On 24 April 2020, the Swedish government filed an memorandum with measures aimed to prevent an increase in gambling following the Covid-19 pandemic.
Copenhagen Economics was asked by The Swedish Trade Association for Online Gambling, or BOS (Branschföreningen för onlinespel), to assess the effect of two of the proposed measures, namely:
The assignment was to theoretically and empirically assess the effect of these measures on the level of channelization in the vertical for casino gambling. Our method can be summarized in two steps.
In the first step we set-up the decision tree for the consumers affected by the spend limit. Then, we assessed the literature and the industry knowledge provided through the consultation responses on how consumers are expected to behave throughout the decision tree.
In the second step we collected data from 8 online casino sites representing around half of the online casino market. The data collected per company covered the share of NGR affected by the spend limit as well as the expected effect of the spend limit on their NGR.
Key findings:
The measures are ineffective to prevent gambling
The first question was to what extent the proposed measures actually prevent gambling. If gamblers choose to continue gambling by playing on other sites when limited by the spend limit, then the measure is ineffective for preventing gambling.
International research show that voluntary limits are more effective than government imposed restrictions. In addition, many gamblers have multiple accounts on various gambling sites, which effectively means that the spend limit easily can be circumvented. The vast majority of answers filed in the consultation process shares this view.
The channelization is expected to decrease from 75% to 52-63% following the measures
The second question is what share of gamblers that continue gambling which choose to play unlicensed. The consensus from the consultation process is that there is a substantial risk that a large share of gamblers will choose unlicensed alternatives. Attitudes towards unlicensed websites are particularly positive for frequent players, i.e. the group are first hit by the spend limit.
We estimate that the channelization will decrease from 75% to 52-63% following the spend limit. This conclusion is based on internal Net Gaming Revenue (NGR) data from the largest gambling companies.
The study is commissioned by The Swedish Trade Association for Online Gambling.
The study is in Swedish.
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