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Swedish government (Regeringen) has announced that the gambling tax rate in the country may increase from 18% to 22% of gross gaming revenue (GGR) since 1 July 2024. The proposal based on the belief that the gambling market should have stabilized since the 2019 regulatory intervention expects to generate SEK540.0m ($48.4 million) in additional tax revenues for the state on annual basis, according to the source.

Governmental Proposal Based on Market Stabilization Claims:

The proposal comes four years after after the Sweden authority launched iGaming market and legalized gambling operations in the jurisdiction. The move allowed gambling service providers to legally offer gambling services under the respective license. Regeringen seemingly considers that the four-year period was sufficient for the operators to stabilize their operations and proceeded with the tax increase proposal.

The  government explained that the tax rate amendment is also considered in the light of the proportion of the regulated gambling operations in the country – referred to as the channelization rate – and its impact on the Swedish gambling market.  As reported, Regeringen said that a 22% tax rate will help reach the channelization rate of at least 90 percent and generate SEK540.0m ($48.4 million) in additional tax revenues.

The authority reportedly stated: “The current tax rate of 18% has applied since the Swedish gambling market was re-regulated in 2019.  “The gambling market has since stabilised and channelisation has increased significantly. In addition, measures have been taken to exclude unlicensed gambling from the Swedish market, which came into effect on 1 July 2023.”

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The statement continued: “The reasons for caution when setting the tax level should therefore not be as strong now as during the re-regulation. An increase from 18% to 22% is judged to be at a suitable level to strengthen the financing of government activities, without it leading to too great an impact on the companies and the size of the tax base.”

Market Vulnerability Arguments:

The source reports that the Online Gaming Industry Association (BOS) opposed and criticized the proposal, requesting that the government reconsider the announced measure. BOS Secretary-general Gustaf Hoffstedt reportedly said: “The announcement from the government is deeply disappointing. Above all, it shows the government does not understand or has taken to heart what kind of market it is set to govern. Even less has the government understood the vulnerable position that market is in.”

Hoffstedt continued that the increased tax rate would affect the channelization rate. According to him, BOS recently found that only 77 percent of the Swedish iGaming market is regulated, with some gambling verticals even standing at a 72% channelization rate. The source reports that BOS and Hoffstedt said findings as ”critically low” with the declining trend having been seen over time.

BOS Secretary-general reportedly commented:“We are already far from the state’s goal of at least 90% channelization. If this tax increase is approved by the Riksdag, we will soon be down to the channelization we had before Sweden re-regulated its gambling market in 2019. A reregulation that took place because Sweden had such a low channelization at the time.”

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”Sweden’s government must perform much better than this. There is still time to withdraw the proposal,” he said. The time will also tell whether the government will accept the suggestions from the industry. The decision may be known soon as September is the month when governments plan the budget for the upcoming fiscal year.

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