Legal comment: Sweden moves to bolster ineffective marketing laws

In order to address ineffective measures and sanctions against prohibited promotion of unlicensed gambling in Sweden, an inquiry investigation was commissioned by the Swedish government last year to remove the differences between the prohibition and sanctions available for the promotion of unlicensed foreign lotteries and unlicensed national lotteries, and to consider an alternative system for orders and injunctions.

Currently, a company or person who wishes to organise a lottery in Sweden is required to obtain a licence. Pursuant to the Swedish Lotteries Act, a licence may only be issued to a Swedish legal entity, being a non-profit organisation and working towards the advancement of socially beneficial objectives.

The Swedish government may also grant special licences to organise gambling, such as those to the governmentally-owned Svenska Spel and Trav och Galopp, which is jointly owned by the Swedish government and the equestrian sports organisations. Essentially, under the current Swedish gambling regime, private commercial entities may not obtain gambling licences.

In addition, the Swedish Lotteries Act contains a prohibition against the promotion of unlicensed gambling, organised within Sweden or abroad. The Swedish prohibition against the promotion of such lotteries is sanctioned in two ways, namely (i) the Swedish Gambling Authority has the option to issue orders and injunctions under the penalty of fines and (ii) the Public Prosecutor can prosecute individuals for a criminal offence.

The issue

Under the current Lotteries Act, there are stricter criminal sanctions for the promotion of foreign lotteries than of national lotteries. With reference thereto, the Swedish Supreme Court has declared that the criminal sanctions against the promotion of foreign lotteries are incompatible with EU law.

Furthermore, while the Swedish Gambling Authority may issue orders and injunctions under the penalty of fines, both the decisions concerning fines and the imposition of fines can be appealed in three instances before being legally binding. Thus, by the time decisions of fines are legally binding, the prohibited action may have already ceased, and the orders or injunctions are redundant.

While the organisation of gambling services in Sweden requires a licence, it is not illegal for Swedish citizens to participate in gambling that is provided without a licence. As a consequence, there are numerous offshore companies offering gambling services to Swedish customers via the internet.

And despite the prohibition against the promotion of unlicensed gambling, the advertisement of offshore gambling operators has become common and is a major source of income for Swedish media companies.

Finding a solution

In order to address the ineffective measures and sanctions against prohibited promotion of unlicensed gambling in Sweden, an inquiry investigation was commissioned by the Swedish government in February 2014, to remove the differences between the prohibition and sanctions available for the promotion of unlicensed foreign lotteries and unlicensed national lotteries, and to consider an alternative system for orders and injunctions.

Just a few days ago (30 March) the inquiry published its investigation and proposed amendments to the Swedish Lotteries Act. In the proposal, which is proposed to enter into effect 1 January 2016, the inquiry suggests that the criminal sanctions for the promotion of unlicensed gambling shall be identical, irrespective of whether or not the unlicensed gambling is organized in Sweden or abroad.

Moreover, the investigator suggests that the Swedish Gambling Authority shall be able to issue orders and injunctions, under the penalty of a fine, which shall apply immediately. If adopted, the proposed amendments will enable efficient sanctions against the promotion of unlicensed gambling in Sweden.

The implications

Assuming that Swedish prosecutors and the Swedish Gambling Authority will enforce the amended provisions, local marketing of unlicensed gambling on Swedish billboards, newspapers, TV-channels broadcasted from Sweden and websites will most likely decrease or cease.

In fact, the Swedish Media Publishers’ Association has argued that the proposed amendments will lead to a complete stop on gambling related advertising in Swedish media and have a severe impact on Swedish media companies.

Since many Swedish media companies rely heavily on incomes provided by gambling related advertisement, the financial impact on Swedish media companies could be devastating. However, since the proposed amendments will not affect advertising on TV-channels which broadcast from other EU member states, the advertising of offshore gambling operators will not cease, but rather be concentrated to certain channels.

Please note that the proposed amendments are included in an inquiry investigation, and that the proposed amendments and time frames may change in the final bill, if adopted.