Is Svenska Spel’s online casino ad ban a dangerous sign for the sector?

It used to be common to describe egaming as a consumer marketing industry, but regulatory changes are making that an increasingly hard claim to sustain. Digital marketing is the heart of the business and additional avenues for marketing such as TV once restricted by legislation have opened up during the past decade, but they now look like they might be slammed shut even more thoroughly than before. What remains is a more open digital environment, but one where it’s not hard to imagine more restrictions in future.

A great deal has been written about the Italian advertising ban and even more about the pending whistle-to-whistle ban in the UK market, but this a broader trend within the industry and one that is gaining rather than losing momentum. Anyone who thinks the trend is towards more opportunities rather than fewer is a hardcore optimist. What we are seeing in nearly all regulated markets is change, with anything from a look at broadcast restrictions to a total advertising ban.

It’s not possible to overstate just what a significant shift this is for the industry and how difficult it will be to pivot away from it if it’s not handled properly. Advertising bans or heavy marketing restrictions are now commonly discussed not just by anti-gambling campaigners but by politicians and the mainstream media. And while TV is currently attracting the headlines it would be foolhardy to think attention won’t or can’t shift to digital, bonusing or even email communications. Certainly, recent rumblings in the Nordic markets that have long been leaders in egaming should raise more than a few eyebrows.

The struggle is Swede

The Swedish market isn’t quite gliding along as smoothly as regulated gambling advocates may have hoped for in its early months, with ex-monopoly Svenksa Spel the latest to throw a boulder onto the tracks. The largest operator in the market has announced it is stopping all advertising for its online casino in response to rising public and legislative concerns around the vertical. And it’s something that will both delight and concern the rest of the Swedish egaming market. On the one hand here is a window of opportunity and on the other hand here is a large flashing warning sign.

Svenksa Spel has taken the somewhat unusual decision to ban gambling advertising for its recently launched casino products until the end of 2019. It said it was taking the decision because the difference in potential harm between sports and casino was huge, with 30% of casino players in the Public Health Authority’s latest survey saying they had a problem managing gambling and 60% of all those who do have a problem saying casino was their main problem game. It added it didn’t want to effectively encourage at-risk players to the riskiest form of gambling.

The press release from Svenska Spel adds that it would like more gaming companies to join it in stopping casino advertising to show that the industry is “taking consumer protection seriously”. As a statement of future intent, it’s one that’s probably unwise to ignore. Because a cynical take on this could be the Swedish’s sector’s incumbent operator with the largest market share of the new online gambling market is looking to both protect players and place pressure on other operators in a way that isn’t unhelpful to its market position.

What is interesting is Svenska Spel said it didn’t see an explicit link between advertising and problem gambling, but that advertising can act as a trigger for those with problems. This is an extremely important distinction that cuts straight through a lot of the lines of argument presented by the gambling industry around this issue. In a market that appears to be emphasising caution and player protection it doesn’t feel much is needed to make the wider debate quickly move in line with Svenska Spel.  And if this viewpoint manages to gain any traction at all in a market moving ever more towards viewing gambling as a vice then this will be very bad news indeed for the prior grey market operators.

A more nuanced debate

An operator with a large land-based presence, the most recognisable brand in the market and a very strong acquisition channel through other “lower-risk” products is going to sustain an advertising ban far better than a digital-only firm reliant on direct acquisition into casino. And it’s feasible it could get other operators with a more sports-focused business model on-side here, in private if not perhaps in public, who can see similar market-share gaining upside to this type of restrictions. Because as we’ve seen elsewhere the line of “too much regulation” appears fairly flexible for the major egaming firms with the elasticity defined quite reasonably by potential profitability.

As ever a part of the problem is a desire to try and work behind the scenes to find solutions that protect revenues and placate legislators. But this is increasingly a battle is for the hearts and minds of the wider public and that can’t be fought in the shadows. What is potentially problematic for the egaming industry about this approach is there is no obvious vision of what success looks like beyond individual company targets. There is no end goal of what can be abandoned and what must be protected that safeguards the industry for long-term growth and not specific short-term gains.

Operators reacting to advertising bans with a smile and a note to the market that it should help the bottom line and squeeze out competition doesn’t feel like a progressive move unless they truly believe they can compete on product, customer service and word of mouth in future. And this is undoubtedly a case of making the best of a bad situation. In reality, this sector needs to find answers to this shift in public and legislative mood quickly or risk having to fundamentally rethink the operating model as more and more restrictions pile on. The question is, can the egaming sector find them in time?