Sweden's Gambling Authority Reverses Legal Position on Negative Equity in License Reviews
Following a court defeat against Avento, Sweden's gambling authority has revoked its legal position on negative equity in license reviews.
Sweden’s gambling authority has been forced to revoke its previous legal position on negative equity in licence reviews following its court defeat in a case brought by Avento, a gaming group that owns Frank Casino and SlotsV.
The Swedish Gambling Authority had previously held that negative equity was an important factor in licence reviews. In December 2020, Avento’s licence renewal was rejected by the regulator due to the company’s negative equity in the first two years of its three-year licence period. However, in December 2021, the Linköping administrative court overruled the regulator’s decision, stating that negative equity did not necessarily mean that a business was at risk of not fulfilling its licence requirements.
Following the court’s decision, the Swedish Gambling Authority has now cancelled its legal position on negative equity in licence reviews. Despite this change, the regulator has noted that negative equity would continue to work against applicants, even if they are part of a group.
The Swedish Gambling Authority believes that negative equity usually means that a licensee’s suitability requirement cannot be considered fulfilled, suggesting that it would continue to scrutinize applicants who are part of a group. However, the regulator has also noted that in some cases, the combined capital strength of a group can be taken into account.
The Swedish Gambling Authority has emphasized that the group’s resources must be relevant and actually at the applicant’s disposal, and can be demonstrated, for example, through a capital guarantee. The regulator has, however, stated that it will not accept a capital guarantee from a private person as a starting point due to the difficulties in obtaining a reliable picture of a natural person’s financial position.
The extent to which the group’s capital strength can be taken into account and what capital strength is required for the conditions of a licence to be considered fulfilled will be decided in each individual case. The change in the Swedish Gambling Authority's legal position is a reminder of the ongoing complexity and controversy surrounding gambling regulations, particularly when it comes to balancing financial stability and industry growth.