Following a recent verdict by the Administrative Court in Linköping, Spelinspektionen, the Swedish Gambling Authority, has decided to reverse its stance on the role of negative equity in the process of evaluating license eligibility.

Gambling Regulator Still Maintains Negative Equity Renders License Unsuitability

In December 2019, Avento, the proprietor of Frank Casino and SlotsV, was awarded a license for a period of three years. However, when the renewal application was submitted to the regulatory authority in December 2022, it was denied on the grounds that the applicant had experienced negative equity in the initial two years of the period. 

Eventually, the case was taken to court and the court has now declared that the rejection was unwarranted, given that Avento, the owner, is now operating under positive financial circumstances. The court further stated that negative equity is not always indicative that a business is incapable of fulfilling its license obligations.

Despite losing the case against Avento, the Swedish Gambling Authority maintains that negative equity generally renders an applicant unsuitable for a license. In some instances where the applicant is part of a group, the collective financial strength of the group may be considered. This applies to both new license applications and license renewal applications. However, it is crucial that the resources of the group are relevant and genuinely available to the applicant, as evidenced by a capital guarantee.

The Swedish Gambling Authority holds the view that capital guarantees from private individuals cannot be deemed reliable sources of information, hence cannot be accepted as a basis for evaluating the financial position of a company.

The degree to which the financial strength of the group can be factored in and the requisite capital strength necessary for license conditions to be fulfilled will be assessed on a case-by-case basis.

The Swedish Gambling Authority Imposes Measures with an Iron Fist

Sweden is known for imposing tough regulations on its gambling market. On top of stringent legislation, the Swedish Gambling Authority strictly monitors all activities on the market and acts whenever necessary slapping operators with hefty fines, revoking licenses or banning operators from offering their services in Sweden altogether.

Such examples are the ban on Ease Gaming from doing business in Sweden and the recent fine issued to ATG in connection with failures in terms of anti-money laundering measures.

However, it must be noted that the Swedish Gambling Authority is also fair and reverses its decisions in case the situation changes and a banned regulator takes measures to become compliant. One example is the case of SG International N.V. The operator was banned from the Swedish market as per decision by the Swedish Gambling Authority issued in November 2022. However, the ban was lifted on February 13, 2023, after the operator proved it has made the necessary changes and now abides by Swedish regulations.