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Odds lengthen for gaming monopoly

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13:44 CEST+02:00
The Swedish gaming industry is one of a trio of State-controlled sectors to have come under increasing scrutiny in the eleven years since Sweden’s accession to the EU. Alcohol, and its natural successor paracetamol, can similarly only be obtained under the watchful eye of the State. But it is the world of odds, pools and lotteries that currently seems most vulnerable to the perils of EU competition law.

A number of episodes have contrived to keep gambling firmly on the agenda ahead of this September’s general election: the government has entered into duels with the tabloids, which defiantly breached the Lotteries Act by carrying advertising for foreign bookmakers; state bookmaker Svenska Spel has made a high profile incursion into the world of internet poker, while recent test cases at the European Court of Justice have put the frighteners on betting monopolies all over Europe.

You have to go back to 1934 and the early days of the Swedish Model to find the embryo of the current monopoly. The government of the time, led by Per Albin Hansson, decided to counter illegal gambling by permitting the establishment of Tipstjänst, a private bookmaker subject to very tight regulation. Nine years later, the state bought all shares in Tipstjänst and nationalised the company.

The state-owned company merged with a smaller state lottery in 1997 and became Svenska Spel, which currently owns four casinos, a battalion of slot machines, and runs an extensive selection of games and lotteries. Not wanting to miss out on the action, it also joined the ranks of internet poker sites in March of this year

While the Swedish market is strictly off limits for private bookmakers, two non-governmental actors are considered kosher. The horse racing industry is funded by ATG, a betting company established in 1975, while so-called public benefit organisations can also receive a dispensation to fundraise by means of lotteries and bingo. Examples of organisations trading under the public benefit banner are sports clubs and political parties.

Most of the major parties in Sweden raise negligible sums through their individual lotteries. For the ruling Social Democrats, however, gambling constitutes their very lifeblood. In 2004, 40 per cent of the combined incomes of the Social Democratic Party and its youth organisation came from the party lotteries. Clearly any move to allow private bookmakers access to the betting industry would represent a threat to the party coffers.

The arguments presented in favour of preserving the current Lottery Act are twofold. First there is the public health issue: the state contends that it alone can effectively combat gambling addiction through the encouragement of responsible gaming. The second justification concerns redistribution: the State endeavours to ensure that the huge sums it earns from its monopoly position are pumped back into youth activities and sporting organisations, and used to encourage responsible gaming.

While Svenska Spel and ATG undoubtedly preach restraint to those partaking in the multitude of games on offer, critics point out that private bookmakers also make a point of warning of the dangers of gambling addiction.

All of those companies straining at the leash to get a piece of the Swedish market advise their customers on how to keep their betting under control. For instance, the traditional ‘big three’ bookmakers in the UK – Ladbrokes, William Hill and Coral – all provide information and useful links for punters in the risk zone. Ladbrokes is one of the companies that has pushed hardest to be allowed to enter the Swedish market.

Svenska Spel meanwhile set aside SEK 14 million of its SEK 4.5 billion profit for the promotion of responsible gambling in 2005. According to the Swedish National Institute of Public Health, 25,000 gamers have full-blown gambling problems, while a further 95,000 linger in the risk zone. Less than one quarter of the profit was redistributed to sports and youth activities, with the remaining SEK 3.4 billion finding its way straight to the government treasury.

In 2003, Svenska Spel and ATG spent a combined SEK 800 million on advertising. The campaigns at times were extremely aggressive, causing many to question whether the organizations were fulfilling their mandate. Furthermore, Svenska Spel has met with serious criticism for its recent embrace of the burgeoning internet poker market and its attendant addictions.

Despite the fact that Svenska Spel wants to force the closure of foreign bookmakers’ Swedish bank accounts, Swedish gamers are at present free to bet online across national borders and avail themselves of the superior odds on offer from either foreign bookmakers or Swedish operators who have bypassed the monopoly by locating abroad.

This is hardly an ideal situation for the Swedish authorities, since large sums of gambling money are now leaving the country. Rather than permit foreign operators to establish their physical and internet businesses in Sweden, however, the State has generally opted to fight tooth and nail to retain its customers.

The Moderate Party’s gaming industry spokesman, Gunnar Axén, told The Local that the four-party Alliance does not have a common policy in place for the September general elections:

“But I do get the feeling that there is a greater willingness than before to discuss alternative solutions. The Moderate Party wants to get rid of the current monopoly and replace it with a regulated market that allows private actors to apply for gaming licences.”

Last week, former minister for sport, Bosse Ringholm, came in for severe criticism from the Administrative Court of Appeal for undermining the work of a special commission set up to examine the Lottery Act. The commission, which was denied an extension by Ringholm when it requested more time to investigate, reached the conclusion that the Act in its current form is untenable and in need of reform.

The minister for local government and financial markets, Sven-Erik Österberg, whose remit includes the gaming industry, was unavailable for comment. However, his political adviser, Magnus Hedberg, informed The Local that is likely to be late autumn before any decision is taken on how best to reform the Lottery Act:

“The government is now analysing the commission’s findings. Reform is certainly needed because of technological changes over the last few years, but a license system is just one of many possible solutions. Another option is to tighten the regulations for Internet betting.”

Aside from Svenska Spel and ATG, which have most to lose from a new betting order, most of the agencies and organisations consulted are critical of the current system. Whatever the outcome of September’s election, the odds that the existing monopoly will survive are growing ever longer.

Paul O'Mahony

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