Sweden: BOS Warns Tax Increase May Link to Rise in Problem Gambling

Ahead of the increase in the gambling tax rate in Sweden, a new report highlighted the potential negative impact of the change. The current tax rate of 18% is expected to increase to 22% for Swedish gambling operators effective from July 1, 2024.

This change is expected to bring additional tax revenue but along with the additional proceeds, key issues may arise, including an uptick in the number of problem gamblers due to a decrease in the channelization to the legal sector.

The revelations came from BOS, the Swedish Trade Association for Online Gambling, after it presented a new report compiled by the analysis institute Copenhagen Economics (CE). The report outlined a number of concerns related to the impact of the tax increase for gambling activities planned in the European country.

Notably, the white paper predicted that the market share of licensed operators in Sweden may decrease between 1.2% and 2.5%. While the share of the licensed gambling market will decrease, the share of unregulated, black market operators is expected to increase. As a result of this shift, between 2,881 and 6,085 people may transition to the unregulated gambling sector.

Such a shift should raise concerns as operators within the black market or ones that do not hold a license in the particular jurisdiction are not obligated to follow the local regulations. This puts the players at risk, as excessive gambling is unlikely to be prevented.

Legal Gambling Market Needs to Be Strengthened, Users Need to Be Protected

Gustaf Hoffstedt, BOS’ secretary general, spoke about the dangers the tax increase may bring, including a significant rise in the number of people affected by problem gambling. He said that in exchange, Sweden would benefit from additional tax revenue.

Finally, Hoffstedt pointed out: “The government should completely overhaul its gambling policy and instead protect and strengthen the legal gambling market, which offers the consumer the protection all gamblers should be able to enjoy.”

“At the price of a modest net addition to the treasury, the tax increase creates around one thousand new cases of people with gambling problems. Thus, gambling problems that would never have occurred without the increase in the gambling tax.“

Gustaf Hoffstedt, secretary general at BOS

According to the CE study, between 591 and 1,247 people may develop problem gambling by transitioning to the unregulated gambling market as a result of the change in the gambling tax rate. A prime reason for the increase in problem gambling is the insufficient or lack of duty of care demonstrated by such unlicensed operators.

Besides an increase in problem gambling, the CE white paper uncovered that the proceeds from the higher tax rate are likely to be lower than the initially expected SEK 539 million ($50.8 million) per year. The researchers estimated that the additional tax proceeds may be in the range of SEK 214 million ($20.2 million) to SEK 399 million ($37.6 million).