Swedish Online Poker Monopoly Tries To Out-Maneuver EU

Despite a European Union ruling on how goods and services from EU-licensed companies should flow freely across member nations, the Swedish government is rumored to be passing regulations designed to discourage foreign competition with its giant gambling monopoly, Svenske Spel, a daunting opponent in the Scandinavian online poker sector.

Sweden's finance minister, Anders Borg, may be taking a cue from UK's Chancellor of the Exchequer Gordon Brown, by using high tax rates and stringent regulations to deter competition from entering the Swedish market.

On one hand, he would appease the European Commission by curtailing the state monopoly and passing legislation to open up to foreign companies. But on the other hand, he would cleverly discourage competition which effectively allows Svenske Spelt to maintain its monopoly position.

One of the election promises of the Swedish alliance of middle and right-wing political parties last year was to abolish the state gambling monopoly.

But a report from Swedish economic journal, Veckans Affarer, suggests that the Swedish finance ministry, under Borg, is working on a licensing and taxation regime so tough that it would deter all but the most determined foreign competitors.

So Borg appears to be performing a complete turnaround of his earlier position, breaking his party promise to abolish the state gambling monopoly.

Veckans Affarer reports that the Swedish government wants Svenska Spel to maintain its monopoly because of the vast amount of revenue the company generates for the state. In the first quarter of 2007, Svenska Spel recorded a net profit of 157 million euros from revenues of 260 million euros.

Besides the new legislation, in order to comply with the European Commission, the Swedish government is expected to force Svenska Spel to substantially reduce their marketing activities and restrict development of new games and simultaneously improve their compliance technology.

The timing is right for such a Swedish announcement.

This week marks the end of the two month deadline that came with the stage two 'reasoned opinion' issued by the European Commission on March 21st 2007, requesting the countries of Denmark, Finland and Hungary to modify their current restrictive online gambling positions (click here to read related article).

If the countries do not become compatible with higher level EU laws that permit companies licensed anywhere in the EU to freely move goods and services across EU state borders (click here to read related article), then the European Commission could move onto stage three, where the countries can face possible litigation in the European Court of Justice.

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