BOS reports Swedish gambling channelization falls in 2024

The Swedish Trade Association for Online Gambling (BOS) has issued a detailed commentary on the latest assessment of Sweden’s gambling channelization rate for 2024, as published today by the Swedish Gambling Authority (SGA). The report highlights persistent challenges in steering players towards licensed gambling providers and points to ongoing concerns about online casino activity leaking into the unlicensed sector.

The SGA’s annual channelization assessment is a key measure of the effectiveness of Sweden’s gambling regulations and the overall health of the competitive gambling market. It evaluates the proportion of gambling conducted through licensed operators versus unlicensed or offshore providers.

Overview of the 2024 Channelization Assessment

Based on the most recent data from the SGA, Sweden’s gambling market is expected to have a channelization rate of 85% in 2024, marking a small decline from 86% recorded the previous year. This decline, although modest, raises concerns about the long-term effectiveness of regulatory measures in ensuring that Swedish players engage primarily with licensed operators.

One notable factor influencing this year’s assessment is the reduction in sources used for the estimate. H2 Gambling Capital (H2GC), a previously included source, was excluded in 2024 after recently adjusting its estimate for Sweden from 91% to 72%. Consequently, H2GC no longer contributes to the SGA’s reported 85% channelization rate.

The SGA’s projection should be measured against the government’s long-term goal of 90% channelization, which aims to ensure a sustainable and well-regulated gambling market in Sweden. Falling short of this target signals persistent leakage to unlicensed operators and underscores the need for further regulatory intervention.

Performance by Gambling Vertical

The SGA’s report also breaks down channelization rates by specific gambling verticals, revealing stark differences across the market:

Betting: The licensed betting market, including popular horse racing betting, performs relatively well, with channelization rates estimated between 92% and 96%. This indicates that most players seeking betting opportunities are using licensed operators.

Online casino: The channelization rate for online casino is estimated between 72% and 82%, highlighting a substantial portion of activity occurring on unlicensed platforms. This segment clearly represents the most significant challenge for regulators and licensed operators alike.

BOS notes that the relatively high channelization rate for betting suggests that consumers find licensed offerings attractive in this vertical. In contrast, the lower channelization rate for online casino indicates that licensed operators may not be meeting consumer preferences in terms of game selection, bonuses, or overall engagement.

Key Reasons for Unlicensed Gambling

The SGA highlights five key reasons why Swedish players opt for unlicensed gambling sites:

• A wider selection of games available on unlicensed platforms.
• Dissatisfaction with the limitations of licensed operators.
• Players disconnecting themselves from the Spelpaus.se self-exclusion system.
• Greater promotional offers and loyalty incentives in unlicensed markets.
• Convenience or perceived accessibility of offshore gambling sites.

These factors collectively highlight structural challenges for the licensed market, particularly in retaining players who may be lured by more attractive or flexible offerings from unlicensed providers.

BOS Response and Concerns

BOS Secretary General Gustaf Hoffstedt issued a strong response regarding the SGA’s findings:

“With this assessment, the SGA confirms that Sweden’s major problem in the gambling market is online casino. It is unacceptable that around a quarter of all online casino gambling is leaking out of the licensed market. It is equally unacceptable that this has been accepted by political decision-makers for half a decade, since the channelization has also been low in previous assessments, without effective regulatory measures being taken.”

Hoffstedt’s comments underscore ongoing frustration within the licensed gambling industry over the perceived lack of urgency from policymakers in addressing channelization shortfalls. Licensed operators argue that regulatory rigidity, particularly restrictions on bonuses and loyalty programs, may make the licensed market less appealing to Swedish consumers.

Implications of the 2024 Assessment

The SGA’s annual channelization assessment carries significant implications for regulators, operators, and consumers alike:

Regulatory effectiveness: Persistent leakage to unlicensed operators suggests that current regulations may be insufficiently aligned with consumer behavior and market dynamics.

Market sustainability: Missing the 90% channelization goal brings into question the long-term viability of Sweden’s licensed gambling sector. A continued gap between licensed and unlicensed participation could undermine government objectives of safe and controlled gambling.

Consumer protection: Players engaging with unlicensed platforms may face greater risks, including limited dispute resolution, weaker responsible gambling measures, and potential legal exposure.

BOS emphasizes that addressing these issues will require both stricter enforcement against unlicensed gambling and strategic enhancements to the licensed market itself, particularly in the online casino segment.

Upcoming Legal and Regulatory Developments

Later this month, Swedish gambling investigator Marcus Isgren is set to unveil a proposal to amend the Gambling Act, with the goal of making nearly all unlicensed gambling activities in Sweden illegal. BOS views this as a welcome development, noting that stricter legal enforcement is necessary but not sufficient to address the root causes of channelization challenges.

Hoffstedt elaborated:

“But anyone who understands the gambling market knows that the elephant in the room is that the licensed market is so tightly regulated that it does not appear attractive enough in the eyes of the consumer. Without a review of, for example, the total ban on bonuses and other loyalty programs, next year’s channelization assessment from the SGA will also be a disappointment.”

This statement highlights a delicate balance for Swedish regulators: enforcing compliance without inadvertently diminishing the licensed market’s appeal to players. Regulatory adjustments may be required to ensure licensed operators can compete effectively while still upholding the country’s strict standards for responsible gambling.

Challenges Facing Licensed Online Casinos

The low channelization rate in online casino underscores several persistent issues:

Game variety limitations: Licensed operators may offer fewer titles or slower access to new releases compared with unlicensed competitors.

Promotional restrictions: Swedish law currently prohibits most bonuses and loyalty programs, which can discourage player retention and engagement.

Regulatory compliance costs: Operating within Sweden’s stringent legal framework increases overhead for licensed providers, potentially limiting their ability to innovate or offer competitive incentives.

Consumer perception: Players may perceive unlicensed platforms as offering better value or more entertaining experiences, despite potential risks.

Addressing these factors is critical for boosting channelization rates in online casino gambling and achieving long-term market sustainability.

The Path Forward

To close the gap between licensed and unlicensed gambling, BOS and industry stakeholders suggest a multi-pronged approach:

• Regulatory reform: Consider revisiting certain restrictions, such as the total ban on bonuses and loyalty programs, to increase licensed market attractiveness.
• Enhanced consumer engagement: Licensed operators should explore innovative ways to retain players while maintaining responsible gambling standards.
• Targeted enforcement: Stricter measures against unlicensed operators, including criminalization and cross-border cooperation, will help reduce market leakage.
• Data-driven oversight: Regular assessment and transparency in channelization metrics can guide policymakers and operators in implementing evidence-based improvements.

By combining legal enforcement with strategic market enhancements, Sweden could strengthen its licensed gambling sector while ensuring consumer protection and market integrity.

Conclusion

The 2024 channelization report highlights an ongoing issue for Sweden’s gambling sector, especially within the online casino segment. While licensed betting performs relatively well, online casino continues to experience significant leakage, indicating a need for both regulatory and market-driven solutions.

The anticipated legislative changes and potential regulatory reforms represent an opportunity to recalibrate the market, enhance consumer engagement, and meet the long-term channelization target of 90%. Without these changes, the licensed market may continue to struggle to retain players, leaving unlicensed operators to capture a growing share of Swedish gambling activity.

FAQs

What is the channelization rate in Sweden for 2024?
The Swedish Gambling Authority estimates the channelization rate at 85%, slightly down from 86% in 2023.

What does channelization rate mean?
It refers to the proportion of gambling conducted through licensed operators versus unlicensed or offshore platforms.

Which gambling vertical has the highest channelization in Sweden?
Licensed betting, including horse racing, has the highest channelization rate of 92-96%.

Which vertical has the lowest channelization?
Online casino shows the lowest channelization, ranging from 72-82%.

Why do players gamble on unlicensed sites?
Reasons include better game selection, promotional offers, disconnecting from Spelpaus.se, and convenience.

What is Sweden’s channelization target?
The long-term goal is a minimum 90% channelization rate to ensure a sustainable licensed gambling market.

What legal changes are expected in Sweden?
Marcus Isgren will present proposals to criminalize nearly all unlicensed gambling, strengthening enforcement.

Why is online casino channelization lower than betting?
Licensed online casino offerings are less attractive due to restrictions on bonuses, loyalty programs, and game selection.

How often does the SGA report on channelization?
The SGA provides an annual estimate of the channelization rate in Sweden.

What can improve licensed market channelization?
Reforms to promotional restrictions, consumer engagement, stricter enforcement of unlicensed gambling, and data-driven oversight can help improve channelization rates.