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European Commission Commences Legal Action Against Sweden for Online Gambling Non-Compliance

Sweden is just unable, and perhaps more likely unwilling, to get on the European Commission’s good side when it comes to online gambling. The Commission has called out Sweden on it constantly over the years; finally the Commission is positively, truly, doing something about it. On Thursday, the Commission began legal action against the Scandinavian country, referring it to the European Union’s Court of Justice (not to be confused with the Hall of Justice, the home of the Super Friends) for its lack of compliance with the EU’s online gambling regulations.

While the Commission’s issues with Sweden go back years, the two cases in question date back to November 2013, when it called on Sweden (as well as a few other countries) to get its national regulations in line with the “fundamental freedoms” set forth in the Treaty on the Functioning of the EU. In a press release at the time, the Commission said that Sweden was certainly allowed to restrict online gambling to licensed operators within its national borders, but that whatever rules were in place still had to comply with EU law. “Member States must demonstrate the suitability and necessity of the measure in question, in particular the existence of a problem linked to the public interest objective at stake and the consistency of the regulatory system,” the statement said, “Member States must also demonstrate that the public interest objectives are being pursued in a consistent and systematic manner. They must not undertake, facilitate or tolerate measures that would run counter to the achievement of these objectives.”

The Commission took issue with Sweden’s online gambling restrictions, believing they were not “compatible” with the “free movement of services” in the European Union. “The Commission found that the restrictive policy in the area of gambling services is not applied in a systematic and consistent manner and that the holder of the exclusive right is not subject to strict state control,” the press release said.  european-commission-logo

Sweden was given two months to make the necessary changes or risk having the cases referred to the Court of Justice. Sweden was able to hold off legal action until now essentially because it kept promising that changes were being made, but that it just needed more time. Most just saw them as empty promises, as stalling tactics. In March of this year, European Gaming and Betting Association secretary general Maarten Haijer called out Sweden on what he perceived as its bullshit, telling eGaming Review, “Sweden is in a perpetual state of imminent change.”

He added, “Changes have been announced for many years. Sweden has had an ample time to adapt its regulation to comply with EU law. Yet, nothing has happened.”

Now the chickens have come home to roost. In yesterday’s press release, the European Commission echoed its sentiments from last year, saying that “the Swedish exclusive right system for sport betting is organised is inconsistent with the aim of achieving the public policy objectives of preventing problem gambling and criminal activities and lacks the necessary state control.”

Also, like Mr. Haijer, the Commission commented that Sweden always seems to be about ready to adjust its laws, saying, “Changes to the Swedish gambling law in order to make it compliant with EU law have long been envisaged but never implemented.”

The second case is about online poker. In this one, the Commission again points to the exclusive right holder not being “subject to adequate control by the Swedish authorities.” Additionally, Sweden’s poker restrictions are “not consistent” as the government “tolerate(s) the unauthorised offer and promotion of poker games.”

Currently, there is one state-run online poker site in Sweden, Svenska Spel. PokerScout currently has it ranked as the 16th largest poker room or network on the internet with a seven-day average of 575 cash game players.

This is the second time in a week that Sweden has drawn attention in the online poker world. Recently it was revealed that the Swedish Tax Authority, Skatteverket, has been using public internet resources such as message boards and poker data mining sites to gather information on Swedish online poker players who have avoided paying taxes. European Union tax law states that players do not have to pay taxes on winnings from any poker site that is located in the EU, but are subject to a steep 30 percent tax rate on winnings from outside the EU.

Many top online poker players are well known in the internet community and frequently post about their successes and failures on poker message boards. They also willingly allow their records to be documented on sites such as highstakesdb.com (cash games) and pocketfives.com (tournaments). Put it all together, along with other sources for sleuthing, and it is not hard to approximate how much money some players have won. So far, the Tax Authority has found about 50 players who have unreported gambling winnings of 250 million Kronor, or around $34.6 million.

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