Swedish gambling regulator reviews stance on negative equity

Spelinspektionen lost a court case brought by Avento.

Sweden.- Spelinspektionen, the Swedish gambling regulator, has retracted its legal position on the importance of negative equity in reviews of gaming licences. The move comes after it lost a legal challenge launched by Avento to appeal against the rejection of its application for licence renewal.

In December, the regulator rejected Avento’s application to renew its three-year licence for Frank Casino and SlotsV because it had been in a position of negative equity in the first two years of its licence, which it obtained in December 2019.

However, the administrative court in Linköping has overruled the decision, noting that Avento now has a positive financial position. It noted that negative equity did not mean a business was necessarily at risk of not fulfilling its licence requirements.

Spelinspektionen had communicated its legal position on the subject of negative equity in October 2020 but has now retracted that guidance as a result of the judgement. However, it said that it still believes negative equity usually means that a licensee cannot be considered to satisfy the suitability requirement for holding a licence and that it will still take it into account as a factor.

It said: “For applicants who are part of a group, in some cases, the group’s combined capital strength can be taken into account. This applies to both first-time applications and applications for renewed licences. A prerequisite, however, is that the group’s resources are relevant and are actually at the applicant’s disposal, which can be shown, for example, through a capital guarantee.”

It stressed that a capital guarantee from a private person cannot be accepted as a starting point due to the “difficulties in obtaining a reliable picture” of a natural person’s financial position.

“The extent to which the group’s capital strength can be taken into account and what capital strength is required for the conditions for a license to be considered fulfilled will be decided in each individual case,” it added.

Earlier this month, Spelinspektionen published guidance on what operators should include in their Duty of Care action plans. It provided examples of good practice after finding some operators’ plans to be lacking following a review in 2021.

Meanwhile, Sweden has notified the European Commission of reforms to the Gambling Act 2018. Developed by the Ministry of Finance, the reforms aim to “minimise unlicensed gambling” and provide more regulatory control against the black market as well as to counter match-fixing.