At its peak, the Swedish gambling regulatory framework was praised as having one of the world’s leading Remote Gambling Acts. The regulator allowed the online gambling business to flourish while maintaining control over player safety and afforded them the freedom to participate in the industry with peace of mind.

However, in recent years, the Swedish Gambling Authority has notably declined, whether due to a lack of foresight or external pressure from uniformed governmental parties. It has applied draconic limitations to a legal industry that has limited player rights and stifled business development.

 Industry Watchdog Calls It as It Sees It

In an open letter to the government and local regulator, Gustaf Hoffstedt, Secretary General of the Online Gaming Industry Association (BOS), outlined the fall of what he calls “one of the world's most promising and successful gambling market reforms”.

To set the tone for his discussion of the market, he opens with one of the most scathing rebukes of the local regulators that you could possible image:

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“We have to call the regulation for what it actually is. A fiasco.” – “What remains is a gambling market that offers perhaps the world's strongest consumer protection, but which consumers have long since turned their backs on.”

These are not hollow words bandied about to shame those in charge without substantiation. One of Sweden's key metrics when it licensed gambling five years ago was channelisation. They stated that the goal was for 90% of all Swedish online gambling to take place at licensed operators – and for a time, this seemed not only attainable but sustainable.

However, fast-forward to 2024, and Sweden’s online casino channelisation rate is sitting at a meagre 57%, according to market analyst ATG. This figure is showing ongoing signs of decline rather than stabilisation.

Where Did It All Go Wrong?

The real question is how did such a once stable online casino market achieve such a rapid decline in less than half a decade. According to Hoffstedt, the answer is simple: hubris. Rather than treating the licensed gambling sector like the free market economy it is, they treated it like a monopoly where all government-sanctioned actions would be adhered to without question.

During the pandemic, the gambling authority placed restrictions on video slots, welcome and retention bonuses, and player spending (both by limiting the amount and recently making credit card deposits illegal). While these restrictions were couched in the promise that they were for the greater good, the reports commissioned to determine if such action was required were largely ignored as they showed limitations were unnecessary.

This was the turning point for the country’s channelisation efforts as Swedish casino players could no longer gamble online at legal sites, so they began to visit unlicensed offshore gambling operations.

While these restrictions were a frustration for players, they were crippling for online gambling businesses that have staff, banking, technology, and other overheads to cover using the revenue of a declining player base.

To add salt to the wound, the gambling license levies in Sweden will increase by another 20% this month. Rather than shoring up the industry, they are milking it to death with seemingly little regard for future growth or sustainability.

With the massive outflow of Swedish players to offshore sites and the imminent impact of his new tax on the local market, Brussels-based Copenhagen Economics predicts that the country will see another 1,000 cases of problem gamblers come to light.

 Regaining Its Former Glory

Hoffstedt believes that the licensed and regulated online casino sector can be returned to its former glory. But adds that it will be "arduous work" that demands that the government begins to support the industry as it once did.

Commenting on how the healing can begin, Hoffstedt said:

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“… it assumes that the government realises that repressive countermeasures against unregulated gambling are ineffective as long as the legal alternative is not considered sufficiently attractive from the consumer's perspective.”

Once they recognise this, the first step towards effectively managing the suppression of illegal gambling and uplifting the legal market is appointing the correct team to evaluate the current regulations and recommend new ones.

The position of BOS is that the balance should be one-third repression to two-thirds upliftment. This will keep the local focus on sustainability and longevity rather than seeing gambling as some form of public enemy which must be combatted.

They believe that failing to do so will see the licensed casino market in Sweden completely disappear as unregulated gambling becomes the norm.