New?gambling tax?takes effect?in Sweden: from 18%?to 22%

Garance Limouzy July 1, 2024

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New?gambling tax?takes effect?in Sweden: from 18%?to 22%

On July 1, 2024, Sweden implemented an increase in its gambling tax, raising it?to?22% of gross gaming revenue.?In 2019, the country had introduced an 18% tax on gambling profits as part of a broader regulatory reform on iGaming.

Oppositions from the industry

The decision to increase the tax rate has?received?mixed reactions within the industry. Stakeholders such as?the Swedish Trade Association for Online Gambling (BOS) and major gaming companies have voiced concerns. They argue that higher taxes could lead players to seek out unlicensed operators, potentially undoing progress made in reducing?the?influence of the?illegal gambling market.

Gustaf Hoffstedt, Secretary General of BOS, has predicted?that the unlicensed market would thrive under the new tax regime as licensed operators face increased financial pressures.

Within the gambling industry, more traditional operators like ATG, specialising in racetracks and horse-racing, are opposing the fact that the tax affects all gambling operators uniformly. They argue that online gaming, which has seen substantial revenue growth, should bear the brunt of the new government policy instead.

However, not only industry stakeholders have opposed the new tax regime. The Swedish Professional Football Leagues Association declared that clubs across the country depend on partnerships with sports betting operators. They expressed worries about potential income loss from sponsorships and the financial strain it could place on clubs. “Football cannot live solely on the commitment and voluntary efforts of players, managers and supporters – money is also needed,” the association stated.

The reasons for the tax increase

In defence of the tax hike, the Swedish government anticipates an increase in tax revenues, estimating an annual boost of SEK 540 million (approximately 47 million euros).

Additionally, the government has worked tirelessly to fight the black market. The goal is to achieve a channelisation rate of 90% or higher, ensuring that the majority of gambling in Sweden occurs through licensed operators.

The government conducted research before the 2019 market regulation, which suggested that a tax rate slightly above 20% would be most suitable for gross gaming revenue. However, at that time, the government opted to set the tax rate at 18% as a measure to prioritise market stabilisation and channelisation efforts. Five years later, the government deemed it appropriate to implement the originally recommended tax rate.