Swedish suppliers clash with regulator over geoblocking rules
A heated dispute has erupted in Swedens online gambling sector, centred on whether geoblocking is enough to keep licensed suppliers from fuelling the countrys black market. The Swedish Gambling Authority (SGA) has taken a hard line, insisting that simply blocking Swedish players from accessing games on unlicensed sites does not meet the requirements for supplier licensing.
This position was recently upheld by the Swedish Administrative Court, which on from Hacksaw Studios, a supplier fined in May 2024 after its games were found on two unlicensed sites targeting Swedish players.
The SGA explained, The Administrative Court agrees with the Gambling Authoritys assessment that Hacksaw has violated the Gambling Act and should be given a warning and that there is reason to impose a penalty fee. Regarding the size of the penalty fee, the Administrative Court based its decision on the net turnover reported by the company and the court also considered that there were certain mitigating circumstances.
As a result, the original SEK2.6 million penalty was reduced to SEK20,000 (?1,828), but the warning remains in place. The court noted that while Hacksaw Studios had cooperated and taken steps to reduce black market risk, its processes were still deemed inadequate.
Hacksaw Studios defended its actions, stating: Hacksaw Studios states that it has not intended to develop any games or gaming software for operators targeting the Swedish market without the necessary licence, nor do they attempt to circumvent the Swedish Gaming Act. Hacksaw Studios believes that geoblocking minimises the possibilities of such circumvention. The company argued that it cannot be held responsible for every clients regulatory compliance and that any provider that has adequate processes in place shouldnt be determined in breach of the gambling act and penalised.
Industry calls for change amid mounting frustration
The SGAs strict interpretation of supplier responsibility has drawn sharp criticism from industry representatives. Gustaf Hoffstedt, secretary general of the online trade group BOS, has been particularly vocal: It is urgent that the SGA establishes that geoblocking is the accepted and approved measure for excluding consumers from unlicensed gambling companies, he said. Alternatively, if Swedish law does not allow such approval, to urgently work for a change in the law in the authority’s discussions with the government.
Hoffstedt also lamented the current approach to supplier licensing, saying, We were and still are supporters of licensing suppliers in Sweden. However, we believe that the punitive part of these licences has been overused, while the opportunity for dialogue with licensees that B2B licences enable has been underused.
The best-performing jurisdictions use gambling licences, whether B2C or B2B, primarily as an instrument for increased dialogue with the industry and individual licensees.
The SGA, for its part, has acknowledged industry concerns. In meetings with suppliers earlier this year, the regulator reported that licensees feel that, in addition to uncertainties about scope of application, there are other difficulties in interpreting the legislation. For example, the fact that several licensees geoblock the gaming software provided to unlicensed gaming companies was discussed. The Swedish Gambling Authority has assessed that geoblocking is not a sufficient measure.
A spokesperson for the SGA clarified: The SGA informed the permit holders that they are always responsible for their gambling software, regardless of contract breaches by other actors. Despite frustrations, the SGA is satisfied with the current compliance landscape and warned that further enforcement actions will follow if breaches continue.
The bigger picture: regulatory review and black market challenges
Swedens supplier licensing regime, introduced in mid-2023, was designed to cut off the black market by making suppliers responsible for where their content ends up. However, some legal experts and industry insiders question whether the system is robust enough. Unfortunately it will be quite easy to circumvent if additional measures are not introduced in the future, said Elvin Sababi, a lawyer with Nordic Gambling.
The government is currently reviewing the Gambling Act, with findings expected by September. This review aims to close loopholes that allow unlicensed operators to target Swedish players, sometimes by operating in English or using euros instead of Swedish kronor.
Hoffstedt, while welcoming the review, remains sceptical it will solve the underlying problems, warning, What is even more important is liberalising the licensed market to make it more attractive to consumers.
As the debate continues, one thing is clear: the tension between regulators and suppliers over how best to police Swedens gambling market is far from resolved. The coming months will be crucial as the government prepares to unveil its recommendations, which could reshape the landscape for both legal and unlicensed gambling in Sweden.
