Re-regulation of the Swedish Gambling Market: An Econometric and Microeconomic Analysis of AB Svenska Spel, Competition and Governmental Tax Revenues in the Reformed Gambling Market

Abstract

With the rise of foreign gambling entities establishing their presence through online platforms, the Swedish gambling market has faced intense competition in recent years. In order to reclaim control of the market, the Swedish Government re-regulated the market effective January 1st, 2019. As a result, all entities that wish to conduct business in Sweden require an approved gambling license and are subject to an excise tax of 18 percent on gross wins. The purpose of this study was to provide a deeper understanding on state-owned AB Svenska Spel and the effects of the reregulation. The authors of this paper applied univariate time series analysis on AB Svenska Spel’s three underlying categories to estimate the projected development if the re-regulation had not been implemented. Utilizing market intelligence provided by H2 Gambling Capital, this study has provided a forecasted gain in governmental tax revenue from the market reform in the sector of the gambling market previously controlled by AB Svenska Spel of SEKbn 1.5 and SEKbn 1.7 in 2019 and 2020, respectively. Furthermore, this study has also found that the re-regulated market has transitioned from a monopoly towards a competitive market structure exhibiting characteristics of a Bertrand oligopoly and monopolistic competition. This paper is the first of its kind to apply empirical forecasting methods on AB Svenska Spel and the findings can be utilized to further extend the research on AB Svenska Spel or the Swedish market post-regulation in general.