The Swedish Trade Association for Online Gambling (BOS) has rejected the government’s plans to increase taxes on gambling, citing concerns about the potential negative impact on the regulated market. The Increase in Gambling Tax Memorandum proposes a tax hike from 18% to 22%, set to take effect from July 1, 2024. BOS argues that this move contradicts the government’s goals for the gambling market and could lead to reduced channelization within the regulated sector.
BOS’s Perspective:
Gustaf Hoffstedt, BOS Secretary General, expressed the association’s reservations about the proposed tax increase. He emphasized that implementing higher gambling taxes might result in reduced channelization within the Swedish regulated gambling market, a sentiment shared by other reference bodies, including the Swedish Gambling Authority. Hoffstedt warned that unlicensed and potentially illegal gambling operators could gain market share if the tax increase is implemented.
Government Targets and Market Trends:
Sweden’s government initially aimed for a target of 10% for illegal gambling, with the expectation that 90% of all gambling would be conducted through legal and regulated operators. However, BOS reveals that, as of March of the current year, this target had already fallen to 77% for competitive gambling overall and 72% for online casinos specifically. These figures highlight the challenge of maintaining a high level of channelization in the face of market dynamics.
Optimal Tax Range and Long-Term Consequences:
Hoffstedt referred to a Copenhagen Economics report, indicating that an optimal tax range for the state to stay within is 15-20%. According to BOS, exceeding a 20% tax rate may lead to lost channelization and, in the long term, reduced tax revenue, as suggested by the classic Laffer curve. The association argues that deviating from this presented tax range could potentially damage the licensed market.
Concerns for the Licensed Market:
BOS’s concerns extend to the potential impact on the licensed market, emphasizing the need for the state to carefully consider the consequences of a tax increase on gambling. The association contends that the state should avoid actions that could undermine the progress made since the Swedish re-regulation of the gambling market.
The opposition from the Swedish Trade Association for Online Gambling underscores the delicate balance required in adjusting gambling taxes. The government’s proposed increase faces scrutiny for its potential to adversely affect channelization and market dynamics. As the debate continues, stakeholders, including BOS, advocate for a measured approach that considers the long-term consequences for the licensed gambling market in Sweden.