The Swedish gambling market: The upcoming re-regulation, part 1
5 December 2018
A new chapter in the history of gambling in Sweden lies just around the corner. On January 1, the new legislation is set in place. If todays’ off-shore regulated companies want to continue to operate in Sweden, it has to be under Swedish law. In this three-part blog series we’ll provide you with an outlook of the Swedish gambling market – and maybe of even greater interest – what we expect of 2019.
First, a comparison of gambling reach for SE vs non-SE regulated companies. Later, we’ll look at reach figures for different gambling types as well as consumer preferences for different platforms used for gambling.
2018 will go down as a very eventful year on the Swedish gambling market. With a new legislation starting Jan 1, 2019, the market will open up for new companies, operating from abroad. A license system will govern both Swedish and off-shore operators, basically under the same rules.
The foreign operators have ramped up their marketing substantially during the last years, partly explained by their positioning strategy ahead of the new legislation. This has been a much-debated subject, since off-shore gambling operators are prohibited from advertising in Swedish media. However, as the broadcasters NENT Group and Discovery Networks are London-based, this has been a way to target Swedish consumers. Under the new regulation, all licensed actors will compete and advertise on equal terms. This implies that other commercial media, such as TV4, Google and Facebook, also can display gambling advertising. In parallel, competition between the state-controlled actors and off-shore companies is rising. Both sides are in a tough battle over market shares. BOS, The Swedish Trade Association for Online Gambling, has expressed concerns about state-controlled actor Svenska Spel and its compliance with the new legislation. And Svenska Spel was quick to rebutt. So, no doubt, the competitors are on the edge of their seats.
But what about the consumers?
56% of 15-74-year-olds gambled an average month 2018 (H1), +12% YOY. The state-controlled actors dominate in market shares, but the off-shore actors are growing.
Total gambling monthly reach in Sweden H1 18 vs H1 17 (%)
SE-regulated brands currently dominate in terms of reach and market share, but the balance of market shares might be subject to change as the new licensing system is introduced. It remains to be seen how many of the currently off-shore regulated actors will establish themselves in Sweden and what kind of effect it will have.
Following the re-regulation, the government aims for a channelization, the share of gambling taking place with licensed actors, of 90 percent within two years. By assuming that all current actors on the Swedish market are successful in acquiring a license, also counting the top 5 (Betsson group, Kindred, Bet365, Leovegas and Cherry casino) off-shore actors and their sub-brands, a channelization of 90 percent appears not only possible, but very likely. Lotteriinspektionen has started approving license applications, and some of the major players have got their license already.
Currently, 30 percent of newly registered gambling accounts during 2018 are with smaller actors (SE-regulated & top five off-shore actors excluded). This indicates that the competition from smaller actors is still present. Furthermore, several of these smaller actors will likely acquire a license as well.
If the Swedish market were to follow the examples set by Denmark and Great Britain, we can expect the number of actors to decrease and several mergers to take place. In other words, we are likely to see a drastic change on the Swedish gambling market in the coming years. 2019 has the potential of becoming a very eventful year, Mediavision will follow the development closely.