New regulations: Sweden has become a digital casino

Stein Langberget
Stein Langberget Special Consultant at Norsk Tipping

The Norwegian authorities have 20 years of experience in handling unregulated foreign gambling companies. In Norway, such companies have continued to ignore the public authorities’ attempts to implement a regulatory framework based on responsible gambling. They have continued to find creative ways of working around Norwegian legislation and the intentions of the legislators. Recent experience from Sweden is showing with startling clarity what these companies do when given the opportunity to transition from illegal to legal activity. It’s simply “business as usual”.

The unregulated companies claim that they represent the future of the gambling market. There are almost no limits to profit-making opportunities in the world of gambling, if that is your only objective. But gambling is not a service like any other. The games that generate most revenues for the unregulated sector have clear similarities to the one-armed bandits and fruit machines that were banned in Norway in 2007. The unregulated companies have simply transferred the one-armed bandit principle across to digital platforms. The same idea in a new package. The games are played at high intensity and many players have no chance against a professional gambling operator who manipulates players by continually racking up the intensity. They offer bonuses, well-timed audio and visual stimuli, all supplemented with extensive mass communication campaigns and VIP treatment for those who lose the most. All too often it ends up with customers losing more than they can afford. It should therefore surprise no-one that these games dominate the calls to the Help Line and are recognised as the biggest issue dealt with by health professionals and volunteers who treat people suffering from gambling addiction.

Are we sure that this is the future of the gambling market? I believe that the answer is no. There is no reason why we in Norway should want to stimulate the gambling market towards increased growth in games that carry the greatest risk. We tried this before during the one-armed bandit days, but back then we had politicians who dared to impose tough regulatory measures when the gambling companies went too far in their eagerness to maximise revenues. The latest attempt by the authorities to regulate the market here in Norway is the proposal to make amendments to the Norwegian Broadcasting Act (kringkastingsloven), which may have a major impact by removing the illegal advertising of high-risk games. A market dominated by online casino gambling may guarantee a sustainable financial future for the unregulated companies, but is of no benefit to the development of our society.

If we are to believe statements made by the unregulated sector, a licensing system offers the solution to the issues that these companies themselves have created. There are no limits to the promises being made by the most vocal unregulated companies. They say that if they get permission to operate a licensing system in Norway, they will start complying with laws and regulations and enhance their work to promote responsible gambling, as many are demanding.

Many countries have introduced a licensing system for those offering online casino gambling. This has enabled us to amass a good deal of evidence on what such legalisation brings with it. The most recent example is Sweden, which introduced new legislation from 1 January 2019. On paper, the Swedish regulations are robust and their overall intentions good. They include detailed clauses stipulating how the gambling companies must help their customers in signing up to a joint self-exclusion register. There are also other key regulatory measures, such as placing constraints on the companies’ ability to offer bonuses. The most important obligations imposed on the companies’ behaviour involve high-level stipulations appealing to the companies’ own assessments and judgement. Among other things, licence holders shall make sure that social and health-related considerations are taken into account in order to protect players against excessive gambling behaviours and to help mitigate the activity of such players when the opportunity arises. Licence holders also have a duty to display restraint in their marketing activities. So far, so good.

To date, a total of 116 licences have been issued. Sixty-two of these have been issued to commercial online gambling interests, which in practice are online casinos and gambling machines. It is likely that many more will register their interest in the future. The most recently published survey shows that only three per cent of Swedes play these games and there is reason to believe that a significant number of players are suffering from gambling problems as a result. When 62 different companies are fighting to attract these players’ attention, things can get very nasty. Competition in this sector is intense. The market is now saturated with companies that have for some time been competing for the most lucrative customers (those who lose the most) with the aid of personal incentives and marketing budgets that appear to be inexhaustible.

In those situations where the Swedish authorities have entertained the hope of restricting the sector for the benefit of vulnerable players, the gambling companies have simply viewed the legislation as an opportunity to rake in even more money from their online casino and gambling machine operations. It appears that while compulsory regulatory requirements have for the most part been complied with, the more discretionary restrictions placed on the gambling companies are being overwhelmed by determined actions on their part to boost revenues and win market shares. I believe that this is the true face of the unregulated gambling market.

A glimpse of a typical Swede's “media day” illustrates the level of pressure imposed by the market. The companies spent SEK 7.4 billion on advertising of gambling products in 2018, an increase from SEK 3.8 billion in 2016. There are also reports of an explosive growth in advertising expenditures from January 2019. Advertising-funded radio and TV in Sweden are saturated 24/7 with adverts for online casino gambling. From 1 January, up to 80 per cent of advertisements displayed on public transport were for gambling products. In order to read online the biggest news media such as the papers Expressen and Aftonbladet, you have to click through casino advertisements before being granted access to the front page. There is free access to social media platforms such as Facebook, YouTube, App Store and Google. As a gesture of gratitude for being granted legal status in Sweden, the collective gambling sector has simply gone berserk!

The aim of introducing a licensing system in Sweden was to address the problems caused by the country’s ambiguous regulatory system. Right now it looks as though the new system has created more problems than it has solved.

While casino gambling adverts are wreaking havoc across the Swedish media landscape, the Minister for Public Administration is desperately trying to turn the situation around. He has given the gambling companies an opportunity to demonstrate how they are planning to constrain the excessive advertising pressure. The provisional response from industry lobbyists the Association for Online Gaming (BOS) and the Swedish Gaming Industry Organisations (SPER) is that they are unclear as to exactly what the Minister expects of them. They refer to the fact that if the authorities have introduced a free competitive market in the first place, the companies must expect to be able to market their products and services with an intensity that they feel benefits their interests.

The same companies now operating in Sweden have requested that the Norwegian authorities look to their neighbours for inspiration as to how the gambling market can be regulated in a proper manner. Our sincere hope is that this is exactly what the Norwegian authorities will do. While the Swedish authorities have introduced a broad array of regulations aimed at ensuring that gambling can be implemented legally, properly, and in a way that limits the negative impacts of gambling, the gambling companies have expressed their gratitude for the trust shown by the Swedish authorities by turning the country into a digital casino.

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