Here’s why Sweden’s new deposit rules are a step too far

The Swedish government has announced it will introduce temporary measures and limits for the online gambling industry to protect players as they are told to stay at home during the Covid-19 pandemic.

One of the central objectives within Swedish gambling legislation is player protection but rules and regulations included in the law (mainly bonus and jackpot restrictions), which entered into force last year, have inadvertently created a black market as players look offshore for better deals.

A recent study by BonusFinder found that almost a third of Swedish players are searching Google for ‘unlicensed online casinos’, with growing numbers turning to black-market brands due to the market’s restrictive gaming regulations.

What history has shown us is that prohibition and over-regulation simply does not work.

A great example is the music industry that did not move fast enough when the world went digital and, as a result, an enormous number of illegal music piracy sites emerged. Daniel Ek, when he founded Spotify, wanted to make it easy for consumers to get the music they wanted in a legal and safe way. After heavily cajoling the music industry, Spotify was born, and very quickly killed a large proportion of illegal music streaming activity.

Staying on the straight and narrow

Open, clear, and fair rules create the best environment to protect consumers as players want the freedom to play on what they want without stringent restrictions on deposits, promotions, and rewards. Players look for the best possible offers, whether sites are licensed or not, so lawmakers must ensure that any measures do not push them away from legal and responsible operators.

It is worth mentioning that some licensees in Sweden, including former monopoly Svenska Spel, have, unlike other markets, announced they have not seen a large increase in online casino play due to betting activity coming to a recent standstill. Advertising has also plummeted with some of the biggest brands cutting spend by 90% compared to 2019.

There are several measures that could have been put in place before this knee-jerk reaction. Requiring operators to increase their responsible gambling messaging is key, as is ensuring that affordability checks are used in conjunction with customers setting their own limits. This would give players several simple, accessible options to take ownership of their behaviour, rather than being forced to do so by regulation. By locking down time and deposit limits, you force more players towards the offshore market.

This not only creates a situation where players are exposed, but also damages licensed Swedish operators which are playing by the rules and striving to adhere to best practice. For operators and suppliers, the new measures will require a vast amount of technical changes to be implemented in a short space of time. Games need to be altered to comply, while all advertising will need to be amended to reflect the new bonus restrictions. This is not easy at the best of times, or the worst, which we are all experiencing today.

A strict approach

Furthermore, the government has given the regulator the task of finding ways to increase the supervision of unlicensed operators and to introduce stricter measures to keep them out of the market, including the possibility of ISP blocking.

Introducing general internet restrictions to enforce these new rules is backwards. If we again use the analogy of the music industry and piracy, this is impossible to enforce on the open internet. We have also seen examples of it in the gambling industry but many European countries that have introduced ISP blocking have admitted to it being unsuccessful.

Europe’s gambling regulators regularly meet and work closely together, exchanging views and discussing gaming policy and best practice. A common-sense approach to regulation that involves honest and open conversations between all stakeholders including regulators, operators, suppliers and affiliates is crucial.

But by introducing even more stringent rules, Sweden is missing out on the opportunity to take the lead and showing the world what a well-regulated and safe gaming environment could actually look like, which ironically was the government’s initial intention.

Swedish legislation already requires operators to have strict responsible gambling procedures in place, therefore the right measures are already there. The focus should instead be on ensuring these are adhered to, rather than introducing further restrictions that will only benefit unlicensed operators that are only too willing to accept more business.

Fintan Costello, BonusFinder MD

Fintan Costello is managing director of BonusFinder, an Amsterdam-based affiliate start-up focused on helping people ‘Play With More’. Be it buying, selling, leading, consulting, building, speaking and writing, he has covered almost everything in the industry in the last 12 years. He is now focused on searching the world for the best casino bonuses, running ultra-marathons and playing Mario Kart with his son.