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Online Gambling It's not just gambling where the Swedish state is under siege |
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| | | Thursday, August 28, 2008 | | | | | Sweden’s state gambling monopoly is now under siege from the European Union because of its protectionist nature.
For seventy years the Swedish welfare state has forced monopolies on gambling, alcohol and pharmacy products, but its membership of the European Union, and EU’s trade deals clearly states that all movement of trade and services must be free within the EU, has enabled online gambling companies to go at the monolithic structure, reports an interesting article in the Financial Times Deutschland earlier this week.
The article focuses on online gambling group Betsson's defiance of the monopolistic policies on gambling as an example, recitation that the Malta and Swedish registered company went up against the authorities in Sweden by opening a betting shop in Stockholm earlier this year. Despite official threats, it still remains in operation.
"The Swedish welfare model is odd. Is it part of the Swedish model for the government to be the biggest dealer of gambling in the country?" Betsson's CEO Pontus Lindwall asks. He points out that the European Union asked Sweden last year to alter its gambling laws or face possible legal actions in the European Court of Justice, and he believes that the government does not want to go to court in the EU.
The state's reply to the increasing pressure on its monopolies has been to announce the reasons they were created in the first place, the FT article informs.
"It says alcohol is not just another commodity 'like rhubarb' and Systembolaget [the alcohol monopoly] exists to encourage responsible drinking, at the same time as Svenska Spel ensures cautious gambling," the article reports and goes on to reveal that Svenska Spel reported a profit of SEK 5.2 billion (€554 million) in 2007. SEK 3.6 billion of this went to the state Treasury and the rest to areas such as the Swedish Sports Federation and youth programmes.
"It can sometimes seem that the role of Svenska Spel is not to keep gambling down, but to keep people gambling," Jörgen Hettne, director of the Swedish Institute of European Policy Studies, told the FT.
When it comes to alcohol, Systembolaget is not run for generating profit for the government, but the government benefits from high import taxes on alcohol. But this state business too is under pressure from consumers who are not willing to pay artificially high prices from state outlets, and European Court of Justice free market rulings last year adds to that pressure. These allow Systembolaget to retain its retail monopoly but permit consumers to buy alcohol online and have it delivered.
One Malta-registered company buys wine from around the world, stores it in Germany and pays Swedish taxes on behalf of customers. Registering in Malta allows it to be offshore from Sweden but EU-authorised. Its next move is an alliance with Konsum, a chain of food stores, which will offer customers access to the company’s online service, allowing it to go head-to-head with Systembolage.
The FT article opines that the monopoly system is starting to go down, and that entrepreneurs armed with the rulings from the European Court of Justice and European Commission enforcement initiatives are beginning to undermine the state's stranglehold.
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