Eventful 2017 for Swedish gambling market as re-regulation draws closer

19 December 2017

2017 will go to history as one of the most eventful years that the Swedish gambling market has ever experienced. Primarily, this is due to the governmental inquiry that was presented March 31, including recommendations for a future market regulation. In short, the commission suggests a licensing system, in which gambling operators can apply for licenses to offer certain gambling types to Swedish consumers. If everything goes according to plan, 2018 will mark the last year with the current regulation in place, as the suggested implementation of the new system is in January 2019.

The main incentive for the Swedish government to get the licensing system in place is, arguably, the increasing size of non-Sweden regulated operators on the Swedish market. With the current system, the government is without both control and potential tax income from operators not regulated in Sweden.

With that said, Sweden regulated actors, such as horse racing monopolist ATG and state-owned Svenska Spel, still control a clear majority of the Swedish gambling market. As an example of their strong position, ATG accounted for 90 percent of all gambling spend on horse racing during the past year, according to Mediavision’s analysis.

However, ATG has found it difficult to persuade the younger generation of gamblers to place their bets on horses, a potential future worry. And in other gambling verticals, Svenska Spel is already suffering from much fiercer competition. In the sports betting vertical, Svenska Spel “only” took approximately 40 percent of all gambling spend during 2017, according to Mediavision. The other 60 percent was captured by brands regulated outside of Sweden, such as Unibet, Bet365 and Betsson.

All in all, aggregated market growth is fully captured by operators regulated outside of Sweden. This is partly reflected in recent customer account registrations. According to Mediavision’s gambling analysis of 2017, 62 percent of all gambling accounts registered during the past 12 months were with non-Sweden regulated brands.

This is one part of the explanation as to why Sweden regulated operators have been fairly positive towards the commission’s suggestion overall, as it will open up the current system, where certain categories of gambling are not fully permitted. This is perhaps most evident for online casino, as no Sweden regulated operator is allowed to provide this gambling form under the current legislation. Following the commission’s suggestion, ATG recently made a notable M&A move, as the horse racing monopolist signed a conditional agreement to acquire Danish online casino and sportsbook operator Ecosys once the new regulation is in place.

Non-Sweden regulated operators have also been largely positive towards the commission’s suggestion, overall. This is partly due to the improved marketing opportunities that come with the suggested system. The group would get access to all available advertising platforms, be able to offer sponsorships and to expand collaborations with Google and Facebook.

Ahead of the expected reregulation, there is an aggressive race for market shares going on among the many actors on the Swedish gambling market, to obtain the best possible position going forward. Before the dust settles, we are likely to see more company acquisitions and mergers, in order for actors to solidify their positions and to leverage their customer bases. As the market matures and new structures fall in place, there will need to be an increased focus on customer retention rather than acquisition, and on decreasing costs rather than just increasing revenue.

In other words, the upcoming few years will probably be just as interesting and eventful as 2017 for the Swedish gambling market.

For more information, contact Sixten Ekström, Communicator at Mediavision.