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A new report commissioned by the Swedish Trade Association for Online Gambling (BOS) says a proposed tax increase would lead to licensed gambling market share dropping between 1.2 to 2.5 percent and could create more than a thousand problem gamblers.
In September 2023, Sweden announced plans to lift its taxes for online gambling to 22 percent of gross gaming revenue (GGR), up from the current 18 percent, with the government arguing that the market has settled since the country abandoned its monopoly model for a licensing system in 2019.
The new report dated May 27 was undertaken by consulting firm Copenhagen Economics (CE), which estimates the increased annual tax revenue will be SEK214m (€18.6m) to SEK399m (€34.67m), “significantly lower” than the Ministry of Finance’s prediction of SEK539m (€44.57m).
It is estimated in the report that 2,881 to 6,085 people will switch to unlicensed gambling sites, and 591 to 1,247 people will develop gambling problems, due to the lack of consumer protection on these unlicensed sites.
Gustaf Hoffstedt, BOS secretary general, said: “At the price of a modest net addition to the treasury, the tax increase creates around one thousand new cases of people with gambling problems. Thus, gambling problems that would never have occurred without the increase in the gambling tax.
“The government should completely overhaul its gambling policy and instead protect and strengthen the legal gambling market, which offers the consumer the protection all gamblers should be able to enjoy.”
In December 2023, BOS wrote a submission to an ongoing consultation on the planned 2024 budget, saying the plan “is in conflict with all of the government’s stated goals for the gambling market”.
Previous estimates commissioned by BOS and separate analyses by formerly state-owned operator ATG put the online casino channelisation rate at anywhere between 60 and 72 percent.
Elsewhere, trade groups in the Netherlands have also warned of the impacts of a proposal to increase the gambling tax rate from 30.5 percent to at least 37.8 percent.
VAN Kansspelen said it received the proposal with “astonishment”, saying it would be “the end of the regulated offline small gambling sector”.
“The gambling tax has just been significantly increased for two years in a row. Legal providers of slot machines (casinos) have been making big losses for years and turnovers have fallen by 29 percent, as a KPMG report published last week shows. It also states that a percentage point increase in gambling tax leads to a 20 percent higher loss,” VAN Kansspelen warned.
Gambling tax hikes are on political agendas around the world.
In the U.S., the Illinois House voted yesterday in favour of a sports-betting tax hike that will see some operators pay up to 40 percent of revenues to the state, and investors showed concern that other states could ultimately follow suit.
While in the UK, there are fears that an ongoing review of tax rates for gambling could see rates for online sports betting rise from 15 percent to match the 21 percent gross gambling yield rate applied to online casino games.
