is that the number is vastly higher, perhaps up to 30%, at least for casino games, as LeoVegas CEO Gustaf Hagman has also suggested.

The main reason for the difference in approach is that the SGA counts the people using self-exclusion as off the market, while they in practice often continue playing with unlicensed operators, now completely out of protection and out of the statistics. The number is high, some 40,254 players had self-excluded in September 2019. So are these players not playing anymore? The Swedish Gambling Authority thinks so and the responsible minister often communicates that public health is safeguarded with the self-exclusion – but is it? If some of arguably the most vulnerable players are moving into unlicensed operators, with no incentives to follow any rules – where does that leave us?

A bad hand

In practice, licensed operators are being dealt a bad hand by the regulator. They are not allowed to compete on the same conditions as unlicensed operators, plus they must pay hefty levies and duties to stay in business. They also have to play with their cards face up showing all competitors how they are doing at any given time. At the same time the unlicensed operators may both cause severe harm to the most vulnerable players – even the self-excluded ones – while competing with bonus offers and other tactics not available to licensed operators.

Regulators like the Swedish ones now have three options:

– Turn a blind eye as they are currently doing and don’t attack unlicensed operators. Act like everything is fine, until some severe gambling problem related issues hit the media with self-excluded people having lost a fortune plus more on unlicensed operators.

– Act swiftly and start blocking unlicensed operators with severe measures and fines, plus going after payment providers and gaming suppliers supplying games. Evolution Gaming has already started removing unlicensed operators from their client list from the Swedish market – but this is without any initiative from the regulator. This is just good housekeeping from Evolution Gaming, but we can’t rely on every supplier operating like that, can we?

– Change the standards for operators to be able to compete with unlicensed operators. This won’t help players at risk in the self-exclusion registry but it will level the playing field in terms of competition between unlicensed and licensed players in the market.

In my opinion, anything but option one would be very much against the spirit of the regulation as such and it would potentially also hurt the industry – and even the respect for the regulation – severely.

The Swedish regulator needs to move swiftly and set the example against unlicensed operators. Other regulators should take notice and learn from this example.

A border that is not properly built and safeguarded is no border. The internet was built to treat censorship as damage and route around it. However, online gambling is being carried out by companies present in the real world. They are possible to monitor and regulate, even though stopping their respective websites may be hard. The regulation needs to address all companies, not just the ones that voluntarily want to comply.

Mikael Pawlo Mandalorian Technologies

Black market | Regulation | Sweden | Swedish Gambling Authority

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