Swedish Ruling Favors Gambling Monopolies

4 November 2004

A recent high court ruling in Sweden could bode well for the country's gambling monopolies.

The Swedish National Gaming Board, in an "Appeal Against a Decision by the Stockholm Administrative Court of Appeal" of Sept. 12, 2001, won a Supreme Administrative court case, issued in Stockholm on Oct. 26, 2004, over Wermdö Krog AB, which acted as an intermediary for betting with SPP Overseas Betting Limited. The verdict, which assesses Sweden's compatibility with E.U. law, could create new jurisprudence.

The case concerns a restaurant in the Stockholm area that was acting as an intermediary for the British betting provider SSP Overseas Betting Limited. The Gaming Board fined the restaurant SEK 100,000 (US$12,500) and ordered the company to cease taking bets for Overseas Betting Limited.

The decision was appealed, and the Administrative Court and the Administrative Court of Appeal found that the restaurant's activities were in conflict with Section 38 of the Lotteries Act, which inter alia prohibits the promotion of foreign lotteries.

"The main conclusion of the court," explained Per Eriksson, legal advisor for board, "is that Sweden¹s gambling regulation does comply with E.C. law."

The appellant petitioned, in vain, that the decision should be revoked. The company argued that Swedish policy allows for an increase in gaming and betting with a view of producing revenue for the government while simultaneously protecting Swedish gambling monopolies AB Svenska Spel and AB Trav och Galopp from competition.

The European Court of Justice's Gambelli ruling in November 2003 establishes that restrictions based on public interest considerations must be designed to secure the realization of the desired objectives in such a way that the restrictions contribute to restricting betting activities in a consistent and systematic manner.

Several foreign Internet operators, including Unibet, Ladbrokes, Expect and Betson, are registered and have offices in Sweden.

"Those companies," Eriksson said, "will be first examined (as to) what the nature and extent of their presence and activities are. Thereafter, it will be decided whether any enforcement measures will be taken. If any activities are considered to be contrary to the Lotteries Act, possible measures typically include issuing of prohibitions, which may be combined with a fine and the filing of police reports."

The Swedish Gaming Board maintains that it is a criminal offense to organize a lottery in Sweden without a permit. To uphold the Swedish gambling regime, the Lotteries Act prohibits promoting foreign and unlawful lotteries. The ban covers selling lottery tickets, receiving stakes, passing on prizes and advertising. A fine or a maximum of two years' imprisonment may be imposed on persons who unlawfully arrange a lottery or promote participation in gaming arranged outside Sweden.

Lotteries are subject to national regulations within the European Union. The European Court of Justice, which has passed judgment in the matter of lotteries, established that E.U. law allows member states--subject to certain specified conditions--to apply special legislation in the field of lotteries.

Eriksson also pointed out that on the same day as the Wermdö Krog verdict (Oct. 26, 2004), a separate verdict relating to gambling was issued as well. In this case, the Supreme Administrative Court ruled that posting a banner linking to a foreign betting provider on a Web site also constitutes a violation of Section 38.

Click here to view copies of the two verdicts. (Note that the translations are not official versions issued by the court.)

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.