Swedish media profits from advertising 'illegal' online gambling operators

The Swedish Supreme Court recently acquitted two media editors – from the Aftonbladet and Expressen newspapers – who were prosecuted for promoting foreign gambling operators in violation of the Swedish Lotteries Act.

The case ultimately went to the European Court of Justice, achieving heavy media coverage, before the editors were let off the hook.

The ruling presented a problem for the Swedish Gaming Board’s enforcement plans, but it’s been great news for the media as adverts have continued to pour in.

This week The Local.se reported that the Board had instigated prosecutions against ten media executives, but despite this the sector continued to take adverts. Back in 2006 that earned media owners almost SKR 700 million…up by over SKR 250 million from previous stats garnered in 2005.

The likelihood is that the numbers this year will be higher.

So widespread has the problem become for the board that its legal representative, Håkan Hallstedt, is reported to have complained: “It hardly feels worthwhile continuing to report cases when very little happens.”

With this level of business it is perhaps not surprising that media owners are opposing attempts by the regulators to cut off a lucrative income stream.

Whilst the Board has been successful in securing convictions in lower courts, these have been appealed and are now under consideration by the Supreme Court, which has already let the Aftonbladet and Expressen editors escape punitive measures, but appears to be inconsistent.

For example, in the case against the editor-in-chief of Nerikes Allehanda, the Supreme Court rejected an application for a second appeal and allowed the Appeal Court’s guilty verdict to stand. So far the punishment has been fines and suspended sentences.

The country’s state gambling monopoly, Svenska Spel, has exacerbated the local income situation for media companies by slashing its marketing budget in order to maintain the credibility of its monopolistic nature, which is ostensibly to protect Swedish consumers.

Last year Svenska Spel invested SEK 277 million in marketing, substantially less than 2004’s budget of more than SEK 350 million.

The Local observes that Sweden’s courts have effectively stood still on the gambling issue, waiting to see whether, and how, the state will react to international firms targeting Swedish gamblers.

Another factor is that the European Commission is threatening to haul Sweden before the European Court of Justice over its legislation.

Meanwhile the government appears to have fallen back on the time-honoured tactic of the stall: planning to make its own legislation the subject of an enquiry, the results of which are not expected until 15th December 2008.

“We’ve got a long journey ahead of us,” the Gaming Board’s Håkan Hallstedt told The Local.

Additional reading on the media vs. regulator tussle can be found in a dissertation by Swedish legal experts Björn Collste and Jakob Vedefors of DLA Nordic, who assess the situation and how it affects foreign companies accessing the Swedish market here:

http://blog.dlapiper.com/gambling/resource/iGB_Swedish_Gambling_Market.pdf