Swedish Parliament Reconsiders Gambling Tax Increase
The Swedish parliament is set to revisit the recent hike in the country’s gambling tax rate from 18% to 22%, following concerns that the increase may be driving players towards unlicensed operators.
Motion to Lower Tax Rate
Carl Nordblom, a member of the Moderate Party, has submitted a motion urging the government to lower the gambling tax rate. He believes that reducing the tax could enhance the channelization of Swedish players towards licensed online gambling platforms, thereby strengthening the regulated market.
Recent reports indicate a significant drop in channelization rates—the proportion of players using licensed operators. The horseracing monopoly ATG estimated that these rates have fallen to between 69% and 82% in the fourth quarter of 2023. This decline is alarming compared to the initial target of a 90% channelization rate set by the gaming regulator Spelinspektionen when the market was liberalized in 2019.
Industry Warnings
Industry stakeholders have expressed serious concerns about the tax increase’s impact. The Swedish Gambling Association (BOS) warned that higher taxes could lead to increased costs for gamblers, potentially pushing them towards unlicensed alternatives. BOS estimated that between 2,881 and 6,085 individuals might migrate to unregulated platforms as a result.
The horseracing industry is also feeling the strain. ATG cautioned that the higher tax rate could elevate operational costs and harm the sector’s financial health. Given that horseracing relies heavily on revenues from licensed gambling activities, the tax hike poses a significant risk.
Government Revenue vs. Market Health
While the government anticipated that the tax increase would generate an additional SEK 500 million (€43.9 million) annually, the potential erosion of the licensed market raises questions. If players continue to shift towards unlicensed operators, the expected revenue boost could be undermined, compromising both economic and regulatory objectives.
Nordblom’s motion not only advocates for a tax reduction but also calls for an in-depth investigation into how tax rates affect channelization. Such research could provide valuable insights for policymakers aiming to optimize the balance between generating revenue and maintaining a healthy, regulated gambling market.
