Tax And Trash: More Will Be Less, Swedish Government Warned

Hot on the heels of Norway’s intransigence to break its state betting monopoly, the Scandinavian gambling industry has taken another major hit today with the news that the Swedish government is planning to hike the gaming tax rate from 18 to 22 percent of GGR.

The proposed move, set to take effect on July 1 next year, subject to approval by the parliamentary Riksdag, has been slammed by Gustaf Hoffstedt, General Secretary of Sweden’s online gambling industry association, BOS, as “deeply disappointing.”

“Above all because it shows that the government does not understand, or has [not] taken to heart what kind of market it is set to govern. Even less has the government understood the vulnerable position that the market is in.

“We were recently able to show that channelization in the Swedish gambling market is [only] 77 percent.

“Some gambling verticals, including online casino, are as low as 72 percent.

“The trend is also declining, in other words the channeling decreases over time.

“We are already far from the state’s goal of at least 90 percent channelization.

“If this tax increase is approved by the Riksdag, we will soon be down to the channelization we had before Sweden re-regulated its gambling market in 2019 – a [move] that took place because Sweden had such a low channelization at the time.”

And Hoffstedt urged Sweden’s ruling Centre-right coalition government, led by the minority Moderate Party of Prime Minister Ulf Kristersson, to ditch the proposed tax hike.

Counting Chickens

But the Swedish government is adamant that since re-regulation in 2019 the gambling market has “stabilized and channelization has increased significantly”, they said in a statement issued to justify the bombshell news.

“In addition, measures have been taken to exclude unlicensed gambling from the Swedish market, which came into effect [in July this year].

“The reasons for caution when setting the tax level should therefore not be as strong now as during the re-regulation.

“An increase from 18 to 22 percent is judged to be at a suitable level to strengthen the financing of government activities, without it leading to too great an impact on the companies and the size of the tax base.

“The excise tax on gambling should therefore be increased from 18 to 22 percent.”

The Swedish government estimated the proposed hike will increase its gaming tax revenue by some SEK 540 million a year (£39.21m/US$48.14m).

But–given the current volatile balance of channelization in the Swedish market–others may argue that this is a classic case of “counting one’s chickens before they hatch”.