【Darkness demo】Swedish gaming regulator releases results of black market study

The SGA report provides an in-depth overview of the scope, structure, and driving forces behind black market gambling activity in Sweden.

The regulator has monitored traffic to around 1,100 unlicensed gambling sites, and estimates that 65% of this traffic is covered by active oversight.

The report categorises unlicensed operators into three groups: those licensed in other EU countries (primarily Malta), those licensed in third countries (such as Curaçao and Anjouan), and completely unregulated entities.

While the majority of Swedish gamblers participate within the country’s licensed system, the analysis reveals that unlicensed gambling remains a significant issue.

The SGA identifies four key user groups frequently involved in unlicensed gambling: those who do so unknowingly, those seeking fewer restrictions, underage users, and individuals registered with Spelpaus.

According to the report, Sweden’s channelisation rate stood at 86% in 2023, meaning 14% of gambling occurred outside the regulated system.

The authority points out that it is not always desirable to channel all gambling activity into the licensed market, particularly when it involves individuals with gambling problems or underage users.

For unlicensed gambling activity to be considered unlawful under Swedish law, it must be directed at the Swedish market, based on what is known as the “targeting criterion”.

This means gambling sites that are merely accessible from Sweden are not automatically deemed illegal. In effect, this creates a three-tier market: licensed, unlicensed but legal, and unlicensed and illegal.

The authority also outlined its evolving methodology for identifying where Swedes gamble outside the licensed market.

This includes analysing internet traffic, processing reports from the public, search term analysis, and collaboration with other regulatory bodies.

Illegal platforms thrive for multiple reasons

A critical issue highlighted in the report is the ease with which players can deposit and withdraw money from unlicensed operators.

The SGA confirmed that a wide range of payment methods are available, including card payments, e-wallets, neobanks and cryptocurrencies.

These systems allow for rapid and anonymous transactions, which complicates enforcement.

Many sites also conceal the nature of transactions by using incorrect merchant category codes to bypass card-blocking measures under Swedish regulations.

Demand for unlicensed gambling in Sweden is driven by several factors, such as more generous bonuses, access to games not available on the regulated market, potentially higher return-to-player (RTP) percentages, and the use of cryptocurrencies.

Some players also turn to unlicensed providers after being restricted by licensed operators or self-excluding via Spelpaus.se, Sweden’s national self-exclusion register.

Special attention is given to “skin betting”, where virtual items are used as currency for gambling, often targeted at minors.

The report is particularly critical of the exposure of young people to these platforms, which often lack age verification and are promoted by influencers through social media.

In 2023, skin betting accounted for up to 49% of all traffic from Sweden to unlicensed sites.

During 2023–2024, these activities reached their peak via streaming platforms such as Twitch, before enforcement measures prompted a decline.

Despite its efforts, the SGA is currently unable to act against many unlicensed gambling providers due to the constraints of the targeting criterion.

As a result, the government has commissioned a legal review which includes a proposal to replace the targeting criterion with a “participant perspective”, whereby any online gambling activity conducted within Sweden would require a Swedish licence.

The findings of the review are expected by this September.

Renewed call for global oversight

International collaboration is deemed essential in tackling illegal gambling.

The SGA highlighted that it remains active in several international forums such as the Gaming Regulators European Forum (GREF) and the International Association of Gaming Regulators (IAGR).

It also maintains bilateral agreements with authorities in countries including Malta, Gibraltar, the Netherlands and the UK.

Countries like Denmark and the Netherlands have implemented measures such as DNS blocking and adopted a participant-based approach, which the SGA argues makes their regulation more effective.

The authority concludes that a combination of legislative reform, enhanced supervision, technological innovation and international cooperation is necessary to curb illegal gambling.

While changes to the legal framework may offer new tools, the regulator stresses that there is no one-size-fits-all solution.

Ongoing analysis of consumer behaviour and targeted public information campaigns are essential to raising awareness about the risks associated with unlicensed gambling, it concluded.