Swedish monopolies carving out their place in the market – State Monopoly

In the second part of Daniel O’Boyle’s deep dive into the changing role of Sweden’s gambling monopolies, ATG CEO Hasse Lord Skarplöth and Svenska Spel CEO Patrik Hofbauer look at how they have evolved. their businesses since the new regulation.

when the new The Gambling Law entered into force in 2019, Svenska Spel and AB Trav och Galopp (ATG) meet for the first time in licensed online competition. They themselves underwent many changes.

2019: a new era for Swedish gambling regulation

For Svenska Spel, the changes were primarily aimed at preventing the company from using its former monopoly status to gain an unfair advantage in online betting and gaming.

Swedish monopolies carving out their place in the market
Sweden launched its regulated gambling market in January 2019

This required major changes, recalls Hofbauer.

“The biggest change was adjusting the entire organization and operations to be in line with the re-regulated gambling legislation. Today Svenska Spel operates as a group with three separate business areas.

“And a big factor in that was the cross-subsidy between a business unit, Sport & Casino, and the other business areas. That was important and was one of the reasons we had to split the client’s system into three parts.”

The identification systems, the logins, “everything” needed to change, and the operator spent “all of 2018” preparing for the new regulation.

“[Thanks] to what I would say was careful planning and dedicated colleagues here, we got it done without any major issues,” adds Hofbauer. “But it was a big challenge for the company. You can imagine going from one company to three different companies.”

building from scratch

Crucially, Sport & Casino was not allowed to use its existing customer database for marketing. Instead, it had to create a database, just like the old gray market operators entering the space on license.

Patrik Hofbauer, Svenska Spell
Patrik Hofbauer, CEO of Svenska Spel

It was “practically starting over,” says Hofbauer.

ATG, on the other hand, got some freedom under the new system. could expand into sports betting and games along with its main racing offering.

Skarplöth says that with the ability to market to existing racing clients, the company quickly established a dominant position in new verticals.

“We launched the sports betting and online casino ourselves without any history of these products and have been quite successful,” he says.

“We are by far the largest operator in the commercial part of the Swedish gambling market.

“And how was that possible? Of course, we had a large customer base from our horse betting history, but we work hard with content and betting experiences.”

Special treatment for Svenska Spel?

Although Svenska Spel has made changes, many argue that it still occupies an unfair position. Many still argue that the government should not own a business in a sector that it also regulates.

Branschföreningen för Onlinespel (BOS), which represents the licensed private sector, has been among the critics.

Gustaf Hoffstedt, B.O.S.
BOS, and General Secretary Gustaf Hoffstedt, have advocated for the former monopolies to lose their privileged position on the Swedish market

“Running a commercial gambling business is not appropriate for a state. A state will set rules for commercial gambling companies and make sure that companies abide by these rules, rather than being an active player in the market itself,” Gustaf Hoffstedt, BOS general secretary, said in June.

Unsurprisingly, Hofbauer doesn’t see things the same way.

“I don’t agree at all,” he says. “At Svenska Spel, we operate under the same regulatory conditions as everyone else, all other licensed gambling companies.

“We do not receive any special treatment because we are state property. And we are audited by the same regulator, the same authorities as other operators.

BOS filed a lawsuit against Svenska Spel with the competition authorities, Hofbauer notes. They eventually dropped the case without issuing any sanctions.

“The feedback we received was that we have divided the company and we are acting according to the regulatory conditions. It is fair competition in the market. So I really don’t agree at all.”

breaking up is hard

Naturally, those opposed to state ownership of an online gambling operator have called for changes. In this case, that means asking the government to break up Svenska Spel and sell the Sport & Casino arm to a private company.

Hofbauer says the operator has communicated on several occasions why it thinks it’s better to be together, and a key reason is the opportunity to enforce stronger responsible gaming policies.

“In connection with the investigations that the government has launched in recent years, we have clearly explained why it is better for Svenska Spel to be a single company that brings together all parties within all business areas,” he says.

“But one positive thing is that we can take the lead in areas like consumer protection and responsible gaming. And we are prepared to, and do, go beyond what is required by law to protect customers.

“For example, one thing we do is we start very early with people sitting down and making 10,000 personal calls [as responsible gambling interactions] in one year. We started that and now we see more and more companies following that practice, so that’s really positive.”

ATG Unique Status

ATG, on the other hand, is not owned by the state, but by the country’s horse racing authorities, with all profits being returned to the sport. At the same time, the Swedish government continues to elect half of the operator’s board, including its president.

Trotting - horse racing
Thanks to the new regulation, ATG has expanded beyond its core horse racing product.

As a result, the company has a middle position between the state-owned Svenska Spel and the private business sector, as it is neither a government entity nor one run without state influence.

On the one hand, BOS accuses the operator of receiving preferential treatment, just like Svenska Spel. For another, it has not faced the same calls for change.

However, Skarplöth says that essentially all companies have the same goals.

“As a CEO, you don’t control what kind of competency or experience you get on the board,” he says. “But ATG’s focus is making money for our owners and pleasing our customers. And I’d be surprised if any operator has a different approach than that. So from one angle, we’re all the same.”

However, he adds, his business has been more focused on sustainability than much of the commercial sector.

“I think we are more focused on sustainability than at least the private licensed industry, at least so far,” he continues.

not on the schedule

So, from your point of view at the head of the ATG, affiliated to the state but not owned by the state, does Skarplöth think that Svenska Spel should be dissolved?

“I think it makes sense,” he says. “Svenska Spel is actually three different business areas where one is part of the fully licensed market and of course it is a bit strange that you are the one who makes the laws, you are the head of the authorities and then you also compete with your own company. ”.

However, he also points out that the issue is not high on his agenda.

Nor is it a priority on the agenda of the new Swedish government. Before the country’s recent choicethe center-right Moderate Party called for the dissolution of Svenska Spel.

He came to power as part of a new coalition, which means that the government’s role in the game would change dramatically.

Two months later, however, Hofbauer says there has been little sign of the new government taking a different stance than the previous centre-left coalition.

“All state-owned companies have a dialogue with the owners and receive directives: we are no exception to that,” says Hofbauer.

“But in response to a direct question from the media, the government said that the sale of state-owned companies is not a priority at the moment. And we don’t have any more information than that.”

But if the Swedish government is rethinking how it plays a role in the gaming sector, the visible initiatives of the two state-affiliated operators could prove to be an important data point.

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