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Substantial changes are finally under way in the Swedish gambling sector

Submitted by on 13 Nov 2017 – 14:41

As several European countries are expected to re-regulate their gambling markets or at least to inch closer to doing so, Christofer Fjellner MEP writes about substantial changes that are underway in the Swedish online gambling sector

Earlier this year, a public inquiry committee presented its proposals for a new gambling regulation to the Swedish government. It was much awaited and if the left-wing government carries out the proposals, the state monopoly on gambling will be replaced with a system based on licenses, allowing private actors to offer their services. While the Swedish gambling legislation seems to be developing in the right direction, the same cannot be said for Germany, a country struggling with similar problems, but with no solution in sight. The case of Germany clearly shows that much needs to be done to get a modern and well-functioning gambling sector in the whole of Europe.

It has taken a lot to get to where Sweden is today. I was elected to the European Parliament in 2004 and ever since then I have worked in Brussels and Sweden alike to create change and get rid of the outdated and obsolete monopolies. Earlier in 2007, the European Commission threatened to take Sweden to the European Court of Justice (ECJ) for not complying with the EU law. It is, nota bene, allowed for member states to have a monopoly on gambling as long as it serves the purpose of consumer protection or strengthening public health.

However, clearly neither has been the purpose of the Swedish monopoly. The gambling marketing is quite aggressive and the purpose is hardly to get people to gamble less, rather the opposite.

Frankly speaking, it seems as though the Swedish government and more specifically the Minister of Finance has become addicted to gambling and the gambling sector’s not unsubstantial contribution to the public treasury. Thus, governments of the past have put their own economic interests ahead of both consumer protection and a safe, well-regulated gambling market.

Although it finally seems like the wind of change is blowing, it is unacceptable that it took more than a decade to achieve considerable change. Both the  Swedish governments as well as the Commission are to be blamed for this delay.

The Commission threatened to take Sweden to court several times, but it never happened. As the guardian of the treaties, the Commission has thereby not carried out its obligations. In parallel, on a national level, Swedish governments of different political colours have, on several occasions, assigned public inquiry committees to put forward proposals for modernising rules on gambling. But in the end nothing, or at least very little, has changed.

It is sometimes said that politics beats money, but technology beats politics. That is certainly true for the gambling sector. The Swedish monopoly is obsolete and the cross-border nature of online gambling makes it possible for companies to offer their services even to countries where the state has the monopoly. Half of online gambling in Sweden is conducted through foreign operators which are neither regulated nor pay taxes in Sweden. Thus, the Swedish monopoly has not been properly upheld or functioning for a long time.

Therefore, many of the proposed changes to the Swedish gambling regulation are almost inevitable. Private operators will be allowed to offer their services on an up-to-date and regulated market based on licenses. This way the government hopes Swedish regulation and taxes will cover at least 90 percent of the gambling conducted online. However, for that to happen the government must stick to the proposed, rather low level of taxation for operators, not limit the minimum return on placed bets and sell the state-owned gambling company.

Without these changes, there is an obvious risk operators will not accede to the system. Given the previous unsuccessful attempts to modernise the Swedish gambling regulation we should not count our chickens before they are hatched. But is certainly looks like yet another Swedish monopoly is going to be abolished.

Unfortunately, the situation in Germany is not as promising, even though it resembles the Swedish case. Like the Swedish regulation, the German one is apparently violating EU law. Gambling in Germany is regulated by the 2012 Interstate Treaty on Gambling. This legislation includes a complete ban on online gaming, a state monopoly in the sector of sports betting as well as favourable treatment of public casinos compared to private gambling halls.

The stated objectives of the legislation are to protect consumers and fight illegal gambling operators, but the current legislation de facto protects the state monopoly and, not surprisingly, channels players as well as private operators into illegality. As a consequence, the illegal online gambling market in Germany is flourishing and gambling addiction is on the rise. Just like in Sweden, the German model is not working properly.

The ECJ has confirmed the shortcomings of the legislation on several occasions, yet the Commission constantly postpones the launch of a formal infringement procedure. There is obviously a need to address the Interstate Treaty in its entirety. Germany, like Sweden, needs a gambling legislation which meets the modern expectations and is in line with EU law. Together with some colleagues in the Parliament, I sent a letter to Commissioner Bieńkowska to make her aware of the situation. The answer we received was general and flat.

One step forward, two steps back. No, it is not that bad, even though it sometimes feels like it when it comes to gambling legislation in the EU. With Sweden eventually going in the right direction, new fights against bad, monopoly-driven legislation in the EU need to be won. Germany is a perfect example that much remains to be done.