Finland has always been some kind of “little brother or sister” of Sweden. We have so called “hate & love” relationship towards Swedish. We try to do things better than they do but unfortunately often we finally decide to copy what they have done. That’s why I’m keen on seeing what results Sweden will get from their new gambling legislation. EU-states could decide about their own gambling legislation as long as they follow EU’s main principles. Countries are observing what is happening in other countries and Finland is used to follow Sweden very closely. So, the Swedish experiences will somehow have impact on the Finnish gambling environment for sure.
Sweden has had monopoly-based gambling system until the end of last year. That was the case in principle level, but real situation has been totally different. Monopoly companies Svenska Spel (lottery, sports betting, casino) and ATG (horse betting) have been the biggest companies, but offshore operators have gained bigger and bigger market share in Sweden. The Swedish gambling regulator, Lotteriinspektionen, hadn’t enough tools and maybe brave to react against those operators. EU Court of Justice was following the Swedish legislation very closely and probably regulator wasn’t sure what they can do. That development caused challenges to ATG and Svenska Spel when they weren’t allowed to compete against offshore operators with same tools. ATG started to talk against monopoly and threatened to move to Malta. Finally also Svenska Spel decided that it would be better to have license-based legislation. Then it was quite easy solution for politicians to decide about new gambling law.
I give some numbers from 2017 which describe the market situation before the new system. The net gaming revenue of whole Swedish gambling business was 22,6 billion SEK (2,2 B€) from which regulated companies had 17,1 B and offshore companies 5,5 B. That meant that offshore companies had 25 % market share and they didn’t have license to operate in Sweden. Svenska Spel had 40 %, ATG 18 % and other regulated companies 17 % market shares. Those offshore companies didn’t have any retail business in Sweden, so all competition was in internet and mobile channels and over 50 % of total gambling happened there. In that online channel regulated companies didn’t manage very well. They had together just 45 % market share which means that offshore operators had already 55 % of that market. In practice there hadn’t been any monopoly in the Swedish gambling market in long time! Gambling companies spent 7,4 B SEK for marketing in Sweden in 2019 and regulated companies had over ¾ of that.
Sweden decided to move to license system in all gambling sectors except in lottery (Lotto, Keno and Instant tickets). There are now about 70 gambling companies which have official license to operate games in Sweden. There are quite many tight rules about what operators can do in Sweden. The former offshore operators are used to use for example bonuses much more than it’s possible to do in Sweden now. The Swedish State has set a goal to raise regulated gambling to 90 % level of total gambling. That sounds to be high level when the Swedish new regulator, Spelinspektionen, is not using blocking tools. I understand when some companies have already announced that it would be better to make business without license. I still believe that regulator will tighten their control to prevent that grey/black market. The Swedish tax level, 18 % of GGR, is lower than they have for example in Denmark and that level should be ok from operators’ point of view although they are complaining about that – they will do that whatever the tax level would be…
There seem to be lots of discussion about enormously increased gambling marketing. Companies are trying to raise their brand and get new customers. They are used to give bonuses to new customers but now they are not allowed to do that and a little bit old fashioned mass media marketing has replaced bonuses. Heavy marketing has already affected negatively on the reputation of gambling business and something must be done soon to prevent that development. It’s too early to analyze financial results and I should do that later – maybe after the H1/2019 results have been published. Anyhow I could analyze the change based on the numbers after two first months. Although there are about 70 license holders the big companies have managed even better than I expected. The net sales in January and February was totally about 3,3 B SEK (320 M€) and ten biggest companies had 85 % market share from that. The winners have been former monopoly companies Svenska Spel and ATG and that should be big disappointment for former offshore operators. Svenska Spel has still monopoly in lottery business and now their three companies have totally 44 % of total gambling business. The monopoly part was in the first two months a little bit over 900 M SEK and that was 28 % of total market. If I drop that monopoly part away and just analyze license market Svenska Spel still has 22 % market share of that area and that is surprisingly high. ATG has lost its’ monopoly in principle but in practice it still has it in horse betting (over 95 % market share?). ATG has managed very well – it has 20 % market share of total gambling business and 28 % share of license market. So totally those two former monopoly companies have almost 2/3 of whole gambling business and from license market they have 42 %. The Swedish based Kindred Group has been the best one among former offshore operators.
It would be important to make analyze from the state point of view, but I don’t have enough information to do it yet. There should be financial results (taxes and profit from monopoly business) but also information from responsible gaming side. The analyze how well the new system is working should be based on those two sides. If financial results have improved but there are more gambling problems then there are still something wrong in that system and probably vice versa too.