Feature: Falling Into Line (Part 2)

Sweden

With gross domestic product of around US$458.6bn according to the World Bank, and little exposure to the financial crisis as a result of not holding significant amounts of debt from Greece, Spain, Italy and Portugal, Sweden is not in a position where it is forced to turn to egaming legislation in a bid to swell the government’s coffers.

This, in part, explains the slow progress of legislation in a market where public demand and worries over player protection take precedence over financial concerns as the driving force behind regulation.

Sweden is most similar to neighbour Denmark in terms of market framework, with a government-owned monopoly holding a majority share, but a number of private operators including Gamesys, Betsson and Unibet enjoy reasonable returns from the grey dot.com end of the spectrum. However this is where the similarities end.

While Danish monopoly Danske Spil was a willing participant in regulation ““ dividing the business into three separate divisions in order to create a fairer regulated market ““ its Swedish counterpart Svenska Spel has openly disputed the need for regulation, despite the fact that it would allow the company to expand its product offering, which it has long lobbied the government for the right to do.

In November last year there were hopes that the Swedish government would finally respond to operators’ calls for regulation to be introduced, although when state secretary for the Ministry of Finance Johanna Lybeck Lilja spoke at the Spelmarknadsansvaret (conference on gambling and social responsibility) that same month she admitted the government was more likely to “come back to” the issue rather than address it at the time, citing social responsibility and player protection issues for the delay.

As a result, MP Gustaf Hoffstedt of the centre-right pro-egaming Nya Moderaterna party explained to eGaming Review that legislation was unlikely to be introduced in any form before the end of the current parliamentary term in 2014, and most likely to be introduced during the following period. However, an investigation by the country’s National Audit Office (Riksrevisionen) into the prevalence of problem gambling in Sweden now looks set to force parliament’s hand.

The report criticised the lack of regulation as offering no protection to players susceptible to problem gambling, and called on Svenska Spel to “do more” to prevent it, and “set a standard” for private operators in the sector. The report and the allegations the government faces over being irresponsible towards some of its citizens, appear to have stung Peter Norman, minister for the financial markets, into pledging action, announcing that a bill would come before the country’s next general election in 2014.

Norman has not revealed whether legislation will open up the market to private operators or simply put more controls in place to uphold Svenska Spel’s lottery status, but a licensing system would allow the majority of operators to continue operating in the market without much disruption. How much will hinge on Svenska Spel’s reaction to legislation.

Belgium & Netherlands

Plans for Dutch egaming regulation first surfaced in October 2010, more than a year before neighbouring Belgium outlined its plans for issuing licences, but the latter has made far more progress in the intervening period. Indeed, authorities in the Netherlands have gone as far as ordering offshore operators to block Dutch players from accessing their sites.

Still, while yet to fully come into force, it has been thought that a Dutch regulatory model might mimic those of France and Italy as far as taxation is concerned. However, as of the start of 2011 the only legal form of egaming took place through De Lotto and Sportech Racing (formerly Scientific Games Racing).

Since then Betfair won a legal case dating back seven years, ruling the existing licensing process noncompliant with EU law and thus deeming the decisions to award licences to De Lotto and Sportech Racing while denying one to Betfair as being in breach of transparency legislation. That progress may have been stunted by the Supreme Court’s decision this year to uphold a case from monopoly operator De Lotto against Ladbrokes, which argued the ban on offshore operators did not constitute a breach of EU free trade agreements.

With such disputes continuing to hog the headlines, the proposed twofold process of overturning such a ban followed by the issuing of licences still appears to be some way off.

The Belgian Gaming Commission (BGC) meanwhile has been bullish in its pursuit of those operators that continue to serve the country’s citizens without a licence, introducing a blacklist which already includes high-profile names such as bet365, bwin and Winamax. However, its compliance with European law has been contested with some taking issue with the requirement that operators must first possess a land-based licence (or a partnership with a land-based licensee) in order to receive online accreditation. To date, both bwin.party and bet-athome have taken the BGC to court, with the former seeing its claims dismissed and the latter case yet to be resolved.

It has, unlike its fellow Benelux country, opened up a licensing process. This has led to the award of three category A+ licences (for casino and poker), as well as multiple licences for amusement arcades offering online gambling (B+) and sports betting (F1+). The award of a licence in each of these categories must be accompanied by a land-based presence, leading PokerStars to seek out a partnership with Casino de Namur, while Unibet was required to apply for land-based and online licences in January, only receiving accreditation in June.

However, continued legal disputes ““ backed up by lobby group the European Gaming and Betting Association which remains convinced of Belgian egaming legislation’s continued non-compliance with EU law ““ could still threaten the future of the current regulations.

Sweden

Adult population: 9m

Product allowed/banned: None so far. Peter Norman, minister for financial markets, pledged action with an egaming bill expected by the next general election in 2014.

Tax model: 15% GPT

Estimated tax take first full year of regulation (source: H2): €56.1m

Belgium

Adult population: 10.4m

Products allowed/banned: Sports betting, games, casino, poker/slots

Tax model: Online gaming providers must pay an 11% tax on all gross gaming revenues. Online bets on horse races are taxed at 3%, and pari-mutuel bets on foreign horse races are taxed at 3.7% of turnover. Operators must possess a land-based licence (or a partnership with a land-based licensee) in order to receive online accreditation.

Estimated tax take first year of regulation: €8.1m

This is the second part of a three-part feature first published in the print edition of eGaming Review. To read part 1 online click here, and to subscribe click here.