In Sweden, the Ministry of Finance’s decision to implement a tax increase in the gambling sector has raised concerns for the Swedish Trade Association for Online Gambling (BOS). The association warns that the new tax regime could drive players toward the black market.
The Swedish government has increased the gambling tax from 18 to 22 percent, as a way to boost tax revenues. According to the Ministry of Finance, this new rate will allow the state to collect an extra 47 million euros annually.
Gustaf Hoffstedt (pictured above), Secretary General of The Swedish Trade Association for Online Gambling, reacted: “Instead of strengthening the serious gambling companies’ fight against the illegal ones, the government has implemented a roughly 20 percent tax increase on licensed gambling, while unlicensed gambling remains tax-free.”
Increased tax rate, reduced tax base
The Ministry assumes that gamblers won’t significantly reduce their spending even if prices increase and has based its projected tax revenue calculation on that assumption. However, according to BOS, gamblers are more price-sensitive than the Ministry suggests. If gambling becomes more expensive, many people might reduce their gambling or stop altogether, leading to a smaller tax base and less revenue than the Ministry expects.
Impact on channelisation
BOS is also concerned about how a tax increase might drive gamblers to unlicensed, illegal gambling sites, counteracting efforts for channelisation in a country where competition between licensed and unlicensed sites is already stiff. If taxes make licensed gambling more expensive, more people might switch to unlicensed sites, further reducing the tax base, explained BOS.
Sweden is “a gambling market that offers perhaps the world’s strongest consumer protection, but which consumers have long since turned their backs on,” according to Gustaf Hoffstedt.
The cost of problem gambling
Reduced channelisation rates could have an important social and economic cost for the Swedish population and government, according to BOS. Licensed operators in Sweden are required to follow strict rules to protect players, but unlicensed sites are not.
“A Swedish licence, issued by the Swedish Gambling Authority serves as a certificate of a site’s legitimacy and reliability and ultimately guarantees that gambling sites comply with existing laws and regulations,” explained Bedrageri.info.
If more people gamble on unlicensed sites, it could lead to more cases of problem gambling, increasing social costs, which the Ministry hasn’t factored into its calculations, according to BOS.
Despite industry concerns, the government has decided to move forward with its new tax rate. It has reassured the public that it remains committed to combating the black market, and aims to achieve a channelisation rate of 90 percent or higher.
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