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A dispute has broken out in Sweden over the use of geoblocking by licensed suppliers to prevent their content from being used on the black market, a practice the country’s regulator says is not good enough.
Some online gambling suppliers in Sweden have continued to sell their games to operators on the Swedish black market, but have forced them to selectively geoblock the country, essentially preventing players in Sweden from accessing their specific content.
The Swedish Gambling Authority (SGA), however, has rejected this approach, arguing that its supplier licensing rules completely outlaw any contracts with operators that actively target Swedish consumers without their own licence.
Sweden began licensing suppliers in mid-2023 and was among the first countries to do so with the express intent of curtailing the country’s black market.
Suppliers now need a licence to provide their services to Swedish gambling companies and must take steps to ensure that their other clients outside the country are not those that illegally target the market.
The regulator’s position on geoblocking has found legal backing in recent weeks, after Sweden’s Administrative Court on April 10 an attempt by supplier Hacksaw Studios to appeal its May 2024 fine.
“The Court agreed with the Gambling Authority's assessment that Hacksaw Studios AB had violated the Gambling Act by providing gaming software to operators without the necessary license to provide games on the Swedish gambling market,” the SGA said, although the court viewed the use of geoblocking as a mitigating factor and lowered the original penalty to SEK20,000 (£1,828).
The decision can still be appealed.
Industry representatives say they are frustrated by the SGA’s position on geoblocking and are calling for change.
“It is urgent that the SGA establishes that geoblocking is the accepted and approved measure for excluding consumers from unlicensed gambling companies,” said Gustaf Hoffstedt, the secretary general of online trade group BOS.
“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,” he told žž GamblingCompliance.
The row over geoblocking has exposed simmering frustrations with the way that supplier licences are being managed in Sweden.
“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,” Hoffstedt said.
“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 summoned its entire licensed supplier sector to a series of meetings in January of this year, as revealed in a recent the regulator published on the unlicensed market.
These meetings, the SGA said, “revealed among other things, 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.”
In comments to žž, a spokesperson for the regulator said that suppliers “mainly expressed concerns about cloned software and breaches of contract by intermediaries leading to compliance issues”.
“The SGA informed the permit holders that they are always responsible for their gambling software, regardless of contract breaches by other actors.”
Despite clear frustrations on the part of the industry, the regulator said it was content with the current compliance landscape and will issue further enforcement actions if it finds suppliers in breach.
“Representatives for a vast majority of the permit holders attended our meeting. We are satisfied with the turnout and with our dialogue. We will follow up if permit holders’ gambling software is still available on illegal websites. If we have any indications of continued compliance issues, we may have to initiate supervision,” the spokesperson told žž.
The report forms part of an initiative from the SGA and government to close what they see as a loophole for illegal gambling.
Sweden’s current gambling law distinguishes between offshore operators that directly target Sweden and those that simply accept Swedish players, with only the former constituting an offence.
The government is due to present its findings and a plan of action no later than September 17.
