The Swedish gaming company AB Trav och Galopp (ATG) has raised an alarm about the falling rates of channelisation—the process of directing customers towards legal gambling activities—in Sweden, expressing severe concern over the issue. ATG’s recently released report reveals that channelisation rates for the country’s gaming market linger between 69% and 82% for the fourth quarter (Q4), a rate that is significantly lower than the Swedish government’s target of 90% to legal operators.
An analysis of the data shows a declining trend in channelisation since Q3 of 2023, with no indication of this downward trajectory being curbed. This observation is further compounded by the fact that visitor traffic to unlicensed gambling sites has ballooned to ten times what it was in 2019. According to ATG’s findings, of the top 20 unlicensed sites with the highest traffic in Q4, a staggering 19 share platform providers with licensed operators—showing a blurred line between legal and illegal gaming operations.
Adding to the grim picture, none of the 20 black-market sites that were studied in the ATG report appear on the Swedish regulator Spelinspektionen’s list of banned websites, raising questions about the effectiveness of current regulatory measures. “It is a very worrying development and our investigation shows that more still needs to be done to keep the unlicensed companies away,” stated ATG chief executive Hasse Lord Skarplöth. He also emphasized the threat unlicensed gambling poses to Sweden’s gambling market and, more importantly, to individuals with gambling problems.
Among the top unlicensed sites in terms of Q4 visitor traffic, seven offered direct deposit and withdrawal services through Swedish bank accounts. These black-market players were able to carry out their transactions utilising BankID, a widely-used identity verification service in Sweden, and Krofort, a payment business. Skarplöth has urged Swedish banks to stem these transactions, encouraging a redirection of funds towards the legal gaming market instead.
Furthermore, Skarplöth pointed out the apparent contradiction where licensed gambling companies face stringent anti-money laundering requirements from Swedish authorities and banks, while unlicensed companies seemingly operate without equivalent scrutiny. “In the light of our report, it is absurd that the Swedish Gambling Authority and banks impose high anti-money laundering requirements on us licensed gambling companies while at the same time watching unlicensed gambling companies,” he declared.
A glance at other European countries reveals that Sweden is not alone in grappling with challenges posed by the black market. A 2023 study conducted by the University of Leipzig highlighted that almost half of all online gambling in Germany occurs with unlicensed operators, and the black market is credited with generating three-quarters of online revenue in the country. At an industry conference, it was noted that Germany’s licensed operators are more squeezed by the black market than ever before.
In France, the story is equally distressing, with the nation’s gambling regulator, l’Autorité Nationale des Jeux (ANJ), estimating an illegal gambling market worth up to €1.5 billion. A PwC study approximates annual gross gaming revenue from illegal gambling to be between €748 million and €1.5 billion, representing 5% to 11% of France’s total gambling market.
Despite concerns about Sweden’s channelisation rates, ATG has reported an uptick in its net profits for the financial year 2023, boasting a 7.5% year-on-year increase to SEK1.45 billion. Though total group revenue saw a slight dip, net gaming revenue edged up by 0.9% to SEK5.27 billion. Skarplöth commented on the financial results with pride, saying, “ATG had growth when the total gambling market landed at plus or minus zero,” acknowledging the company’s resilience in a market with a stagnant growth rate.
The issues highlighted by ATG’s findings point to a larger problem of ineffective channelisation that not only jeopardises a nation’s legal gambling operations but also affects regulation efforts and exposes vulnerable populations to increased risks.
