Black market takes it all under Swedish gambling proposals

Sweden is at a crossroads in its regulatory journey, but risks undermining its legal market with increasingly punitive controls. But rather than engage in a war of words to add to an already febrile atmosphere, all stakeholders need to work together to find common ground, writes International Betting Integrity Association (IBIA) chief executive Khalid Ali.

More worrying data is emerging from Sweden covering the impact of counterproductive policies being promoted by vested interests and championed by the country’s policymakers as necessary, but as yet unevidenced, steps to restrict and supposedly to protect Swedish consumers.

As many will have seen, this includes a deposit limit running at least until the end of this year and further restrictions proposed to the sports betting products onshore licensees can offer to consumers.

Our colleagues at Branschföreningen för Onlinespel (BOS) have worked with Copenhagen Economics to produce a report that should be making those policymakers shudder, pause and rethink their approach. Unfortunately, so far there appears little appetite for clear thinking from those under pressure from an avalanche of publicly pronounced conjecture and misinformation. Clear thinking and avoiding knee-jerk reactions is however crucial at this juncture if a sustainable market is to be maintained. 

The disturbing figures speak for themselves: up to 28% of consumer activity on online casino and 20% of sports betting is now offshore; moreover, both show a worrying continuing trend to the black market.
Data from leading market analysts H2 Gambling Capital is used in the Copenhagen Report and it has stated that the results “are largely consistent with what we [H2] are seeing in terms of a downward trend in the channelling rate onshore from the high 80% of mid-2019 to the low 70% going forward.”

Sweden’s consumer channelization goal is 90%; the data gives every impression of a going… going… gone scenario. Once it’s gone, why should it return? Mistakes may have been made, but this is fixable without draconian measures that will ultimately drive more consumers offshore.

Policymakers so far appear unable or unwilling to grasp these core concepts and unfortunately confidence in the regime’s understanding of online gambling, and its approach to it, is quickly eroding. By way of example, addressing match-fixing has been stated as a key priority by policymakers.

However, some 10 weeks after IBIA’s response to the previous betting integrity consultation process made a clear recommendation and argument for putting an information sharing agreement in place, and bringing IBIA’s global intelligence into this discussion, we’ve heard nothing. Understandably, we find it difficult to comprehend this lack of impetus and engagement if integrity is so paramount and Swedish sport is under such sustained attack. 

IBIA and its members applauded the opening of the online market and the move away from the failing monopoly approach, but that was clearly not universally welcomed.

As in other markets, the product innovation of private operators is understandably someway ahead of those that have not previously been part of the global marketplace. IBIA’s experience from other markets is that restricting products is one way that some have sought to level the competitive playing field and, to that end, muddled integrity arguments are often front and centre of any supporting arguments.

The uncomfortable reality is that commercial and integrity issues do overlap. Yet it never ceases to amaze me how the agenda of some is said to be predicted on protecting the integrity of sport yet it so seamlessly complements their commercial aims.

Take Svenska Spel’s assertion that the SGA’s proposed restrictions on football don’t go far enough and should include side markets such corners. The land monopoly also opposes the SGA banning betting on many football friendly matches (we also oppose this, but probably for differing reasons); apparently friendlies are an important commercial product for it when the competitive leagues finish! But isn’t this all about integrity?

I respect our colleagues at Svenska Spel and Swedish policymakers, especially given the challenging and no doubt somewhat daunting move from a national online monopoly model to an open licensing approach in a global competitive marketplace. Both however do seem to have missed the obvious: the integrity answer lies with increased engagement and intelligence gathering on all products from SGA licensed operators and wider market analysis to punish corruption and to protect consumers.

For Svenska Spel, its current position is commercially understandable (at least for now; it is likely to change as its commercial position does over time). For policymakers, the approach is reversing all of the good work to date and potentially sending the onshore market to oblivion. 

Banning Swedish operators from offering certain side betting markets (such red cards and penalties) isn’t going to stop the fixing of Swedish sporting events – our datasets, already provided to the SGA, show that: a) over 90% of our alerts on Swedish sport, and indeed internationally, are on the main betting markets, not side markets; and b) around 75% of potentially corrupted Swedish sporting events identified by IBIA involved suspicious betting placed on accounts outside of Swedish licensing.

Let’s put this in context. IBIA is by far the largest customer account-based integrity monitoring body with around 50 retail and online international brands feeding in, so its data is robust. It highlights the limitations of the product restriction proposals in a global market place.

Similarly, introducing low deposit limits isn’t going to meet Swedish consumer demand or best serve to protect those at risk of harm if they go offshore. In both cases, the offshore black market wins.

IBIA believes that it is far better to have as much consumer and market oversight as possible. Surely we can engage and reach an agreement that better serves to maintain market oversight and protect sport and consumers?

That must begin with a clearer and more grown-up debate about the limitations of national online policy in a global online market. Rather than throwing grenades at each other publicly (and yes I’m now complicit in that) and benefitting the black market agenda, we actually have much in common.

Put simply, we all want the onshore market to work. The current consultations are a process, but let’s get around a (virtual) table; surely that will prove more productive and beneficial going forward.

IBIA is engaging in this discussion publicly to try and provide a clearer understanding of these issues and to challenge some of the conjecture being so liberally thrown around.

This is an important crossroads for Sweden and one where the impact of future policy shouldn’t be underestimated. You can join that debate through our Twitter and LinkedIn feeds and via #blackmarkettakesitall; we’d love to hear your views. I nevertheless warn you that I may find it hard the resist the odd ABBA pun.