Stakes are high in Sweden: An examination into gambling law changes

In ‘The Gambling Market in Numbers 2023’, issued by the neighbouring Danish Gambling Commission, Sweden was revealed to be the European country with the highest share of online gambling spend last year. Although Sweden was 10th in Europe when it came to GGR, reporting SEK 27.1bn ($2.53bn) from its regulated market, 69% of this came from online gambling through its 92% channelisation rate – the fourth highest out of the countries present.

In its Q1 2024, the Spelinspektionen Swedish Gambling Authority reported that online gambling had a turnover of SEK 4.3bn, the highest figure for the corresponding quarter since the licensing system was introduced in 2019.

Notably however, this was the quarter when Casino Cosmopol was closed in Gothenburg and Malmö. It was also the same time when the Spelinspektionen and the International Betting Integrity Association signed a deal to counteract match-fixing, completed an inquiry into party-political lotteries, renewed its cooperation with the UK Gambling Commission, made changes to the notification system, made amendments to lottery regulations and guidelines, introduced criminal record background checks, banned several companies… You get the idea, it’s been a busy first half of the year for the Authority.

Rather than asking why Sweden is doing all of this, as we already established why it’s probably taking its gambling industry so seriously in the opening paragraph, let’s instead analyse each of the steps it has taken this year – and whether this is something other gambling authorities could learn from.

Access to criminal records

On 23 May 2024, the Swedish Government approved the Spelinspektionen to have access to criminal records. This would allow the Authority to check for any crimes committed by a person, including illegal gambling activities and insider crimes.

“Authorities should not be able to be infiltrated by criminals. With today’s decision, we are taking another step to strengthen the fight against money laundering and match-fixing, for example.” Niklas Wykman, Swedish Minister for Financial Markets

The Government went on to explain that the gambling market has a “significant turnover and can thus attract interest from criminal actors”, due to the fact that the industry has such a high risk of money laundering opportunities. While it may seem intrusive to require such checks, this is one of the best ways to deconstruct organised crime in a country.

Of course, this is something that’s already employed across many countries, the process in the UK to receive a gambling Personal Management Licence (PML) or Personal Functional Licence (PFL) is extensive and will also require the applicant to undergo criminal record checks.

These changes will go live in Sweden on 1 July 2024.

Ban on credit cards

On 21 May 2024, the Spelinspektionen came out in support of a proposed ban against credit cards in gambling. While there was an initial focus on lotteries, the Swedish Gambling Authority doubled down by stating that it “also agrees with the proposal that the prohibition should cover all forms of gambling subject to a licence” in the country.

This didn’t go unchallenged though. The Swedish Trade Association for Online Gambling (BOS) didn’t wait long and published its own statement on 23 May, two days later. The Association flat-out rejected the proposed ban, although it did emphasise that “BOS agrees with the approach that you should not gamble on credit” and that “we have given our support to all the bans that have been proposed in this area”.

“Gambling on credit can lead to major financial difficulties. That is why we are now stopping that possibility. It is not reasonable for gambling companies or gambling agents to contribute to individuals taking such large risks.” – Niklas Wykman, Swedish Minister for Financial Markets

Gustaf Hoffstedt, Secretary General of BOS, proposed a few different reasons for this. According to Hoffstedt, “it goes without saying that it is important that people do not spend any money on our business before the basics of life – such as food, housing and clothing” and that most of the people who use credit cards “tend to be older and have a more organised economy than average”.

Another point Hoffstedt raised was the comparison to other addictive industries, claiming that “one can certainly object to the comparison between alcohol addiction and gambling addiction” because “the former phenomenon does not always have the same financial consequence of an addiction as the latter”. He went on to emphasise that even though 310,000 Swedes were addicted to alcohol, while 40,000 were addicted to gambling, credit cards can still be used to purchase alcohol.

“The purpose of the proposal is to prevent gambling for money from leading to indebtedness. Gambling companies with a Swedish license are subject to a duty of care which means that they must counteract excessive gambling. They must have an action plan for the implementation of this work.” – Spelinspektionen

So, how controversial is this proposed ban? Well, looking at the wider European gambling scene, it’s actually the norm. Germany banned credit cards in gambling in 2020, going as far as instructing the banks to block the payments if necessary. The UK implemented a similar ban in the same year, while Spain introduced credit card bans for players showing ‘intensive’ behaviour. Belgium, Norway, and even Brazil in South America already have credit card bans in place too.

Closing land-based casinos

On 7 May 2024, the Swedish Gambling Authority proposed a memorandum to make changes to the licensing system. It discussed, at length, how the state-owned casinos should be dismantled and that more effective anti-money laundering supervision should be introduced.

“In this memorandum, legislative amendments are proposed to remove the form of gambling at a casino from the license type state gambling. The consequence of this will mean that no operators will be allowed to provide gambling at a casino in Sweden. The casino that is currently operated by the company Casino Cosmopol AB will therefore be closed.” – Spelinspektionen

Of course, the issues with Casino Cosmopol have been extensive and the operator has caused more problems for the Swedish Government than anyone could’ve imagined these past few months.

A report was published on 19th December 2023 which stated that the Spelinspektion was having to step in “to prevent the company from being used for money laundering and terrorist financing” after multiple failures were found in Casino Cosmopol. As part of this, the Spelinspektionen has decided to issue a penalty of SEK 2m and an official warning to the operator.

In one example, a customer was allowed to deposit SEK 45,000 multiple times a week, despite their income being listed as SEK 30,000. This customer admitted that they funded this through taking out loans, which Casino Cosmopol deemed as a “valid explanation for their income and took no further action” against them – even when this customer lost SEK 240,000 in one day.

However, there was also an interesting example used against Casino Cosmopol. One of the customers was found to have withdrawn SEK 1.1m from the casino, but a corporate disclosure found that the customer’s company had made share dividends towards Casino Cosmopol. In addition, the customer was married to the person who owned the auditing company involved with the company.

In the official statement, Svenska Spel explained that the decision to close Casino Cosmopol was due to falling profits as more people were migrating to online casinos.

“The movement from gambling in land-based casinos to gambling online accelerated after the reregulation of the gambling market in 2019 and the subsequent Covid-19 pandemic, when Casino Cosmopol remained closed. Our review of Casino Cosmopol has taken place in close dialogue with our owner. We share the assessment that it is no longer possible to run Casino Cosmopol profitably.” – Erik Strand, Svenska Spel Interim President and CEO

However, as some might say in the industry, “there’s no such thing as a coincidence”. Alongside the memorandum to close Casino Cosmopol, the Swedish Gambling Authority also demanded that regulations around money laundering should be much stricter.

The Spelinspektionen requested an obligation to be put into place to report any transactions, customers or other conditions which seem suspicious, with a total of 21 proposed changes made to the anti-money laundering legislation.

The legislative amendments relating to gambling at casinos are proposed to enter into force on 1 January 2026.

The amendment to the ordinance concerning lotteries is proposed to enter into force on 1 September 2024.

The amendments to the statutes concerning the reporting obligation are proposed to enter into force on 1 July 2025.

This seems to be the only change that cannot be reflected across wider Europe. While it might have seemed like Sweden was finally catching up in terms of credit card bans and criminal record checks, it was a surprising move for everyone when it was announced they’d dissolve their land-based operations.There’s no way to predict how this will affect the Swedish gambling scene, or whether this will have ramifications anywhere else. All we can do is wait and see how the amendments play out this year in the run-up to the land-based casinos closing their doors before 2026.