The Swedish gambling regulator Spelinspektionen has announced that the country’s channelization rate for the online gambling market has reached 86% for 2023, reflecting an improvement over the 77% recorded the previous year. This figure exceeds the forecasts made by several operators, including Aktiebolaget Trav och Galopp (ATG), which had predicted the rate would fall between 69% and 82%.

Channelization: Progress and Challenges

Channelization refers to the percentage of players who participate in gambling through licensed, regulated operators. A high channelization rate indicates more players opting for legal platforms over unlicensed, offshore options. However, even with the rise to 86%, Spelinspektionen faces challenges from unregulated markets. The regulator estimates that unlicensed sites generated SEK2.5 billion (€220.2 million) in 2023 compared to SEK17.3 billion for licensed operators. This figure, however, assumes equal betting amounts on licensed and unlicensed platforms, a variable Spelinspektionen admits could differ.

Data gathered from surveys of 4,000 Swedish players between June and July 2023 was instrumental in determining the channelization rate. Among the respondents, 97% reported gambling with a licensed operator in their most recent session, while 83% of total wagers were placed on regulated websites.

Licensed platforms dominated the sports betting sector, attracting 99% of players and 97% of wagers. However, the online casino sector saw lower rates, with 96% of players using licensed websites and 79% of total wagers placed on these platforms.

Skin Betting and the Black Market

While overall channelization improved, the growing issue of skin betting—using in-game virtual items as currency for illegal gambling—remains a concern for Spelinspektionen. When including skin betting in the data, licensed gambling visits represented only 73%, a drop from 84% when excluding this form of betting. In fact, 49% of all visits to unlicensed websites involved skin betting.

Efforts to curb black market activity remain critical, as Spelinspektionen reported that 24% of visits to unlicensed gambling sites were tied to commercial online gaming, while 20% were related to online gambling. The regulator aims to further understand the factors driving players to these platforms.

Mixed Estimates from Operators and External Data

Other figures have also provided varying estimates of Sweden’s channelization. For instance, data from H2 Gambling Capital suggested a higher rate of 92% for 2023. H2 also reported that 93% of online betting turnover came from licensed platforms, with online casinos recording a slightly lower rate of 87%. This data offers a more optimistic outlook compared to the regulator’s figures, but it underscores the complexity of assessing channelization due to differing methodologies.

Meanwhile, reports from the Swedish Trade Association for Online Gambling (BOS) have been critical of the country’s current regulatory framework, which they argue limits the competitiveness of licensed operators. According to BOS, channelization for the overall market stood at 77%, and even lower—at 72%—for the online gambling sector. Some operators, including ATG, believe the actual channelization rate may be even lower, suggesting it could be between 57% and 72% for certain segments of the market.

Regulatory Response and Looking Ahead

Despite the ongoing challenges, Spelinspektionen remains focused on ensuring that Sweden’s licensed gambling market continues to capture a larger share of activity. However, the regulator acknowledged that the 86% rate could potentially be lower, depending on differences in player spending on licensed versus unlicensed sites. If turnover per visit is significantly higher on unlicensed platforms, the rate could drop as low as 78%.

Camilla Rosenberg, Spelinspektionen’s director general, emphasized the importance of diverse methodologies in assessing channelization. In a translated statement, she noted, “The results show that the degree of channeling varies depending on the method and form of play. The SGA believes there are four different indicators that together can give a picture of the degree of channelization.”

Spelinspektionen continues to monitor the impact of unlicensed operators and hopes to study the black market further to understand its growing influence. As the regulator collects more data for 2024, it aims to solidify the progress made in channeling Sweden’s gambling market and reducing the reach of unregulated platforms.

Source:

Redovisning Av Uppdrag Fi2023_03130: Den Offentliga Kontrollen Over Spelmarknaden, Spelinspektionen [pdf], October 2024.

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