A degree to which Swedish consumers gamble with licensed operators is called channelisation. It is well known that a large portion of gambling turnover comes from outside the licence system, i.e. on sites that are operated by companies that do not hold a Swedish licence. Those companies neither abide by the Swedish regulations nor pay any betting duties.
The political goal of the reform
The channelisation rate is the single most important aspect when assessing the success or failure of the Swedish gambling reform. If channelisation decreases, Swedish society will lose out on revenue to society in the form of taxes, lower investments into sports and other organisations, fewer employees and diminished consumer protection.
The new licence system was implemented on 1 January 2019. In a bill to the Swedish Parliament containing the new Gambling Act, a channelisation rate of 90 per cent was defined as the political goal of the reform.
Kindred Group is a member of The Swedish Trade Association for Online Gambling, or BOS (Branschföreningen för Onlinespel). BOS represents more than 20 gambling companies and game developers that operate in Sweden.
Those companies have been highlighting the following issue: the channelisation estimation that the Swedish Gambling Authority (SGA) and the Swedish Government refer to does not correspond with the actual numbers. Therefore, BOS assigned the independent consultancy firm Copenhagen Economics to assess the actual channelisation rate through a comprehensive study. Their findings show that estimates used by the SGA are an incomplete representation of the actual level of channelisation, as well as an underestimation.
The report is the first to show the true channelisation for individual gambling verticals, like sports betting and online casino, in the Swedish market. Previous estimates have only captured the channelisation for the competitive side of the gambling market in general.
- The public estimates on the proportion of gambling that takes place within the Swedish license system, at 91 per cent in Q1-Q2 2019 and 85-87 per cent in Q3 2019, do not reveal the actual situation in certain critical categories of gambling.
- The channelisation for online casino is 72-78 per cent, which means that 22-28 per cent of the gambling volume in this category takes place outside the licence system. Copenhagen Economics also conclude that channelisation is decreasing.
- The channelisation for sports betting is 80-85 per cent and is decreasing.
- Licensed operators lost 16.8 per cent of revenue during 2019 compared to 2018, whereas the total market exhibits steady growth.
You can find the full report attached.