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Monday, August 13, 2018

Why Has Sweden’s Gambling Market Re-Regulation Created Such a Big Buzz?

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Why Has Sweden’s Gambling Market Re-Regulation Created Such a Big Buzz?

The recent participation of Casino News Daily team members in several iGaming conferences has, among other things, confirmed what we all expected – Sweden and the re-regulation of its gambling market has indeed created quite some buzz in the field.

Lotteriinspektionen, the Swedish Gambling Authority, launched the application process for gambling companies interested in operating in the country under its new gambling law on August 1. According to various sources, the regulatory body accepted 22 license applications on the very first day. Around 27 companies are believed to have applied for a license so far, and Swedish authorities expect around 70 applications ahead of the January1, 2019 opening of the market.

Sweden’s state-run Svenska Spel as well as major gambling companies originating from the country but operating from Malta, including Betsson, LeoVegas, and Kindred Group, were among the early birds of the ongoing application process. And while a number of companies are looking to join the Scandinavian nation’s gambling space as early as possible, others have told members of our editorial team that they would approach the newly regulated market a bit more cautiously and wait until after the actual re-regulation takes place.

It is believed that Sweden could rapidly turn into one of Europe’s largest regulated jurisdictions in terms of revenue generated once its new regulatory regime takes effect. According to official data by Lotteriinspektionen, the regulated portion of Sweden’s gambling market, which is controlled by state-run operators, generated revenue of SEK17.07 billion ($1.8 billion) in 2017, while unregulated operators servicing local players generated SEK5.534 billion ($607.97 million).

Here it is important to note that the size of the country’s gray market cannot be estimated accurately and that it is probably much larger than what has been stated in Lotteriinspektionen’s latest annual report. Nevertheless, the figures reported certainly create optimistic visions of the future of Sweden’s re-regulated gambling market. And it is a matter of a very short time until the industry sees whether these visions will become reality.

Potential of the Swedish Gambling Market

Online gambling has been a popular activity across the Scandinavian Peninsula, Sweden included, since its not-so-distant dawn. The widespread tech-savviness of the Swedish population and the high Internet and mobile penetration rates have helped the online gambling industry as well as other digital developments keep and grow their footprint in the country.

In other words, Sweden has always been in a pole position when adopting and assimilating digital infrastructure, and this is why it is believed that the re-regulation of its gambling market and its opening to international operators that will bring further innovation, but in a regulated environment, is a step in the right direction, and a step that would provide for a further growth of the market.

The way a market is regulated defines the way it will develop in future. It can be said that, with very few exceptions, the provisions comprising Sweden’s new gambling law seem to be quite reasonable ones, not that likely to prevent the re-regulation’s success. For instance, Swedish lawmakers have introduced an 18% tax rate on gross gambling revenue, which given the anticipated size of the market and the wagering volumes operators expect from Sweden, could be described as a reasonable rate. It is a bit higher than UK’s 15% point-of-consumption tax, but it is lower than Denmark’s 20% tax.

eSports Betting – an Anticipated Success Story

With gambling companies looking for ways to attract younger generations of customers to their products, eSports and eSports betting are gradually becoming a popular option for drawing clientèle.

According to multiple online gambling companies, eSports could be one of the big success stories of the upcoming re-regulation of Sweden’s online gambling market. The world of eSports seems to be booming right now and a recent report by Paypal and Superdata shows that Sweden is Europe’s second biggest eSports market, only topped by Russia.

The publication notes that the Swedish eSports market is worth $31 million based on tickets and other products sales as well as sponsorships and brand popularization activities. In comparison, Russia’s eSports market is estimated to around $38 million.

A separate report by Kindred Group claims that Sweden has more professional eSport players than any other country. In addition, the country was allocated a particularly large portion of overall eSports winnings in 2016. And Paypal and Superdata believe that the Swedish eSports market will continue growing beyond 2019 when the European market is expected to reach its peak in terms of audience and players.

Data from the above reports presents a really nice picture for the potential creation of a solid eSports betting sector in Sweden under the country’s new regulatory regime. And multiple operators have actually confirmed that they would venture into the nation’s re-regulated market with an eSports betting product, in addition to their more traditional offering.

Possible Hurdles Before Gambling Companies

Competition in Sweden’s gambling market is expected to be fierce. A number of companies will be competing for a bigger share of a newly regulated market in a country with a total population of 9.9 million people. And some of these companies have already gained advantage over their future competitors through aggressive advertising activities in the country.

A report by measurement firm Kantar Sifo has shown that the national monopoly Svenska Spel as well as international gambling companies Kindred Group and LeoVegas placed among the nation’s top 20 advertisers in 2017 with total ad spending of SEK472.3 million, SEK443.09 million, and SEK313.1 million, respectively.

These companies as well as a number of major others operating in Sweden for years have already gained brand awareness and customer bases that will challenge newcomers quite significantly.

Another important thing to be taken into account as part of Sweden’s iGaming regulatory push is one particular provision in the country’s new gambling law, under which licensed operators would not be able to offer bonuses to their players beyond “the first occasion in which [a] player participates in a game”. As a result, black market operators will be able to gain a competitive edge with countless bonus offers, which would certainly create inconvenience for licensed companies.

Final Comments

Sweden is months away from re-regulating its market and opening it to international operators. The process is expected to create one of Europe’s largest and highest grossing jurisdictions, but despite the expectations and the fact that the regulatory environment created will be, to some extent, operator-friendly, there still will be major hurdles before the newly licensed companies and that it will take time before the market truly shows its actual potential.

The post Why Has Sweden’s Gambling Market Re-Regulation Created Such a Big Buzz? appeared first on Casino News Daily.

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