Analysis: Are Scandinavian markets becoming ‘guinea pigs’ for stricter gambling regulation?

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Analysis: Are Scandinavian markets becoming ‘guinea pigs’ for stricter gambling regulation?

By Tim Poole

With the COVID-19 pandemic affecting industries worldwide, without even mentioning its effect on human life in general, the gambling industry was always bound to suffer to some degree.

Land-based casinos have fallen victim to property closures and sports betting has been stripped of its essence through the postponement and cancellation of major sport.

As has been explored in depth by Gambling Insider, other verticals have thrived, including online casino, virtuals, poker and esports. But, for the sector as a whole, it is as tough a time as it has seen.

With social distancing and isolation measures also in place globally, there is increased scrutiny on problem gambling and an increase in online gaming.

While the industry has been quick to point out data has not shown as “drastic” a change in player behaviour as expected, external outlets have reported on operators ‘luring problem gamblers back in,’ as well as picking up on rogue operators offering COVID-19 related markets.

As Gambling Insider warned earlier this month, elevated scrutiny always seemed inevitable during this pandemic. Anti-gambling media outlets have relied less on evidence and data in recent years but, in their defence, the industry was always likely to come out and play down any rise in problem gambling.

Whatever the real numbers are, the most important result is the end outcome in terms of player protection and regulation. But the two are not mutually exclusive.

As Betsson Group CEO Jesper Svensson told Gambling Insider this week, referencing advertising regulation in Spain and the suspension of licenses in Latvia, restrictive regulations can become “contradictive” to player protection.

He said: “What you risk doing as a regulator is pushing players to play outside the regulated market. That can severely impact the channelisation in those jurisdictions, because players will not stop to play, they will just find other places to play.

“I think it’s good when you can work closely with regulators and have a good dialogue about what are the right measurements to do at a time like this; to protect not just the consumers but the regulations in themselves.”

While the industry urges caution, uttering that ever-more important phrase “evidence-based,” those opposed to the very nature of gambling assume all operators are exploiting homebound players and want governments and regulators to step in.

In Scandinavia, they have – and rather swiftly. First, the Swedish Government set a weekly deposit limit of SEK 5,000 ($500) and a SEK 100 cap on bonus offers during the COVID-19 crisis.

In the words of Svenska Spel president and CEO Patrik Hofbauer, “It is difficult to interpret the proposals as anything other than a substantial underestimation of the gaming industry’s ability to present powerful measures themselves.”

This week, however, Finland’s Interior Ministry took things a step further, capping online game loss limits at €500 ($542.24) per month, down from the previous cap of €2,000.

It must be stressed the Finnish market operates with a state-owned monopoly, making this a different case study to the norm; though these actions are still an obvious sign Finnish politicians share a similar outlook to those in Sweden.

Those calling for tighter gambling regulation across the world will feel vindicated and, in many ways, these Scandinavian markets are the ‘guinea pigs’ for a strict gambling regulation model, with no disrespect intended.

The Malta Gaming Authority, by contrast, recently spoke of assessing real data before making any such proposals during the coronavirus pandemic. In the UK, it’s also worth pointing out the actions of the Betting and Gaming Council, which has imposed a voluntary TV and radio advertising ban. These kind of actions can perhaps help hold off potentially similar regulation.

But, clearly, Finland and Sweden disagree.

Will the sanctions imposed by these markets genuinely protect players and reduce problem gambling? Are they genuinely needed or are the responsible gaming actions of the industry to date simply being ignored? Thanks to the experimental approach of regulators, we are in the process of finding out.

Those inside the industry will rightly discuss the risk of black-market activity. But those outside the industry, just like those I have conversed with outside work recently, will believe the right thing is being done to curb problem gambling.

With channelisation of the market already down in Sweden, early results are not encouraging. Yet, either way, Scandinavian gambling markets will give us a true glimpse of how a far stricter-regulated gambling industry would look in the future.

Personally, I feel €500 a month is a more than fair limit, which encourages mass marketing rather than a cash-cow approach towards high-value players. But, crucially, that is a subjective opinion not based on data and formed purely on my personal circumstances, not taking into account the earnings of higher-income players. That’s exactly where arbitrary limits fall short.

My opinion, though, is one that brings us straight to the issue of affordability, one UK commentators are already highly aware of. That, however, is a different conversation altogether – one I’ll leave for another day for fear of opening up another can of regulatory worms.

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