Zimpler Subject to SEK25 Million Fine for Illicit Gambling in Sweden

Zimpler was given until July 31 by Spelinspektionen to stop offering payment services containing BankID to unlicensed businesses

Zimpler Subject to SEK25 Million Fine for Illicit Gambling in Sweden

Payment processor Zimpler has been warned by the Swedish regulator Spelinspektionen that failure to stop its business dealings with unregistered operators could result in severe consequences.

Zimpler was given until July 31 by Spelinspektionen to stop offering payment services containing BankID to unlicensed businesses. The regulator warned that if Zimpler disobeyed the law, a fine of SEK25.0m (£1.8m, €2.1m, or $2.3m) would be imposed.

Spelinspektionen said:

"Swedish gambling regulations are based on the fact that everyone who operates in the market must have a licence, and those without a licence must be shut out. The aim is for all gambling to be channelled to offers from responsible, reliable and controllable operators.

"Since January 1, it is not permitted to promote participation in games that are provided without the necessary licence in professional activities or otherwise for gainful purposes."

Regulatory choice The decision to take action against Zimpler, according to Spelinspektionen's injunction judgement, was made as a result of the provider using BankID in transactions with unregistered operators.

Customers in Sweden are the only ones that utilise BankID, a service for electronic identification. According to Spelinspektionen, the transactions' usage of BankID demonstrated that the operators in question were improperly pursuing Swedish players. The regulator did not reveal the names of any of the businesses implicated, but it did state that an anonymous tip prompted the opening of an investigation.

Zimpler responded to the situation by stating that it didn't think its activities had violated Swedish law. However, it also declared it would sever ties with unlicensed websites serving Swedish clients. According to Zimpler, this process has already started, and the company hopes to finish it by the third quarter at the latest.

Zimpler responds

However, the supplier also asserted that it was unaware that the operators needed the required licence. As for whether specific websites are made to appeal to Swedish players, Zimpler said that depends on an overall evaluation. The list of companies that Spelinspektionen believes are illegally pursuing the Swedish market, Zimpler continued, does not include any of its clients.

Zimpler responded by saying:

"The payment service solutions that Zimpler provides to these customers are not specifically adapted for gaming companies but are provided to all customers in all segments.

"The payment service solutions must therefore be seen as a normal payment task. As part of its process for approving new customers, Zimpler takes a large number of measures to ensure regulatory compliance. We have the right to terminate a business relationship if anything comes to light that indicates that the customer is targeting Sweden without a Swedish licence."

However, Spelinspektionen claimed that it was obvious Zimpler worked closely with businesses that lacked a licence but targeted the Swedish market. It claimed that because these businesses utilised Zimpler's payment service options on the Swedish market, Zimpler encouraged illegal behaviour. Concerns about operators without licences The decision was made due to research conducted by the Swedish Online Gaming Industry Association (BOS), which revealed that 77% of Sweden's online gaming market is channelised. The BOS stated that this was "critically low" and required action. 90 percent of licenced gaming offerings are what Sweden hopes to have available on the market, according to its channelisation target.

There is "no doubt" the Swedish licencing system is in a critical state, according to Gustaf Hoffstedt, secretary-general of BOS.

Hoffstedt said:

"Far too much power has been spent on the part of the state to force the licensed gambling companies to implement measures that have not been well received by gambling consumers."

Extra powers The Swedish government gave Spelinspektionen a number of additional tools to help tackle illicit behaviour. The primary modifications were made in relation to payment processors and Spelinspektionen, the relevant regulatory body.

Specific data must now be provided to Spelinspektionen by payment providers. Now, they must disclose whether payments to and from unregistered operators in Sweden are processed through their networks. The government claimed that the modifications would make the system for restricting payments more effective at the time.

Additionally, it was stated that by doing this, the regulator and payment processors could collaborate to fight illegal gambling. The owners of supplier licences are now required to pay fees, as Spelinspektionen started doing earlier this month. Beginning July 1, Spelinspektionen will impose a predetermined fee on the business that possesses the licence to deliver gaming software to operators in Sweden. Unless they are granted a specific exception, enterprises must pay a separate fee to the regulator for each licencing they have. According to news reports in Sweden, a plan to enhance the fines imposed on gambling operators that violate the nation's money laundering laws was also made public last month.

The plan would double the maximum fine for violating the Gambling Act if approved.