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This month in iGaming: June 2023

July 4, 2023
3 min
497

A new era begins in Brazil, Finnish authorities promise to privatize, and Sweden misses channelization target.

Brazil breaks ground with first sports betting tender

At long last, the floodgates of Brazilian sports betting are beginning to open.

The Rio de Janeiro State Lottery (Loterj) has issued a 5-year tender worth R$5.0 million (€952,405/US$1.0 million) to São Paulo-based Rede Loto.

The government launched a provisional measure last month to regulate sports betting after a long wait (the initial law was passed in 2018). Once it is signed by President Lula, the measure will go into effect for 60 days, with the possibility of a 60-day extension.

It could be that this is just the beginning. There have already been indications that a law regulating casino games and jogo do bicho may finally be voted on as well.

Finnish monopoly finished by 2026

Voices from around the iGaming industry often tout the opinion that a well-regulated, private licensing system is far more stable than a ban or a monopoly. Rahapeliala, the Finnish online gambling trade association, is one such voice.

And the Finnish government has been listening.

In 2017, the government established a state-controlled monopoly, unifying betting brand Veikkous, slot brand Rahaautomaattiyhdistys, and horse race betting operators Fintoto under the single brand of Veikkous.

However, Veikkous was only able to achieve a channelization rate of around 50%, leading the government (somewhat prompted by Rahaleliala) to carry out an investigation into ending the monopoly.

The monopoly system will be abolished and replaced with a modern licensing system no later than 2026; the Veikkaus monopoly will be broken up back into its constituent parts of Veikkous, Rahaautomaattiyhdistys, and Fintoto. A licensing model will then be introduced for private operators.

With the new plans, the government aims to reduce financial and social harms caused by gambling. Regulators will have sufficient resources to enforce rules and there will be new AML measures, as well as measures to combat sports integrity violations. There will also be a unified self-exclusion portal.

Sweden struggles to channelize

Channelization is hard.

Players need enough regulations to be protected, but not so many they’re driven to offshore sites. Governments want tax revenues, but tax rates can’t be so high that companies move offshore and target players disgruntled by the regulations intended to protect them.

In a recent report, Sweden’s Online Gaming Industry Association (BOS) has announced that the country is far short of its 90% channelization target. It turns out that only 77% of online gambling in Sweden takes place on domestic, licensed sites.

This is despite the best efforts of the Swedish Gambling Authority (Spelinspektionen). While winnings from licensed operators are untaxed, those from unlicensed platforms are taxed at 30%. Spelinspektionen also has the power to block websites and payments.

So why do so many players stray abroad?

While the taxes on gambling companies are at a reasonable 18% of GGR, the restrictions on players are a little more than they’re willing to put up with.

During the pandemic, Spelinspektionen introduced player protection measures including a weekly deposit limit of SEK 5,000 (€459). While the deposit limit was lifted, eventually it was put back into place and lowered to SEK 4000.

But that’s not nearly as big of a problem as the limit on bonuses. Casinos can only offer one SEK 100 bonus per player, upon signup. Compare that to how brands in other markets can offer bonuses for an infinite variety of reasons.

In a 2022 study, 32% of respondents identified bonus offers as the main reason they use unlicensed sites, up from 21% in May 2021. In the 2021 survey, the leading motivation to visit unlicensed sites was that players found better odds that way (25%). The obvious conclusion that both iGaming companies and regulators should draw? Bonuses are definitely a deciding factor for players when they’re choosing where to play.

While authorities in some countries are able to pull off the balancing act (the UK, for example) so far, it seems, the Swedish have really stumbled on their tightrope.

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