Sweden Proposes Radical Overhaul of Gambling Law, Shifting Onus to Payment Providers

• Sweden’s government has proposed a radical overhaul of its Gambling Act, aiming to more effectively combat the unlicensed black market by dramatically widening the law’s scope.
• The proposal scraps the current “targeting” criterion and replaces it with a new, much broader rule: if a person in Sweden can participate in a game, Swedish law applies.
• In a pioneering move, the law would also introduce a “ presumption rule” for payment providers, reversing the burden of proof and forcing them to block transactions to unlicensed operators.
• Payment firms would have to assume a transaction from a Swedish resident is for illegal gambling in Sweden, unless they can prove the person is physically abroad.
• While the regulator has welcomed the plan, legal experts warn it will create a huge compliance burden and could face significant legal challenges under EU law.

The Swedish government has unveiled a proposed legislative overhaul that would fundamentally rewrite the rules of engagement in its fight against the online black market. In a move that is being seen as potentially pioneering in Europe, the new law would dramatically expand the scope of the Swedish Gambling Act and place a significant new compliance burden on payment providers.

The core of the proposal is the removal of the existing “direction criterion.” Until now, Swedish law has only applied to unlicensed operators who were deemed to be actively “directing” their services at the Swedish market (e.g., by using the Swedish language or currency). The new proposal scraps this, replacing it with a simple “participant criterion”: if a person located in Sweden can access and play a game, that game is subject to Swedish law.

The ‘Presumption Rule’: Shifting the Burden to Payment Providers

In what is arguably the most significant and controversial part of the plan, the new law would also introduce a “presumption rule” for all payment intermediaries. This effectively reverses the burden of proof for blocking illegal gambling transactions.

Under the new rule, any company that processes payments must assume that a gambling transaction initiated by a Swedish resident is for participation within Sweden. They would be legally obligated to block any such payment to an unlicensed operator, unless they have clear proof that the person is physically located abroad at the time of the transaction. “ This reverses the burden of proof and requires payment providers to implement robust verification systems,” warns legal expert Luís Portela de Carvalho. “ They face potential liability for facilitating unlicensed gambling even when operators don’t target Swedish consumers.”

The Rationale: Closing a Major Loophole

The government’s drastic new approach is a direct response to the persistent failure to curb the black market. The Ministry of Finance’s own memorandum acknowledges that “roughly two-thirds of Swedes’ gambling on the unlicensed market takes place on websites that are not directed at Sweden.” The new law is specifically designed to close this massive loophole. The national regulator, Spelinspektionen, has welcomed the proposal, stating it will strengthen its ability to work more effectively against unlicensed gambling.

Potential Conflict with EU Law

The Swedish government has acknowledged that its pioneering approach could face legal challenges. The proposal arguably restricts the free movement of services, a core principle of EU law. While the government’s memorandum insists the changes are “compatible with EU law” and “proportionate” to the goal of consumer protection, experts are not so sure.

“ These measures raise concerns under Article 49 of the EU Treaty,” says de Carvalho. “ There’s a risk of EU legal challenges if the measures are seen as disproportionate barriers to trade.” If approved by parliament, the new rules are scheduled to come into force on 1 January 2027, but a potential legal battle in Brussels could lie ahead.