Sweden’s betting industry has responded positively to government plans to expand the scope of the country’s Gambling Act to target illegal companies.

The Ministry of Finance announced a memorandum earlier this week with the aim of removing the ‘directorial criterion’ from the Gambling Act. This criteria excludes online games not aimed at the Swedish market from the law.

The memorandum, drafted by Financial Markets Secretary Niklas Wykman, states that the directorial criterion will be replaced with a ‘participant criterion’ instead. This will require unlicensed online gambling companies to take ‘appropriate and effective measures’ to prevent Swedes from betting on their platforms and playing with their products.

This will apply to all companies even if they are not actively targeting the Swedish market. Wykman’s amendments broaden the scope of the Gambling Act, and will place direct obligations on payment providers and IT services to stop illegal transactions.

The move comes as part of a wider crusade by the Swedish government to take control over channelisation rates, which have been particularly lagging around casino products ever since the market was re-regulated in 2019.

Responding to the government’s announcement, the Swedish Trade Association for Online Gaming (BOS) welcomed the proposals to expand the Gambling Act and stated that it has been working towards achieving such a change since the 2019 re-regulation.

“This is an important contribution to the possibility of strengthening the Swedish gambling licence market, which is now proposed to criminalise almost all unlicensed gambling in Sweden,” said BOS Secretary General Gustaf Hoffstedt.

“I foresee the government shortly submitting a bill to the Riksdag in accordance with the investigation’s proposal.”

Sweden’s channelisation challenge

Sweden’s channelisation problems have come to the forefront in recent months, though as BOS notes it has been an issue since the 2019 re-regulation. This process saw the monopoly held by Svenska Spel, the state-owned gaming and lottery operator, replaced with a multi-licence model.

However, overseas operators continue to target the market, whether deliberately or unintentionally as the Ministry has implied. For the most part, channelisation remains on target, particularly regarding sports betting.

Overall gambling channelisation is estimated at between 85-87% towards the regulated market, just below the government’s target of 90%. Betting channelisation stands out at 92%-96%, but online casino falls behind at 72%-82%.

This is often reflected in the Swedish regulator’s enforcement actions. The Spelinspektionen regularly takes action against overseas companies, the vast majority of which are online casino operators, many registered in Curaçao.

To further clamp down on these offshore illegal activities, the Ministry of Finance is proposing that the Gambling Act’s administrative prohibition ban also be expanded to cover areas other than marketing.

This would include a focus on payments, with any person or company mediating payments to or from an offshore gambling operator having to assume that the customer making or receiving the payment is a Swede. Payments should only be processed if the provider has evidence that the person making or receiving it is not Swedish.

This may make life a bit tricky for Swedish payments companies, with the Nordics as a whole being a central hub for fintech activity, historically being a heartland for payments technology and practices like Open Banking.

“The purpose of these legislative amendments is that the expansion of the Gambling Act’s scope of application should have the greatest possible effects, especially when it comes to stopping payment flows between Swedish consumers and illegal gambling,” the Ministry’s statement read.

Nonetheless, Sweden’s regulated industry, which has long warned about the impact of black market activity in the sector, is pleased with developments. The Ministry hopes that the legislative amendments will enter into force on 1 January 2027.

BOS’ Hoffstedt summarised the government and industry’s ambitions: ”Unlicensed gambling in Sweden must be smoked out.”