Parliament to Review Gambling Tax After July Hike

Sweden’s parliament (Riksdagen) has taken steps to potentially reduce the nation's gambling tax following a proposal by Moderate Party member Carl Nordblom. This initiative comes three months after the Swedish government increased the gambling tax from 18% to 22% of gross gaming revenue (GGR). Nordblom believes that lowering the tax rate could encourage more Swedish players to opt for licensed gambling operators, a move aimed at improving the country’s channelisation rate.

The proposal, submitted on October 2, calls for an examination of the relationship between tax policy and channelisation. Nordblom suggests that by reducing the tax burden, the government could redirect more players towards legal, regulated markets, helping to safeguard consumers from unlicensed offshore operators.

Challenges to Channelisation in Sweden

The issue of channelisation, or the extent to which Swedish gamblers are using licensed platforms, has been a concern for the country’s regulators and operators. A 2023 report by horseracing monopoly ATG highlighted a drop in channelisation rates, estimating that they have fallen to between 69% and 82%. Based on trends throughout the year, ATG expects this decline to continue.

’’The move comes three months after the gambling tax was increased from 18% to 22% of gross gaming revenue’’

When Sweden opened its online gambling market in 2019, the country’s gaming regulator, Spelinspektionen, set a goal of achieving a 90% channelisation rate for licensed operators. However, the regulator’s most recent estimate indicates that channelisation stands at around 86%. This figure is derived from various surveys that ask players about their gambling preferences and habits.

However, this 86% figure is based on the assumption that gamblers are spending similar amounts across both licensed and unlicensed sites. Spelinspektionen has expressed skepticism about this, acknowledging that those betting on illegal platforms tend to wager larger sums. Adjusting for this, the regulator estimates that actual channelisation could be closer to 78%, a slight improvement from the 77% recorded in 2022.

The Swedish Gambling Association (BOS) offers a more conservative estimate, placing the overall channelisation rate at 77%. When focusing specifically on online casinos, these numbers drop further. Spelinspektionen estimates a channelisation rate of 81% for this segment, while BOS suggests it could be as low as 72%, and ATG reports a figure as low as 58%.

Concerns Over Gambling Policy and Tax Impact

The July increase in the gambling tax was projected to generate SEK 500 million annually in additional tax revenue. However, this rise has sparked concerns among stakeholders. ATG previously warned that the higher tax rate could increase costs, particularly affecting the horseracing industry.

BOS also voiced its concerns, predicting that the tax hike could drive players to unlicensed alternatives. They estimated that as many as 6,085 individuals could shift to unlicensed sites due to increased costs. BOS Secretary General Gustaf Hoffstedt warned that the tax increase could lead to serious consequences for the licensed market.

“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,” Hoffstedt stated.

In addition to calling for a review of the gambling tax, Nordblom has proposed several other legislative changes. He has tabled motions calling for a ban on financial transactions with unlicensed gambling sites and the introduction of a self-exclusion system for payday loan providers to help problem gamblers avoid financial pitfalls.

The call to lower the tax is backed by a report from the Swedish Gaming Authority, which recently assessed the country’s channelisation rate at 86%, using a revised methodology. This marks a significant improvement from the pre-2019 licensing era, when channelisation rates were below 50%.

BOS, however, has consistently argued that the recent tax hike would negatively impact channelisation. In its earlier projections, the organisation warned that the 2023 tax increase would result in a channelisation rate decline of 1.2% to 2.5%. Additionally, they forecast that this decrease could translate into hundreds of new problem gambling cases.

Future of Sweden’s Gambling Policy

As Sweden grapples with maintaining its channelisation rates, the government faces a delicate balance between raising tax revenue and ensuring a robust, well-regulated gambling market. Nordblom’s motion signals a growing recognition that the current tax policy may be undermining efforts to channel players toward licensed operators.

While the parliament reviews Nordblom’s proposal, it remains to be seen whether lawmakers will move forward with a tax reduction or explore other measures to bolster the channelisation rate. In the meantime, industry stakeholders continue to voice concerns about the impact of recent tax changes on Sweden’s gambling landscape.

Source:

''Swedish parliament to reconsider gambling tax rate'', igamingbusiness.com, October 03, 2024.