Spelinspektionen Says Channelization Rates Improve but Proving It Is Hard

Sweden is grappling with a low channelization rate, indicating that the regulated gambling market is struggling to retain players as offshore operators market aggressively and the industry is constrained by tight advertising rules.

According to Spelinspektionen, the channelization rate in the country is improving, indicating that as many as 86% of all active players are now turning to a regulated market operator to play.

Channelization in Sweden Market Remains Moving Target

This is still beneath expectations, but a marked increase from previous numbers released by BOS, or the Swedish Trade Association for Online Gambling, which has been highly critical of the current regulatory framework, which the association has blamed for most of the moribund results faced by licensed operators and the fact they had continued to lose ground to the offshore sector.

BOS has argued that the current marketing regulatory regime suppresses the competitiveness of licensed operators, ending up with players turning to unlicensed operators whose offers they find more attractive. There have been various surveys suggesting abysmal numbers.

For example, a study by BOS said that channelization for the total market was at 77%, but only 72% for the online market. ATG, a horseracing operator, suggested that the channelization for online gambling could be even lower – anything between 57% and 72%, meaning that after regulating the market, as much as 37% of it could in theory be controlled to the offshore sector, which is not licensed to operate in the country per see.

These figures must be taken with a grain of salt, as the black market is not a homogenous entity and there is no clear reporting of how much revenue such operators derive from Swedish players.

Spelinspektionen, however, remains somewhat more confident about the numbers and argues that between January 2023 and June 2024, the licensed market has captured between 78% and 91%. The average tally was put at 86% for the entirety of 2023, with 2024 results still in the process of being collected.

However, the methodology used by the regulator is equally important. A translated statement by Spelinspektionen director general Camilla Rosenberg reads:

The results show that the degree of channeling varies depending on the method and form of play. The SGA believes there are four different indicators that together can give a picture of the degree of channelization.

Spelinspektionen direcotr general Camilla Rosenberg

Using Diverse Input to Get a Fixed Rate

The Spelinspektionen interviewed 1,511 respondents, which showed that channelization stood at 83%. Then, the regulator looked at search engine optimization tools, ascertaining that channelization was slightly higher – at 84%.

A look at the legal market revenue suggested that channelization stood at 87%. Finally, H2 Gambling Capital, a consultancy, suggested that the channelization rate now stood at 91%, with the regulator drawing the conclusion from all four factors used to gauge channelization to conclude that the rate was 86% for 2023.

“The degree of channelization is calculated in this report as the proportion of Swedes’ gambling on the competitive part of the gambling market that takes place within the licensing system. To estimate the degree of channeling, several methods have been used”, Spelinspektionen said in a translated statement on its website.

Spelinspektionen has also said that the regulator is going to study the black market better to understand how it succeeds in encroaching on the regulated sector, something that BOS attributes to impractical gambling regulation, which the watchdog denies.