The Hard Truth About Swedish iGaming, with Gustaf Hoffstedt, Secretary-General, BOS
Finding the balance between market competitiveness and player protection has always been a challenge, regardless of the jurisdiction. The pressure of Covid – 19 on the Swedish market, in particular, has caused regulators to implement temporary measures on operators that have polarised industry opinions.
Gustaf Hoffstedt, Secretary-General of BOS, the Swedish Trade Association for Online Gambling has his own thoughts on the impact of recent regulatory changes in the Swedish market and what this means for the future stakeholders of this region. In the first instalment of this Swedish two-part special, Gustaf gives his perspective on the industry’s current state and how he thinks we can work together to ensure future growth.
The unprecedented market conditions we currently find ourselves in means more players than ever will be potentially vulnerable to problem gambling. What are your thoughts on Sweden’s recent decision to extend their temporary Covid-19 measures such as 5000SEK loss limits until 2021? Is this the best way forward?
“I don’t think it’s the best way, and it’s actually not the second or the third best option either.
I’m afraid that the measures that have been taken by the government will be counter-productive when it comes to protecting vulnerable punters for several reasons.
We have to begin with what channelisation looked like in Sweden before the temporary restrictions, namely online casino, and iGaming.
Many stakeholders often point out that that’s the most hazardous gaming vertical.
Before the temporary restrictions, channelisation in Sweden was approximately 75% (accurate as of spring 2020).
We had a leakage out of the Swedish licensing system, which includes the customer protection measures put in place.
We had leakage of approximately 25% before the temporary Covid restrictions.
In July, the government implemented the SEK 5,000 deposit limit and it had two consequence:
The first one didn’t have an obvious negative impact on channelisation.
Punters usually have two to four gaming accounts with different operators. However, after the initial restrictions were implemented, we saw a dramatic increase in the number of operators (within the licensing system) that punter used. This figure jumped to 10—15 gaming operators. The obvious reason was so that punters could fly under the radar with the SEK 5,000 limit.
This is a huge problem when it comes to customer protection because it’s really difficult to get the whole picture when the punter is turning to so many different gambling operators.
All of our members gave the same feedback that they have the picture of the punter, especially the higher volume punter. They are almost blind when it comes to finding problematic gambling behaviour.
The second impact of the temporary restrictions was that some punters got fed up with yet another threshold within the licensing system.
Whilst we haven’t measured the new channelisation rates, we believe that even more punters have left the licensing system.
If we had channelisation of 75% last spring, the number is likely even lower today.
It’s also worth noting that channelisation is not a customer protection measure in itself, however, any customer protection measure needs channelisation.
If the punter that is outside the licensing system, then the consumer cannot be reached by any customer protection, at least not from the local government in this case.”
What data were the temporary Swedish regulatory changes based on, and how accurate was it?
The advocacy to implement those measures was based on the government seeing a dramatic increase in online casino in Sweden due to the Covid situation.
It’s quite tempting to accept this picture that the government has painted. After all, you can imagine the number of societal challenges connected to Covid, and it’s tempting to believe that it would have had a dramatic impact on online casino.
In the past six months, this rise didn’t occur.
Online casino pretty much stood still with a 4% rise in activity or so. Whereas, in Sweden, as well as in all other jurisdictions, sports betting had a dramatic fall since most games were cancelled.
In Sweden, trotting is hugely popular, and it continued when most other sports were suspended. It acted like a magnet and attracted a lot of new players. What we actually saw here in Sweden, was trotting exploding in popularity. Whereas the other gambling verticals, either dropped or stood still.
Last-minute, the government withdrew the COVID-19 restrictions for trotting, the only gaming type that actually exploded, whereas online casino had to comply, even though it had no real growth.
This is strange behaviour from the government, regardless of what kind of angle you view it from.
Whether you prefer to view it from a customer protection angle or a taxation level, regardless, it’s difficult to find rational reasons.
Editor’s Note: After catching up with Gustaf, the initial part of his message is clear; let the data do the talking!
It seems, from his perspective, that an unflattering narrative has been adopted by influential policy-making stakeholders of the Swedish iGaming industry and is causing measures to be implemented that aren’t servicing the market in the way they should.
Gustaf believes that the key to managing responsible gambling is in keeping Swedish gamblers playing with the regulated license holders only, but with all the new regulation coming through, customer experience is at risk of being damaged significantly and pushing players elsewhere, to unlicensed operators with more operational freedom. The issue of unlicensed gambling remains a key factor to future market growth, hopefully, with more industry stakeholders sharing their data and collaborating more with policymakers, we will see further progression in the near future.
Join us in part 2 when we discuss the pursuit of licensed operators vs unlicensed ones, and how we can work closely and communicate effectively with the regulators to help create a sustainable, protected market for the future.