In recent months, the Swedish Gambling Authority, Spelinspektionen, has been under fire for a range of ill-fated decisions, not the least of which has been going against its own advisors and implementing a ban on credit card gambling.

However, the ruling, which comes into effect on 1 July 2024, is predicted to have far-reaching and dire consequences for the reputation of the regulator, the Swedish online gambling community, and potentially even their families.

 New Gambling Tax Comes into Force

The amendment to the existing online casino tax charter will see the country raise its gambling tax rate from 18% of gross gaming revenue (GGR) to 22%, making it one of the more expensive markets for gambling operators to do business in.

According to the government's predictions, the tax increase will generate a little over €47 million per year in additional revenue. However, according to online gambling specialists, this is considered a minimal benefit compared to the impending negative impact it will have on the market.

The decision is especially mind-boggling when one considers that Sweden is already struggling with its channelisation rates – at 77% they are some of the lowest in Europe. There appears to be some level of bravado based on the court approving action, such as blocking access to unlicensed sites at an internet service provider (ISP) level, restricting access to live casino streamers playing at unlicensed sites, and bans of gambling-related offshore transactions.

 BOS Says BOO to New Gambling Tax

The Swedish Trade Association for Online Gambling (BOS) presented its findings on 29 May, which it feels proves that the decision to impose the tax rate will negatively affect legal online gambling in Sweden.

Gustaf Hoffstedt, Secretary General of the Swedish Trade Association for Online Gambling, went to great pains to highlight their greatest concern, saying:

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“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 would never have occurred without the increase in the gambling tax.”

The findings, as summarised in the BOS report, are as follows:

• The tax increase will reduce the legally regulated license market’s share of the gambling market by 1.2%-2.5%. Corresponding losses for the regulated gambling market will be taken over by the unregulated gambling market.
• Measured in number of individuals, this means that 2,881 to 6,085 individuals will switch to unlicensed alternatives.
• As a direct result of the tax increase on gambling, 591 to 1,247 people will develop gambling problems. This is a result of the loss of licensed gambling to unlicensed gambling. Unlicensed gambling lacks statutory consumer protection.
• The Ministry of Finance calculates the expected increased tax revenue at SEK 539 million (€47.1 million) annually. Copenhagen Economics calculates that the increased tax revenue will be significantly lower: SEK 214-399 million (€19-€35 million).

If these predictions and Copenhagen Economics' calculations are accurate, Spelinspektionen is artificially creating more than 1000 new problem gamblers and driving down market channelisation by 2.5% in order to scrape together as little as €19 million per year, or €1.58 million per month, in tax-based income.

Hoffstedt continued his appeal to the Swedish government, asking that they take these statistics to heart and revamp the country’s online gambling framework rather than pursuing what is proving to be a dangerous route for the people of Sweden and an increasingly lucrative one for unlicensed operators.