Sweden seeks to increase gambling tax to 22%

The gambling industry in Sweden is possibly undergoing another shift, after for years now, lawmakers and the regulator have been working on making the sector safer. Now, a higher tax would be charged to licensed companies in the country, which will possibly pay 22% of their gross gaming revenue, up from the current 18% level.

Regeringen, the Swedish government, is hoping to strap the public purse with an additional SEK540m a year, or some $48.4m from the regulated gambling sector, but whether the tax would pass is another matter. According to the government, though, there are merits in pushing forward with this measure.

It’s the government’s opinion that by raising the tax rate, licensed operators will be incentivized to push channelization above the 90% desired by the government. Presently, channelization remains rather low. This metric is used to indicate how many people end up picking an operator that is licensed by Spelinspektionen as opposed to offshore operators.

The country even issued a new licensing regime in which it stated that any supplier found to be offering games to offshore casinos targeting Swedish citizens without the necessary licenses would face enforcement action. All the while, the government has been pushing forward to limiting the reach of such unlicensed operations, mostly working through regulatory pressure levers, and issuing a stern warning to legitimate companies with a lot to lose.

Meanwhile, Regeringen is fairly confident that the 22% tax rate would not really stifle growth or put the industry in a financial impasse, as operators would be able to navigate through this new taxation regime. However, not everyone has received the news on such a cheerful note.

For one, the Online Gaming Industry Association of Sweden (BOS) was the first to criticize the proposal, arguing that this move was disappointing and it showed a lack of clear understatement of the "state of state" when it comes to gambling.

Gustaf Hoffstedt, BOS Secretary General, was among the critical voices to speak against the newly proposed law and express his incredulity at the argument that by increasing the tax rate, channelization would improve. BOS recently did a survey which indicated that the channelization of the iGaming market in the country is sitting at a rather critical low – 77%.

Should this tax increase go through, the sector would struggle to reach any proper channelization with Hoffstedt warning that the sector would even lose more steam and drop below the channelization rates of 2019, when the first year of online gambling started in Sweden. Should the measure kick in, it will be available from July 1, 2024.

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