Swedish gambling tax hike could result in more problem gamblers

The Swedish Trade Association for Online Gambling (BOS) has published a detailed report conducted by Copenhagen Economics, an analysis institute, that takes a more detailed breakdown into a proposed change of Sweden gambling laws that would see the tax rate increase to 22% from currently 18%.

The report seeks to demonstrate that, just like some other measures, an otherwise well-intended change to gambling laws in Sweden could blow back and undermine consumers and the industry it supposedly seeks to serve.

Gambling tax increase in Sweden to harm consumers and businesses

The report purports that an increase in the tax rate to 22% would result in a reduction of the market share for regulated Swedish gambling sites by anything between 1.2% to 2.5%, with offshore and rogue gambling websites scooping up the difference.

"Increased Gambling Tax: How Are Tax Revenues Affected?" also looks into how many players could be affected as a direct result of regulated market share loss. By and large, the report focuses on four core criteria:

• Regulatory considerations when setting the tax rate
• Measuring the effect on reduced demand due to higher prices
• Accounting for switching to unlicensed websites
• Extra costs associated with problem gambling

By the researchers’ estimate, the change could impact as many as 2,881, and up to 6,085, pushing those players to the unregulated market.

BOS and the report further argue that because of playing at unregulated Swedish gambling websites, anything between 591 and 1,247 people could become addicted to gambling and suffer from gambling-related harm.

The association similarly worries whether the data projected by the Ministry of Finance, which hopes to see a significant increase in tax contributions from the sector, is accurate.

The Ministry of Finance projects gains to the exchequer in the range of SEK539m but, according to Copenhagen Economics, the actual net gain would be closer to SEK214m – SEK399m.

Sweden gambling sites operate under different conditions

One of the issues cited by Swedish gambling sites and operators for not endorsing the tax increase has to do with the different contexts in which they operate. For one, they are not really running their business in a country that is particularly promotion-friendly.

In other words, Sweden prides itself – and deservedly so – on a tight regulatory framework when it comes to gambling advertising. Yet, this exposes legitimate businesses to unfair competition from offshore operators.

Albeit the Swedish Gambling Authority has been trying to limit the impact of those, it is next to impossible to do so quickly enough, as unlicensed websites continue to bombard customers with little fear of regulatory retaliation.

The report specifically mentions this and cites it as one of the leading reasons why many operators end up reluctant to support the measure. Not least, the research also attempts to be soberingly pragmatic.

Sweden cannot afford more problem gamblers

Not least, Swedish society may not really want to add to the societal and economic costs of creating an environment where there is a risk of creating more problem gamblers by reducing the regulated market’s competitiveness.

If the report is to be trusted, and its numbers taken at face value, the cost of problem gambling in Sweden is put at SEK11.5bn, a staggering tab which would only grow bigger should the number of problem gamblers go up.

According to Folkhälsomyndigheten, the Public Health Agency of Sweden, 130,000 people in the country share a household with someone who is experiencing problem-gambling harm.

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