The opening of a betting shop might not initially appear to be an event worthy of report. But when that betting shop is in Stockholm, it takes on much greater significance. Betsson’s new shop in Sweden’s capital city opened on Friday, and gives physical form to the pressure that is being applied to the country’s gambling monopoly.
A few hours after the shop had opened, Pontus Lindwall, chief executive of Betsson, and Ola Wiklund, an attorney with Wistrand, the Stockholm-based firm, talked to Interactive Gaming News about recent events and the regulatory situation in Sweden.
Mr. Lindwall said the opening of the shop had been “fantastic:”
“[T]here was a lot of response from both customers and the media,” he said. “We have been applying for a license for many, many years but have been told ‘No’ without any reason.”
Betsson, a Sweden-based operator, has yet to receive a license for this outlet and Mr. Lindwall saw the shop’s opening as a challenge to the government monopoly. “If you don’t do something about it (challenge the monopoly), nothing will happen,” he explained.
Johan Röhr, an attorney representing the Swedish Gaming Board, told Sweden’s TT News Agency a few days before the opening that “we will send an inspector and see what it is they’ve (Betsson) put up. Then we’ll see what we will do.” But Mr. Lindwall was not able to confirm whether or not an inspector had been present on Friday.
From an operational perspective, a betting shop represents an interesting development for Betsson. The company says the shop is a means of getting closer to its customers but it will be “fine tuning” what is available in the shop before it considers opening any further outlets. Mr. Lindwall, however, believes the shop is a “big step” in the debate over gambling monopolies that “will have an impact on what is taking place in the rest of Europe.”
Mr. Wiklund had also just returned to his office from what he described as an “extremely hectic” opening day at the Betsson shop when he spoke to IGN. He agreed that the new betting shop had “great symbolic value” in the Swedish gambling monopoly debate. But he thought that it was unlikely the authorities would conduct a high-profile “raid” on the shop to close it down, when the idea was put to him.
Instead, Mr. Wiklund suggested the Gaming Board would simply file a complaint with the prosecutor, who would then look into the shop’s activities. The Swedish government is keen to avoid litigation concerning the gambling monopoly and this quieter course of action is, therefore, preferable.
The Betsson betting shop may have symbolic value but how influential will it actually be in altering the regulatory situation in Sweden? Mr. Wiklund thinks that as an individual event it will not be that influential in hastening the end of the monopoly but will have a greater impact in combination with other developments.
One such development is an announcement made by the Appeal Court of Stockholm last week. It is considering sending the assessment of the legality of the Swedish Lottery Act to the European Court of Justice in Luxembourg. Should the court find against the Lottery Act, Mr. Wiklund said there will be a “regulatory vacuum,” which the Swedish government would then be forced to fill with new legislation.
Whatever may or may not happen at the European level, domestically, Svenska Spel, the country’s gambling monopoly, is already coming under pressure to change its strategy. The first manifestation of this change was the appointment of Margareta Winberg, a former deputy prime minister of Sweden, as the company’s new chairperson. Almost immediately her appointment began to stir things up internally.
First was the announcement that Jesper Kärrbrink had resigned from his post as chief executive. In a prepared statement, Mr. Kärrbrink said: “It has become clear lately that my ideas about how Svenska Spel should be run don’t agree with the image held by the owner. Therefore I have, in consultation with the board, come to an agreement that the best course of action in this situation is for the board to find a replacement for me.”
Subsequent comments from Ms. Winberg to the TT News Agency also seemed to confirm that there were disagreements about the future strategy for the state-owned company: “It (Mr. Kärrbrink’s resignation) was in relation to the change in the board chair. It became very clear, from the side of the owners, that they wanted a different direction.”
Talk of a “different direction” reflects the conflict that Svenska Spel faces between the commercial aspects of providing gambling services and the requirement of acting in a socially responsible manner. Mr. Kärrbrink’s tenure was characterized by The Commercial. It included the launch of Svenska Spel’s own online poker room, suggestions about extending the company’s operations beyond Sweden, and extensive spending on advertising and marketing of its products.
The appointment of Ms. Winberg signaled that this commercial era was at an end. It was a very political appointment by the ruling Alliance coalition to keep the issue of gambling off the domestic political agenda. It also signaled that protecting the public from the perceived harmful effects of gambling and social responsibility were now the priorities of the state monopoly. This could be an attempt to bolster its position in the ongoing argument with the European Commission regarding the status of the monopoly.
Svenska Spel’s new direction has prompted two further executives to defect. Mathias Hedlund, director of the online and retail betting division, and Annica Axelsson, director of the bingo, casino and restaurant division, both left in the wake of Mr. Kärrbrink’s departure. Speaking to E24, the Stockholm-based online financial newspaper, Mr. Hedlund said: “Svenska Spel is changing its target . . . but the new aim of the owner is not in line with my view so I decided to resign.”
On top of all these developments, a report from the Moderate Party, which makes up the majority of the ruling Alliance coalition, has called for Svenska Spel’s monopoly to be abolished to allow for new ways of raising funds for cultural and sporting projects in Sweden. The party’s Culture Committee has argued that ending the monopoly and opening up the market to private companies will enable more funds to be raised for a larger number of good causes.
But Svenska Spel is not entirely on the defensive, as it has shown with its recent court case against Ladbrokes for its advertising practices in Sweden. Mr. Wiklund describes this case as “being on the outskirts” of the main issue, which is the status of the gambling monopoly.
Lasse Dilschmann, chief executive of Ladbrokes Scandinavia, concurs that this court case “is a marketing case with little bearing on the regulatory environment.” But this does not mean that he is any less keen to win the case or the countersuit that Ladbrokes has lodged against Svenska Spel.
Mr. Dilschmann explained to IGN that the countersuit has two aims. First, to have Svenska Spel refrain from characterizing foreign operators like Ladbrokes as “illegal.” Second, Mr. Dilschmann wants an opportunity to “put the cards on the table” with regard to how Ladbrokes and Svenska Spel operate. Engaging in debate through the court case might provide that opportunity. He hopes that the Market Court will give its judgment within the next eight to 12 months.
Looking at the wider issue of the gambling monopoly, Mr. Dilschmann believes that the worst-case scenario from the perspective of private operators is the most likely outcome. He thinks the Swedish government will wait until the publication of an investigation into regulatory change, which is due on Dec. 15, 2008, before any decisions are taken. But there will then be a period of consultation which will take the process into 2009 -- and it all buys time to retain the current setup. With the next set of elections falling in 2010, the coalition government could then be wary of implementing radical changes to the gambling monopoly in the run-up to those elections.
Andreas Jansson, communications director of Svenska Spel, could not be reached on Friday to discuss the various issues raised.
The gambling market in Sweden is a competitive one that is already targeted by a number of private companies, and the state monopoly is under pressure from a number of parties. It might be this perceived weakness that persuaded Betsson now was the right time to openly challenge the monopoly with its betting shop. It is certainly a bold move and one that Ladbrokes is not likely to follow at the moment -- “We are interested in changing the law, not breaking it,” Mr. Dilschmann said.
But for all the recent developments there is little sense that they are making the situation any clearer. The timescale for any substantial regulatory change could still be measured in years rather than months.