Reading Time: 3 minutes
The Swedish government announced today that it would increase the gambling tax from 18% to 22% of gross gaming revenue. According to the government the reason is that since reregulation of the gambling market in 2019, the market has stabilized and channelization is high.
BOS Secretary general Gustaf Hoffstedt remarks
The government’s announcement is disappointing because it shows the government has not understood or taken into account the kind of market that it will be governing. The government has also not understood how vulnerable the market is.
Recently, we were able to demonstrate that the channelization rate in Sweden’s gambling market is 77%. Some gambling verticals such as online casino are at 72 percent. The trend is also decreasing, i.e. the channeling is declining over time.
If this tax increase is approved, we’ll soon reach the level of channelization that we had in Sweden before it reregulated the gambling market. Reregulation of the gambling market in Sweden that was necessary because Sweden’s channelization was so low at the time.
Sweden’s Government must do much better than that. Gustaf Hoffstedt concludes that there is still time for the proposal to be withdrawn.
The government’s proposal can be found in Swedish on pages 289-290 here: https://www.regeringen.se/contentassets/e1afccd2ec7e42f6af3b651091df139c/forslag-till-statens-budget-for-2024-finansplan-och-skattefragor-kapitel-1-12- appendices-1-9.pdf
Below is a Google Translation of the same text.
Gaming tax increases
According to the government, the excise tax on gaming should be raised from 18 percent to 22 percent for each tax period.
The proposed legislation should come into effect on July 1, 2024.
Why the government made its assessment: The purpose of gambling regulation today is to protect the surplus of gambling activities from the public by financing government activities. The Act (2018:1139) relating to tax on gambling applies to licensed gambling, except for gambling reserved for public benefits. The law stipulates that 18 percent of each tax period’s balance is subject to excise duty. The balance is the difference between total stakes and total payouts. One calendar month is the taxation period.
A tax increase on gambling must be balanced in order to avoid any negative impacts on the amount of gambling at companies with a gambling license in Sweden. According to the bill “A reregulated gambling industry”, a tax rate of slightly over 20% is compatible with a goal of achieving a channelization of at least 90% (prop. 2017/18:220 p. 258). A lower tax rate was however proposed in that bill for precautionary purposes. Since the Swedish gambling industry was reregulated, in 2019, the current tax rate is 18 percent. Since then, the gambling market has stabilized and channelization is increasing significantly. The Swedish government has also taken measures to ban unlicensed gambling on the market. These measures came into force 1 July 2023. 2022/23:33). It is therefore important to be more cautious when determining the tax rate. The increase in tax from 18 percent to 22 percent has been deemed to be a reasonable level for enhancing the funding of government activities without affecting the tax base or the businesses too much. It is therefore recommended that the excise tax for gambling be raised from 18 percent to 22 percent.
The next proposal is expected to enter into effect on 1 July 2024. In the spring of 2020, the government plans to present a proposal to the Riksdag that complies with the above. Estimates show that the upcoming proposal will increase tax revenues by SEK 0,27 billion by 2024 (half-year effects) and then by SEK 0,54 billion each year.
