Contributed By Wiklund Law
New Gambling Act for Sweden
On 1 January 2019 Sweden re-regulated its previous state monopoly and implemented a new Gambling Act, whereby private gambling operators satisfying the suitability criteria laid out in the Swedish Gambling Act (2018:1138) can apply for and obtain licences to offer land-based and online gambling services and products.
The licensing regime covers a broad spectrum of gambling products: online casino, online betting, online poker and online bingo. Land-based sports betting and land-based horse race betting are also included in the licensing regime. Lotteries and land-based slot machines will remain monopolised.
A licence will allow private online gambling companies, as well as the state-owned Svenska Spel and ATG, to operate in the competitive section of the market. Hence, ATG no longer has a monopoly on horse race betting, which means that ATG will become an operator like any other private gambling operator. These gambling companies may enter into agreements with the harness and horse racing organisations that own the courses and other infrastructure.
Svenska Spel’s exclusive rights cover the offering of token gaming machines and land-based casinos in designated premises under the trade mark Casino Cosmopol. The company continues to compete with public interest associations with respect to online and land-based lotteries. In addition, Svenska Spel has obtained licences for online and land-based sports betting, online casino, online poker and online bingo.
The law prescribes a tax rate of 18% on gambling in the competitive sector. The tax rate is to be calculated on net gambling revenue; ie, the company's profit after paid winnings.
All licence holders pay a licence and supervision fee. The fees are based on the company's turnover and the number of games involved. The licence fees in the competitive area vary from SEK60,000 to SEK700,000 and the annual supervision fees in the same area are between SEK30,000 and SEK1 million.
All gains from wins that stem from unlicensed operators will be taxed as income. The government believes that this will deter consumers from gambling on unlicensed sites.
New Criminal Offences and Higher Penalties
An effective system of sanctions is a prerequisite for the sought channelling effect. A number of criminal offences have been introduced. A party that intentionally or through gross negligence provides (in Sweden), arranges in Sweden or otherwise facilitates (in Sweden) participation in gambling for a person resident or permanently staying in the country without a licence when this is required under the Gambling Act shall be sentenced for unlawful gambling activities to a fine or imprisonment for up to two years. If the crime is gross, the penalty is imprisonment for at least six months and up to six years.
For the promotion of illegal gambling – ie, a breach of the promotion ban – the range of punishment is significantly raised and is the same as for the principal offence; ie, a fine or imprisonment for up to two years, or, if the crime is gross, imprisonment for between six months and six years.
If a gambling company that has a Swedish gambling licence violates the Gambling Act, or regulations or conditions issued by virtue of the Act, a sanction charge shall be imposed in the first instance. This can vary between SEK5,000 and SEK50 million. The sanction charge may not exceed 10% of the company’s turnover in Sweden.
Furthermore, internet service providers should be required to display a warning message when a visitor attempts to play on illegal sites. The message shall inform the visitor that the game provider does not have a licence in Sweden and is not under Swedish supervision.
The law does not introduce blocking of electronic communication to sites offering games that are not legal in Sweden. However, a procedure for blocking payment transactions between illegal gambling companies and players has been introduced. The provision of payment transfers to and from unlicensed operators is criminalised with a range of punishments, from fines to imprisonment for up to six months.
A new crime classification has been introduced: the offence of cheating at gambling (match fixing and other types of manipulation of the outcome of a game). The offence is punished with a prison sentence of up to two years. If the offence has been committed intentionally and has been conducted systematically or on a major scale, or has otherwise been of a particularly dangerous nature, it is classed as gross, resulting in imprisonment for at least six months and at most six years.
Apart from these sanctions, the law introduces a number of additional burdens on an operator. The most notable are marketing restrictions and a wide arsenal of player responsibility provisions to be complied with.
Regulations Are Needed to Give Vague Provisions More Impact
The law is a framework law that has to be filled out and completed through regulations by the government and the administrative authorities, such as the Swedish Gambling Authority (SGA), or by court practice. In the Act the author finds a number of indeterminate and vague objectives to be achieved, and the general principles to be respected in the enforcement of the law. These vague provisions must be filled with standards of a more tangible impact if they are to be meaningful.
There are several factors currently affecting the licensing market in Sweden. The COVID-19 pandemic led the government to enact temporary regulation aimed towards licensed online casino operators. The regulations are to be lifted by the end of 2020.
The material content of the temporary legislation includes:
Further, the SGA has announced new regulations for sports betting, including targeting match fixing within soccer through prohibiting betting on red and yellow cards, achievements by individual players and games in lower divisions. This regulation will come into effect on 1 January 2021.
When holding an online commercial gambling licence, a gambling operator may offer the following games: online slot machines, online bingo and online casino games. Online lottery products are reserved for the state-owned gambling operators and not-for-profit organisations.
When holding an online betting licence, a gambling operator may offer the following types of games in addition to traditional sports betting: betting on fantasy sports, betting exchanges, betting on virtual events and betting on the outcome of a lottery.
Fantasy sports gambling can, depending on the various skill elements present within the game, be considered as a game of chance or skill. Fantasy sports that are deemed as games of skill are not regulated by the Gambling Act.
Betting may be offered in betting shops and through agents. Other than betting, land-based gambling is normally reserved for the state, which operates land-based casinos and lotteries. Not-for-profit organisations may offer land-based bingo and sell lottery tickets.
The key legislative text relating to the Swedish gambling market is the Swedish Gambling Act (2018:1138), the Gambling Tax Act (2018:1139) and the Gambling Ordinance (2018:1467). In addition to this, the Act (2017:630) on Measures against Money Laundering and Financing of Terrorism, the Swedish Marketing Act (2008:486), the General Data Protection Regulation, the Consumer Services Act (1985:716) and the Act on Payment Services (2010:751) play key roles relating to their specific branch of the gambling market. This also includes other regulatory publications by the competent authority; for example, the National Board for Consumer Disputes (Allmänna Reklamationsnämnden) or the Swedish Consumer Agency (Konsumentverket).
Lotteries are defined as any gambling where the outcome is completely based on chance. Not only traditional lotteries fall within this definition, but also scratch cards.
Betting is defined as an activity where the participant has a chance to win a prize when a stake is placed on the outcome of a future event. All types of sports betting and betting on the outcome of a lottery fall under this definition.
Casino games are defined as all types of roulette, dice games, card games and similar games. Additionally, all types of slot machines are to be considered casino games.
Pyramid schemes include gambling where winnings derive from the bets of future participants and where the likelihood of winning depends on the number of participants who subsequently join. These types of games are prohibited according to the Swedish Gambling Authority.
Land-based gambling is defined as gambling done on physical premises. Physical premises that are accepted in one way or another are land-based casinos, land-based gambling that takes place in amusement parks or restaurants and hotels that hold a gambling licence, or land-based betting.
Online gambling means any form of gambling that takes place through electronic online means of communication, either online commercial gambling or online betting.
To promote or provide unauthorised gambling or gambling without the necessary licence, whether intentionally or through gross negligence, is a criminalised offence under the Swedish Gambling Act. Further, to take measures that are likely to affect the outcome of a game that is covered by the licensing requirements of the Gambling Act is considered cheating and/or match fixing and criminalised accordingly.
Penalties for the operation of unlawful gambling or the promotion of unlawful gambling span from fines to imprisonment for up to two years. If a crime has been committed internationally, or is otherwise deemed serious, the offences are punishable by imprisonment for a maximum of six years.
On 2 July 2020, temporary responsible gambling measures were implemented due to COVID-19, and will cease to exist on 1 January 2021, unless extended. The restrictions cover the following:
The SGA is the authority appointed to evaluate and approve licence applications as well as holding general responsibility over all gambling operations that are regulated under the Swedish Gambling Act. Due to the Act being a framework law, this includes publishing extensive regulations in order to further clarify the provisions of the Act.
The SGA exercises oversight for compliance with this Act and the regulations and conditions that have been issued pursuant to the Act. Under its supervision, the SGA can investigate licence holders as well as issue complaints and warnings. As a final measure, the licence of an operator can also be revoked.
As for the marketing and advertisement aspects of the gambling market, the Consumer Agency is the supervising authority. On the same note, the Tax Agency is responsible for ensuring that the relevant taxes are declared and paid.
No response has been provided in this jurisdiction.
Six types of licence exist, with two of them regulating the competitive market.
Licences are readily available in the competitive market, including online commercial gambling and land-based gambling operated on board ships in international waters or within amusement parks and hotels or restaurants with a permit to serve alcohol.
The various licences available are outlined in 4.3 Types of Licences.
Licences can be, and are normally, issued for a period of five years. However, the SGA has full discretion to limit the licence period and has done so in several instances. Historically, the reasons to limit an operator’s duration of a licence have been negative equity within the company applying, previous regulatory breaches in other jurisdictions and operators applying for multiple licences through various subsidiaries.
An Annex A is to be filled in by every person associated with the application, including the key personnel within the applicant company, the board of directors of the applicant company, the board of directors of all qualified owners (ownership of 10% or more), and by the ultimate beneficial owners if holding a qualified ownership. The following due diligence documents shall be appended to an Annex A:
*Should any of the above not be available within the country of current residence, or countries in which the person has resided within the past five to ten years, with the exception of a criminal record, which is to be shown for all countries resided in since the age of 15 years old, the person in question can attest that the criteria are met, along with a letter from a lawyer within the jurisdiction attesting that the certificate does not exist within the given jurisdiction.
An Annex B is to be filled in by all qualified owners (legal entities) of the applicant company. The following due diligence documents shall be appended to an Annex B:
An Annex C is to be filled in to show a “Gambling Concept Description”, which includes a specification of games and products included in the application, where the system infrastructure is located, a description of individual games to be offered, game rules and URLs.
In addition to Annexes A to C, the following due diligence documents regarding the company applying for a licence shall be included with the licence application:
The timescale of a licence application varies from case to case, mainly depending on how complete an application is and the regulatory and financial status of the company and its owners.
A complete application submitted by gambling operators with strong finances and an otherwise uncomplicated history or group structure should be processed within two to three months.
The relevant fees collected by the SGA relating to the licence application of a private operator are the following:
(a) licence for commercial online gambling – SEK400,000;
(b) licence for betting – SEK400,000;
(c) joint application for (a) and (b) – SEK700,000;
(d) renewal of licence under (a) to (c) – SEK300,000; and
(e) amendment of licence under (a) to (c) – SEK150,000.
The fixed annual fees are as follows:
Regarding annual fees for commercial online gambling or betting, the fee is calculated depending on the operator’s expected turnover:
During the first two years since the re-regulations on 1 January 2019, licence holders for online commercial gambling and/or betting have paid a fixed fee of SEK450,000 per licence.
State-owned operators can obtain a licence to provide land-based commercial gambling. Such gambling takes place mainly through land-based casinos, of which a maximum of four may exist, with the exception of operators obtaining licences to offer various casino games at amusement parks, on ships in international traffic and in hotels and restaurants with a permit to serve alcohol.
Licences for games reserved for charity/good causes can include land-based bingo, lotteries and pool betting at horse racing tracks.
See 1.1 Current Outlook and 1.2 Recent Changes.
Gambling operators satisfying the criteria outlined in the Gambling Act may apply for online commercial gambling and/or betting licences.
B2B licences are not available in Sweden. Suppliers must undergo a technical certification to ensure compliance. However, it is up to the operators to supply such technical documents to the SGA as part of the application process and ongoing supervision.
That said, both the authorities and licence holders in the Swedish market are advocating the implementation of B2B licences. Therefore it can be expected that such a licensing system will appear within the upcoming years.
Affiliates and the marketing provided are not directly regulated by the Swedish Gambling Act. Affiliates and operators marketing products targeting the Swedish market are regulated by the Swedish Marketing Act.
However, operators and affiliates shall follow some provisions within the Swedish Gambling Act, the most important of which is that it is illegal to aim direct marketing towards players who have opted to self-exclude themselves from gambling using the national self-exclusion register.
White-label solutions are accepted and regulated under the Swedish Gambling Act. The company providing the white-label solution will act as the licenceholder, thus holding the liability and responsibility laid out in the Gambling Act and Marketing Act.
See the Sweden Trends and Developments chapter.
The SGA may, in certain circumstances, order an internet service provider to prepare a warning notice that is clearly displayed to visitors to a website that provides gambling without the necessary licence under the Swedish Gambling Act. The notice shall inform visitors that the party providing the gambling service does not hold a licence in Sweden and is not under Swedish supervision and that the gambler is liable for taxes on their winnings.
The Swedish Gambling Act introduces the concept of "duty of care", which holds a central position within the licensing system. The duty of care includes all player responsibility measures taken by the licence holder in order to protect the player from excessive gambling, both those that the licence holder is required to take and those not put down in any provisions. The licence holder is expected to have policies in place for detecting and handling problem gambling. In line with this, the player shall be provided with tools to help reduce gambling when necessary.
As these requirements span several regulations, there has been some debate regarding the actual material content of the duty of care; however, the framework is laid out in the Swedish Gambling Act. In short, the licence holder must:
In accordance with the duty of care, it is mandatory for players to set a maximum deposit limit. The player shall be able to set daily, weekly and monthly limits. Increases of the limits shall take effect after 72 hours, whereas decreases to limits shall take effect immediately.
If a player raises a limit to exceed SEK10,000 per month, the operator shall contact the player in order to fulfil the duty of care. Further, players shall receive regular notifications regarding their account history, including winnings, losses, login times and any additional information the operator wants to share.
The player shall also be given notifications about the option to either log out or continue gambling, with the purpose of counteracting excessive unwanted gambling. Additionally, players shall receive a message upon logging into their account, which shall contain information regarding accumulated losses during the past 12 months, limits and responsible gambling measures.
Players shall have access to self-exclusion tools, for the purpose of excluding themselves from specific types of games, for a duration ranging from 24 hours to indefinitely. Additionally, there shall be information and links to the national self-exclusion register, Spelpaus, where players can exclude themselves from all gaming with all Swedish licence holders.
The provision of gambling in Sweden is subject to the Act (2017:630) on Measures against Money Laundering and Financing of Terrorism, which has implemented Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the "Fourth AML Directive").
Additionally, the SGA has issued regulations, guidelines and regular advice on the prevention of money laundering and the financing of terrorism (LIFS 2018:11).
Customer due diligence shall be performed:
The SGA has deemed that a business relationship is established when a customer registers with an online gambling operator. Due diligence is therefore required in relation to all online customers before they can engage in gambling.
In line with the Fourth AML Directive, the Swedish AML regulations require gambling operators to implement a risk-based assessment of customers, which should be used to assess whether risks of money laundering and terrorist financing are high or low, and action should be taken accordingly.
According to the Act (2017:630) on Measures against Money Laundering and Financing of Terrorism, all operators shall carry out a general risk assessment. The general risk assessment is to be regarded as a key component of a gambling operator’s AML work and shall include how a gambling operator’s products and services may be used to launder money or finance terrorism, and thereafter the risk is assessed on a case-by-case basis.
The SGA has provided operators with general advice on which factors may amount to high or low risk:
All licence holders shall have routines and measures in place to counter money laundering and terrorist financing. It is therefore imperative that there are close connections between the general assessment and other routines. The routines shall include at least the following:
The supervision of marketing and advertisement of gambling products and services is divided between and handled by the SGA and the consumer agency.
The SGA handles marketing that is directly tied to gambling operations, such as information about specific games, bonuses and campaigns, and sponsorships.
The Consumer Agency handles marketing not directly involved with gambling operations, such as moderate marketing, marketing targeting underage persons, direct marketing to persons and general rules governed by the Marketing Act.
Marketing is defined in the Marketing Act as “advertising and other business activities intended to promote the sale of and access to products, including a trader's act, omission or other measure or conduct before, during or after the sale or delivery of products to consumers or traders”.
Marketing provisions regarding gambling products and services are found in Chapter 15 of the Swedish Gambling act. Additionally, general marketing rules and regulations are found in the Marketing Act (2008:486). The Marketing Act is based on Directive 2005/29EC of the European Parliament concerning unfair business-to-consumer commercial practices in an internal market.
Additionally, there are important sources of information that assist when interpreting the marketing regulations:
Advertisement and marketing targeting Swedish citizens without the possession of a gambling licence is a criminal offence.
Advertisements and other forms of marketing may not be aimed specifically at people under the age of 18, nor directly target players who have registered with the Spelpaus self-exclusion registry. However, if a player has closed a player account with a licence holder, marketing can still be aimed at this player if consent has been given.
Commercial game notices must contain clear information about the minimum age to play. In places where games are conducted and in connection with commercial announcements about games, with the exception of such announcements on the radio, the licensee must ensure that contact information is also provided of an organisation that provides information about, and support in connection with, gaming problems.
When a licence holder enters into a sponsorship agreement, it shall ensure that its logos and names of gaming products or gaming services do not appear on products intended for use by persons under 18 years of age.
Bonuses are defined as a discount or similar financial incentive that are directly linked to gambling and are severely restricted in Sweden. The SGA has made a wide interpretation of what is to be determined as a bonus, making the following prohibited under the Gambling Act:
Bonuses shall only be given out to a player once per licence holder. Further, licence holders shall inform the player, with clear language, of the terms and conditions of the bonus offering. Payment of a bonus shall be made as soon as the terms and conditions laid out have been met, and the same bonus offerings shall be made on the same terms for all players receiving the bonus offering.
When failing to comply with the provisions of the Marketing Act under the supervision of the consumer agency, the consumer agency may file a lawsuit at the Patent and Market Court. The lawsuit may file for the following:
Any legal entity directly or indirectly owning 10% or more shares or voting rights of a licence holder shall submit an Annex B.
All board members and key personnel of such a company shall submit an Annex A, as well as any person owning 10% or more of the shares or voting rights in the licence holder.
Any changes to ownership or personnel shall be reported to the SGA within two weeks, along with a fee of SEK800.
The trigger in relation to changes in corporate control is as stated in 10.1 Disclosure Requirements: 10% direct or indirect ownership of the licence holder.
See 10.1 Disclosure Requirements.
The SGA can enforce the Gambling Act directly through decisions against gaming operators. The SGA also has the power to take action against gambling operators under the Act (2017:630) on Measures against Money Laundering and Terrorist Financing. The various types of decisions the SGA can impose on gambling operators are listed in 11.2 Sanctions.
Decisions from the SGA can be appealed to the administrative court.
Appealed decisions are not enforceable until the decisions have entered into force, which happens when a decision or judgment can no longer be appealed. The exception to this is if the SGA deems it necessary to have the decision be applicable in the interim.
The SGA has a number of sanctions available for when licence holders fail to comply with the Swedish Gambling Act and its provisions. The SGA can abstain from interventions and sanctions if the offence is deemed minor or excusable, providing the licence holder rectifies the matter.
The primary sanctions available to the SGA are as follows (in hierarchical order):
Since the removal of the monopoly and the creation of a lawful market for online gambling, the SGA has issued sanctions mainly due to illicit bonus offerings, the offering of betting products on games where the majority of participants are minors, failure to comply with AML regulations and failure to comply with responsible gambling measures.
The actions taken, and ongoing supervisory cases, have been due to offences in the following areas:
See 11.2 Sanctions.
Social gaming is not regulated by the Swedish Gambling Act.
Esports gaming falls within the scope of the Gambling Act. Betting on the outcome of esports events can be offered by operators holding a betting licence.
Fantasy sports betting can be offered by operators holding a betting licence. It is worth noting that certain fantasy sports events may be considered skill games, depending on the skill-to-luck ratio involved, and will therefore fall outside the Gambling Act. Winnings from these types of skill events will be taxed as income.
Skill games do not fall within the scope of the Gambling Act and can therefore freely be offered without obtaining a licence.
Blockchain currencies are not allowed. Licence holders may only receive deposits and make payouts from payment service providers in accordance with the Act on Payment Services (2010:751).
See 1.1 Current Outlook and 1.2 Recent Changes.
Gambling tax shall be paid monthly to the Swedish Tax Agency. Licence holders shall pay tax at a rate of 18% of the gross gambling revenue (stakes – winnings paid out – bonuses given).