Evaluation of the reregulation of the gambling market - Final report

On 1 January 2019, the Swedish gambling market was reregulated when Sweden got a new gambling regime through the Swedish Gambling Act (SFS 2018:1138). The background to the reregulation was that more and more of gambling by Swedes was taking place over the internet with gambling companies not licensed in Sweden. One central reason for changing the gambling regime was to give the State more control of gambling with these companies.

The Swedish Agency for Public Management (Statskontoret) has been commissioned by the Government to follow up and evaluate the reregulation in 2018–2022. This is our final report.

The new gambling regime is based on a licensing system in which all gambling companies in the Swedish gambling market must be licensed. After reregulation the market is divided into

• a competitive sub-market that is open to all licensed gambling companies, which mainly consists of online gambling and betting on sport and horses
• a part reserved for non-profit organisations, which mainly consists of lotteries and land-based bingo
• a part reserved for the State mainly consisting of gambling at land-based casinos (Casino Cosmopol) and on slot machines,

The market is functioning better after the reregulation

Statskontoret’s overall conclusion is that the Swedish gambling market is functioning better in 2021 than it did in 2018, which was the last year before the reregulation. The reregulation has improved the possibilities of reaching the objective of the Swedish Parliament for the area of gambling. According to this objective the gambling market should be under public control, be covered by strong consumer protection and safeguard revenue from gambling to voluntary organisations and the State.

Public control of the gambling market has increased

The most important effect of the reregulation is that public control of the gambling market has increased. One result is that a larger share of gambling by Swedes takes place at companies that

• operate legally in the gambling market and hold Swedish gambling licenses
• comply with Swedish gambling legislation and pay tax in Sweden
• come under the supervision of Swedish authorities.

The level of channelling is a way of describing how much public control there is over the gambling market. The level of channelling shows what share of gambling by Swedes in the competitive sub-market takes place with companies licensed in Sweden. The level of channelling has increased from under 50% before the reregulation to an estimated 87% in 2021. This is a considerable increase and a clear effect of the reregulation.

The increase in public control of the gambling market has given the State better possibilities of making demands on gambling companies concerning responsible gambling, for instance. Greater public control also gives the State better possibilities of, for example, countering match fixing, getting tax revenue from gambling and regulating the content of advertising for gambling.

Even though public control has increased, a considerable part of gambling still takes place with gambling companies not holding Swedish licenses. This is why one important area for improvement is taking more effective action against companies not holding Swedish licenses.

Stronger consumer protection but more can be done

The reregulation has led to the strengthening of consumer protection in the gambling market. The new gambling regime means that tougher requirements have been introduced for gambling companies concerning responsible gambling and marketing. After the reregulation it is also possible for gamblers to exclude themselves from gambling at the national self-exclusion register, Spelpaus.se.

There are no signs that the reregulation has had a clear impact on the scale of gambling problems in the population. The share of the population with problem gambling in 2021 was 1.3%, which is the same as in 2018.

Even though consumer protection has been strengthened, it is possible to do more to reduce the negative consequences of gambling. The duty of care that gambling companies have under the Gambling Act, which means that they have to counter exaggerated gambling, is an area for improvement. If the duty of care is to function effectively, more knowledge is needed about what effects measures resulting from the duty of care have on gamblers’ behaviour. Clearer regulation is also needed of how gambling companies are allowed to process personal data to counter exaggerated gambling.

Voluntary organisation and state revenue has been maintained

The reregulation has largely preserved the possibilities for voluntary organisations to receive revenues from gambling, with the exception of the associations behind bingo halls. Total revenue to non-profit organisations has been slightly higher after the reregulation than before reregulation. In our assessment, the State’s possibilities of receive revenue from gambling have been maintained to a high degree. The State’s aggregate revenue from gambling has been about the same in the years after and before the reregulation.

Situation in nine areas three years after the reregulation

We have evaluated the effects of the reregulation in nine areas, and we describe them in detail in a separate chapter for each area. Here we summarise our most important conclusions about what has happened in these areas three years after the reregulation.

Development of the gambling market (Chapter 6)

There are substantially more commercial gambling companies operating legally in the gambling market than before the reregulation. We estimate that the total turnover in the market in 2021 was SEK 28.4 billion, with gambling companies licensed in Sweden accounting for SEK 26 billion. This is more than before reregulation. But turnover has been increasing each year for a long time, so it is difficult to say how big the effect of the reregulation itself has been. The share of the population gambling has continued to decrease after the reregulation.

Channelling the gambling market (Chapter 7)

The level of channelling was estimated at 87% in 2021. Before the reregulation it was under 50 per cent. Two possible reasons why gamblers gamble on sites not licensed in Sweden are that gamblers have excluded themselves from gambling with gambling companies licensed in Sweden and that some gamblers look for better bonus offers outside the licensing system.

Central government revenue from gambling (Chapter 8)

Central government had revenue from gambling of around SEK 6 billion per year before the reregulation. Its revenue comes from gambling tax, dividends from the state-owned company Svenska Spel and company tax for gambling companies. Central government’s aggregate revenue from gambling is about the same after reregulation as before it, but the distribution between different revenue sources has changed.

Non-profit organisations' revenues from gambling (Chapter 9)

The central conditions for non-profit organisations to get revenues from gambling are unchanged after the reregulation. Their revenue was SEK 1.6 billion in 2021, which is higher than before the reregulation. At the same time, the tax on slot machines has led to lower revenue for non-profit organisations behind bingo halls.

Consumer protection on the gambling market (Chapter 10)

The reregulation has strengthened consumer protection on the gambling market. This is because the requirements applying to gambling companies have increased and more gambling companies are complying with Swedish law. The gambling companies are also gradually getting better at complying with the rules about responsible gambling and marketing,

Public health and gambling (Chapter 11)

There are no signs that the reregulation has had a clear impact on the scale of gambling problems in the population. The share with gambling problems was 1.3% in both 2021 and 2018. Gambling problems are more common among men and among people with low incomes.

Crime and crime prevention (Chapter 12)

It has been difficult to stop gambling companies without Swedish licenses from aiming gambling at Sweden. But the proposals currently being prepared by the Government to do with being able to block payments and introducing requirements for licenses for gambling software may improve the conditions for this. The new cheating at gambling offence that is intended to make it easier to take action against match fixing has had little effect so far, but does close a potential loophole in the law.

Privacy (Chapter 13)

Gambling companies process personal data to a greater extent after the reregulation, partly because of the duty of care. To live up to their duty of care, these companies may need to process data about gamblers’ finances and health. At present, the Gambling Act does not give them clear support to do so.

Costs for government agencies (Chapter 14)

Government agencies’ costs for tasks and commissions regarding the gambling market are, in total, SEK 20 million higher in 2021 than in 2018, This is mainly because the Swedish Gambling Authority has been given new and expanded tasks.

Statskontoret’s recommendations

In this report Statskontoret makes several recommendations for a better functioning gambling market. We recommend that:

• the Government gives the Swedish Gambling Authority a commission to develop the calculation of the level of channelling and increase knowledge about channelling
• the Government and the Swedish Gambling Authority cooperate with other EU countries in action against non-licensed companies
• the Government gives the Swedish Gambling Authority a commission to produce knowledge about which gamblers exclude themselves from gambling and what consequences this has
• the Government reviews the regulation in the Gambling Act of how gambling companies are allowed to process personal data
• the Swedish Authority for Privacy Protection considers whether it needs to supervise how gambling companies handle personal data
• the Government considers whether slot machines in bingo halls should continue to be covered by the tax on gambling
• the Government takes an integrated approach to the structural and long-term conditions for non-profit organisations’ gambling
• the Swedish Gambling Authority develops its communication with the gambling industry.

In our assessment, there is a need for further monitoring and evaluation in the area of gambling after our commission. We recommend that:

• the Swedish Gambling Authority regularly reports on channelling
• the Swedish Gambling Authority produces a situation report about match fixing each year
• the Public Health Agency of Sweden follows the development of gambling problems as part of the Agency’s regular mandate
• the Government gives consideration to evaluating the effects of coming regulatory amendments, including those in the proposal referred to the Council on Legislation on Stronger regulation of gambling.