The Swedish gambling authority Lotteriinspektionen has yet again reported that gambling operators regulated abroad have increased their share of the Swedish market. According to Lotteriinspektionen, non-Sweden regulated operators, who offer their products exclusively online, currently command 25% of the Swedish gambling market (gross winnings revenue). For the first three quarters of 2017, the overall market increased by 3% compared to the same period last year. In this period, non-Sweden regulated operators grew by 11% while operators regulated in Sweden reported zero growth as a group. Thus, the proposition to implement a new license-based system in Sweden, encouraging foreign-based companies to move to Sweden and operate under Swedish regulations, is becoming ever more urgent. The current goal is to have a new system in place by January 1, 2019.

However, not only operators regulated abroad are growing online. Operators regulated in Sweden are also increasingly positioning themselves online. During the first three quarters of 2017, state-owned Svenska Spel saw an increase in online revenue by 15% while land-based gambling revenue decreased by 5%. Similarly, horse racing monopolist ATG saw an increase in online gambling revenue by 16% and a decrease in land-based gambling revenue by 8%.

While the aim of a future license system certainly is to attract foreign-based operators targeting the Swedish market to also move to Sweden, the rapid shift to online gambling could actually have the opposite effect, incentivizing currently Sweden-regulated operators to set up shop off-shore instead (e.g. Malta).

Examples of the latter have recently occurred in the Netherlands, another European gambling market in a similar situation. Just like in Sweden, a new gambling regulatory system is proposed to be in effect by January 2019. The proposed system will make it possible for off-shore gambling operators to apply for a license from Kansspelautoritet, the gambling regulatory body in the Netherlands. Licensees will then enjoy all the perks that come with a license, at the cost of paying Dutch company taxes on their gross earnings revenue instead of Maltese taxes (for instance). On the other hand, operators who are already regulated in the Netherlands might be able to move the bulk of their business elsewhere, since a prerequisite for obtaining a Dutch online gambling license is to only have some form of physical presence in the country.

As a result, several incumbents are now preparing their move to Malta, making the island their base ahead of January 2019. Depending on what is considered sufficient to meet the Dutch requirement of a “physical presence”, it might potentially sway operators towards fully operating under a Maltese gambling license, and not a Dutch one. This is certainly an unintended effect of the proposed gambling regulatory system in the Netherlands, as it would be in Sweden.

Mediavision continues to follow the development of the Swedish gambling market closely. In December 2017, a full-year analysis of the Swedish gambling industry will be published, focusing in particular on the online and foreign-based operators.

For more information contact Arvid Åsbrink, Senior Analyst at Mediavision.