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Sweden faces counterproductive effects from gambling restrictions

Sweden is one of the countries, with some of the toughest restrictions leading to counterproductive measures

Most countries in Europe, have implemented new gambling laws, regulations, restrictions, and licensing systems. Sweden is one of these countries, with some of the toughest restrictions that have led to counterproductive effects.

Harsh restrictions from the beginning

1 January 2019, Sweden launched the gambling regulation, with new laws, restrictions, and a licensing system for gambling operators. This is nothing new within the iGaming industry, but with Covid-19, Sweden took this trend to the next level.

Sweden didn't just implement harsh laws and restrictions that directly affected the gambling operators, but also the players. One example is that the player can only retrieve one single bonus per license.

This means that a Swedish player can only use one single bonus from all brands that operate under the same license in the country. This is obviously something that has led to confusion among the Swedish players, since very few know about this law and that several gambling sites operate under the same license.

According to the Swedish Gambling Authority, there are 283 brands offering online casino, sports betting, and other types of online gambling. These 283 brands operate under a total of 72 approved licenses.

Extra Covid-19 restrictions

On top of the restrictions that the new Swedish gambling law includes, the Swedish government decided to launch extra restrictions due to the Covid-19 pandemic, with the motivation to prevent that more Swedish players end up in gambling addictions.

Additional Covid-19 restrictions

• Deposit limit of SEK 5,000 (€490) per week.
• Maximum SEK 5,000 (€490) per week in losses on slot machines.
• Own limit set for maximum playing time, per day, week, and month.
• Gambling companies may only offer one single bonus of max SEK 100 (€10).

This was decided despite that research from the Swedish Health Authority, proved that the gambling habits in Sweden did not change because of the Covid-19 pandemic. But the additional Covid-19 restrictions were still taken into effect. It has now lead to a completely different effect where the Swedish authorities are actually losing more control over the situation.

Swedish players seek unlicensed operators

Since the introduction of the Swedish gaming regulation and licensing system, interest in unlicensed gambling companies has exploded. There are also no signs that this trend would level off and this is something that has become a big problem for the Swedish authorities.

swedish players

Source: Google Trends for “casino utan svensk licens”, (casinos without Swedish license).

According to the Swedish football betting website, Fotboll.com, this is a trend that will stick and grow as long as the current restrictions apply in the country.

They refer to the Laffer curve effect, a theory that is based on tax levels and what people accept before they start to seek ways to get around the system. They mean that the Swedish players simply don't accept the current restrictions, and therefore are forced to look for unlicensed alternatives where they are not restricted.

Sweden is losing millions in tax

Sweden is not just losing control when it comes to preventing gambling addiction, they are also losing millions in taxes due to all the players, especially high rollers, seeking unlicensed operators.

With hard restrictions for both bonuses and deposits, the players that want to play with high stakes and bonuses, are forced to seek unlicensed alternatives.

In fact, the Swedish Health Authority reported that 3% of the Swedish gamblers account for 50% of the total gambling revenue in the country. This means that potentially more than 50% of the forecasted tax may be lost.

The current gambling tax for licensed operators is 18% of the player revenue, and this obviously means a huge loss of taxes.

Extended Covid-19 restrictions

Despite all the reports and the proven counterproductive effects, the Swedish government decided to extend the additional Covid-19 restrictions until 14 November 2021.

This has raised confusion within the iGaming industry, whether the Swedish government prioritizes gambling addiction effects and tax income or if the taken actions are just a way of gaining increased political support in Sweden, where gambling generally is considered to be something bad.

Very few are breaking the law

The non-restricted alternatives for Swedish players are the approximately 450 Curacao licensed operators that have a global license for online gambling. Basically, no laws are being violated by these companies, even when accepting Swedish players.

These operators are only violating Swedish laws if they offer a version of the gambling site in Swedish, with the Swedish currency SEK, and/or if they are actively marketing their site in Sweden, directly targeting Swedish people.

The Swedish players are not doing anything illegal either, and as long as the operator also has a gambling license within the EU, the winnings aren't even taxed.

Esports bettors are likely to choose unlicensed operators

Esports betting is growing rapidly around the world, and looking at the popularity within online betting on esports events, Sweden is top 5 in the world when it comes to organic searches, for example when it comes to searching for betting sites with CS:GO odds. (Counter-Strike: Global Offensive).

Monthly search volume for “CSGO betting”

• Globally 19.000
• United States 5.700 (30%)
• United Kingdom 3.600 (18%)
• Canada 1.5K (7%)
• Sweden 1.5K (7%)
• Australia 900 (4%)
• Germany 700 (3%)

(Google searches)

Source: Ahrefs.com Keyword Explorer

esports

There are very few esports-focused betting sites with a Swedish gambling license that offer a vast selection of odds on different esports games and events. This means that even the esports-interested bettors could be forced to wager their bets at unlicensed esports betting sites, where they can find all the games and events.

Minding the huge interest around betting on Europes most popular esports title CS:GO, there are most likely thousands of Swedish people that every month wager their bets at unlicensed operators.

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