GAMBLING COMPANIES CHALLENGE SWEDISH INQUIRY FINDINGS (Update)

19 December 2008

Problem gambling more efficiently countered by a competitive licensing system

 

The debate on the findings of the Swedish Inquiry on Gambling (see previous InfoPowa report) entered a new phase today (Wednesday) when four major online gambling companies called a press conference to challenge the Swedish government findings with a study of their own.

The Swedish recommendations released earlier this week suggested some modification to the monopolistic structure which restricts gambling to the state owned Svenska Spel, but confined this to licensing sports betting products to private operators by 2011. However, the document stopped short of including poker and casino activities, which it said carried an increased risk for problem gambling, and should therefore remain the exclusive preserve of the state monopoly.

At the press conference in Stockholm, Scandinavian-facing operators Expekt, Unibet, Betsson and Ladbrokes were critical of the SIG and presented the findings of an independent study jointly commissioned by the gambling companies from the Swedish Retail Institute. This evaluated the efficiency of the Swedish gaming monopoly and studied the effect of replacing it with a licensing system.

The study found that despite the Swedish gaming monopoly and Swedish gaming regulations being ostensibly motivated by consumer protection, the problems arising from gambling addiction could be more efficiently dealt with under a serious licensing system, demanding a lower optimal tax rate of between 0.2 percent and 2 percent of stakes, as opposed to the effective monopoly tax rate of about 20 percent.

The four operators suggested that the SIG draft proposals were motivated by factors other than consumer protection. Betsson chief executive, Pontus Lindwall, suggested it was instead about protecting the state finances, and Petter Nylander as head of Unibet claimed that Sweden's Ministry of Finance had dictated much of the SIG draft with the goal of retaining as much revenue as possible.

The Swedish Retail Institute study showed that the government's protection of the Svenska Spel gaming monopoly is economically short-sighted, pointing out that the present system currently costs SEK 5 billion annually in efficiency losses, and that the cost savings, lower optimal gambling tax and increased winnings paid to players under a licensing system would result in an additional SEK 4 billion of consumer spending being ploughed back into the economy on an annual basis.

The report also warned that the monopoly system left the government little room for manoeuvre should revenues fall, as raising tax rates would make conditions less favourable than elsewhere, discouraging companies from entering the market.

Finally, the operators discussed the Swedish vulnerability to European Union law under the present and SIG-proposed conditions, which were characterised as defying EU law and depriving Swedish customers of the privilege of choice when it came to which gambling company they wished to give their business to.