Swedish regulator issues warning to payment processors

The Swedish Gaming Authority (Spelinspektionen) has written to payment service providers warning them not to do business with unlicensed gambling operators targeting the country's regulated igaming market.

The regulator said that having implemented the Gaming Act, which opened up the market to private online operators for the first time in January this year, it aimed to enhance player protection controls by challening users towards legal, controlled forms of gambling. 

By working with companies that had not secured a Swedish licence, it said, payment processors were undermining these efforts as well as violating the Gaming Act. This could cause more people to develop problems with gambling and create unfair competition in the market, which in turn could reduce tax revenue from the regulated market.

Furthermore, Spelinspektionen continued, unlicensed operators were not subject to the country's money laundering and terrorist financing regulations.

The regulator explained while it can enforce these regulations for licensees, it has no control over unlicensed businesses, meaning they could be used to launder money or finance terrorism.

In addition, Spelinspektionen noted that processing payments for unlicensed operators could impact its responsible gambling efforts in Sweden. Websites without a licence do not have access to the Spelpaus.se self-exclusion database, meaning they cannot offer players the ability to block access to igaming sites.

“Players who play at gaming companies without a Swedish license are not protected by the gaming liability measures that result from the Gaming Act,” Spelinspektionen head of operations Patrik Gustavsson explained. “Payment service providers that mediate bets or profits to and from unlicensed gaming companies help these companies to continue to operate without complying with Swedish laws and regulations.”

Despite the warning, and myriad issues experienced by licensees, the re-regulation of the market has succeeded in significantly cutting revenue from unlicensed gambling. In the second quarter of 2019, to 30 June, revenue from unlicensed operators fell 15.4% quarter-on-quarter to SEK324,000. Spelinspektionen said at the time that around 91% of revenue was generated via licensed operators.