Swedish Parliament to Reconsider Gambling Tax Rate

The Swedish parliament is set to revisit its gambling tax rate, potentially reshaping the country’s gambling landscape. Following concerns over declining channelisation rates, lawmakers are considering a tax reduction to retain players in the licensed market. Lowering the tax could make licensed platforms more attractive, steering Swedish players away from unregulated and potentially risky alternatives. Learn how this policy shift could impact Sweden’s gambling industry and drive player engagement in a regulated environment.

Sweden Reconsiders Gambling Tax Rate to Address Channelisation Decline and Protect Licensed Market

The Swedish parliament (Riksdagen) has taken a significant step in addressing the challenges facing the country’s gambling industry by agreeing to reconsider the current gambling tax rate. This move comes in response to a motion presented by Carl Nordblom, a member of the Moderate Party, who urged parliament to evaluate the effects of the recent tax increase on channelisation rates and the licensed gambling market.

The debate over Sweden’s gambling tax rate has gained momentum since it was raised from 18% to 22% of Gross Gaming Revenue (GGR) in July. Many industry experts, including Nordblom, argue that the increased tax burden is pushing players away from licensed operators toward unregulated platforms. The proposed tax revision aims to strengthen the attractiveness of the Swedish licensed market, thereby improving channelisation rates by bringing more players back into the regulated fold.

In his motion published on October 2, Nordblom stressed the need for a comprehensive investigation into the correlation between tax policy and channelisation. He argued that lower tax rates could incentivize both operators and players to remain within the regulated market, thus enhancing consumer protection and the integrity of the gambling industry.

Is Channelisation Declining in Sweden?

The concept of channelisation—the rate at which gamblers use licensed versus unlicensed platforms—has been a focal point in the Swedish gambling debate. Recent data indicates a concerning decline in channelisation rates. According to ATG, Sweden’s horseracing monopoly, channelisation has dropped to between 69% and 82%, based on its Q4 2023 report. ATG’s findings project a continued downward trend, fueled by the increasing appeal of foreign gambling websites that operate outside of Swedish regulatory oversight.

Spelinspektionen, the Swedish gambling regulator, had set an ambitious target to achieve 90% channelisation when the online gambling market was liberalized in 2019. However, its latest estimates suggest channelisation is sitting around 86%. This figure is derived from player surveys that ask gamblers which sites they use, but the regulator acknowledges potential inaccuracies. The assumption that players wager equally on both licensed and illegal sites may not hold, as players on unlicensed platforms are often inclined to place higher bets.

Further complicating the situation, the Swedish Gambling Association (BOS) estimates the channelisation rate to be closer to 77%. For online casino games specifically, rates appear to be even lower across the board, with Spelinspektionen estimating 81%, BOS at 72%, and ATG reporting a stark 58%.

BOS chief Gustav Hoffstedt weighed in on the issue, stating: “Sweden still has a lot of work to do if it is to succeed in achieving at least 90% channelisation. This work must include both repressive measures to keep unlicensed operators away, as well as liberalization of the licensed gambling market in order to increase the attractiveness from the consumer’s perspective.”

The Impact of the Recent Tax Hike

The tax increase from 18% to 22% was introduced in July, with the government projecting an additional SEK 500 million (£37.4 million/€43.9 million/$48.6 million) in annual tax revenue. However, the hike has drawn criticism from various industry stakeholders who warn of its potential to disrupt the licensed market. ATG voiced concerns that the increased costs could harm the horseracing industry, while BOS cautioned that the higher tax rate would negatively impact channelisation.

BOS estimated that as many as 2,881 to 6,085 individuals could migrate to unlicensed alternatives, thereby undermining efforts to maintain a regulated gambling environment. This exodus could also expose players to greater risks, as unregulated platforms lack the consumer protections enforced within Sweden’s licensed market.

The Swedish parliament’s decision to reconsider the gambling tax rate highlights the country’s ongoing struggle to strike a balance between regulation and market competitiveness. By potentially lowering the tax burden, Sweden aims to bolster channelisation rates, steering players back into the licensed market where they can enjoy a safer and more regulated gaming experience. The upcoming debate will be crucial in shaping the future of Sweden’s gambling landscape, determining whether the country can meet its 90% channelisation target and ensure a thriving, fair gaming market.