The Swedish Gambling Authority has recently had a change of heart on negative valuation after it lost a case against a company that was filed in October 2020.
Following a verdict that the Administrative Court in Linköping recently announced, Spelinspektionen has decided to reverse its opinion on the role of negative equity in the process of evaluation of companies’ eligibility for a gambling operating license.
In December 2019, the proprietor of Frank Casino and SlotsV – Avento – was granted an operating permit for a period of three years by the component authorities. However, when it submitted an application for the license renewal to the Swedish gambling regulatory authority in December 2022, the watchdog rejected to issue a new operating permit because the applicant had received a negative valuation in the first two years of the period.
The case was then taken to court, and the Administrative Court in Linköping has eventually sided with the gambling operator, saying that the license renewal rejection was unwarranted, especially considering the fact that Avento is currently operating under positive financial circumstances. Furthermore, the Administrative Court stated that negative equity is not always an indicator that a certain business is not capable of fulfilling its obligations under its operating permit.
Although it lost to Avento in the aforementioned lawsuit, Spelinspektionen maintains that a negative financial valuation generally proves that a license applicant is not suitable to be issued an operating permit. In some cases, where the applicant is part of a larger gambling group, the overall financial strength of the group may be taken into consideration, and the procedure applies to both new license and license renewal applications. Still, the resources of the group are considered relevant in the situation and are taken as evidence for capital guarantee.
Swedish Gambling Regulator Loses to Avento in Court over Rejected License Renewal
Spelinspektionen believes that capital guarantees from private individuals cannot be considered reliable sources of information, so it refuses to accept them as a basis for evaluating a company’s financial position.
The degree to which the group’s overall financial strength can be taken into consideration along with the required capital strength needed to meet license conditions are set to be assessed on a case-by-case basis.
Sweden is known for imposing strict laws and regulations on the country’s gambling market. Apart from tough legislative measures, the local gambling regulatory body strictly monitors all services and activities in the sector and takes action whenever necessary to hand out fines to operators, revoke their licenses or fully suspend them from offering their services in the country. As part of regulatory action, Spelinspektionen previously banned Ease Gaming from targeting Swedish users and recently issued a monetary penalty to ATG as a result of the company’s anti-money laundering failures.
The Swedish Gambling Authority, however, is trying to be fair, so it tends to reverse its decisions in case the situation changes. This means it could change the status of a banned company and make it compliant. This happened to SG International N.V., which was suspended from the country’s gambling market under a decision of the Swedish Gambling Authority in November 2022. The ban was eventually lifted on February 13th, 2023, after the company presented some proof that it has made the needed changes and was in line with the requirements of the Swedish gambling watchdog.