“This Is a Failure, and It Must Stop”: Swedish Gamble Tax

LeoVegas CEO Warns against the Consequences of the Rise in Levy

Gustaf Hagman, CEO and Co-Founder of LeoVegas Group, recently highlighted concerns over the upcoming Swedish gambling tax increase. He referenced a report by Copenhagen Economics, that predicts negative outcomes from this policy change.

Starting July 1, 2024, Sweden’s gambling tax will rise from 18% to 22% on Gross Gaming Revenue (GGR). GGR is which is the total bets minus payouts. This tax, first introduced on January 1, 2019, affects operators in Sweden’s competitive gaming market. This includes Casino Games, Online Bingo, and Slots. Meanwhile, the State retains its monopoly on lotteries.

The Swedish Ministry of Finance projects the tax hike to generate an additional SEK 539 million (₹425.3 crore) in annual revenue, starting in 2025. However, Copenhagen Economics’ analysis suggests that the ministry may have overestimated the revenue by SEK 214–399 million (₹168.8–₹314.8 crore). And underestimated the potential negative public health impacts.

The Tax Hike Will Lead to a Surge in Unlicensed and Problem Gambling

At a seminar organized by the Swedish Trade Association of Online Gambling (BOS), LeoVegas CEO Gustaf Hagman presented the concerning findings from the Copenhagen Economics report on Sweden’s planned gambling tax hike. A tax increase from 18% to 22% on GGR may seem modest by Indian standards. But the report outlines potentially harmful consequences.

“Contrary to the Swedish government’s intentions, research shows that the tax increase will lead to continued lower channelization, an increase in the number of people suffering from gambling addiction, and an influx of players to unlicensed operators,” LeoVegas CEO Gustaf Hagman told the seminar attendees.

“I urge the government and regulators to take swift action against the growing unlicensed market, which is avoiding Swedish tax while aggressively and unethically targeting Swedish players with gambling problems. This is a failure, and it must stop,” Hagman stressed.

Misinterpretation sees legitimat actors lose market share to illegal ones

The Copenhagen Economics report argues that Swedish government officials misinterpreted research on the price elasticity of gambling demand. This misstep could cause licensed operators to lose market share to illegal platforms. Between 1.2% and 2.5% of Sweden’s gambling activity may shift to these illegal operators. Operators who offer no consumer protections or responsible gambling tools.

This shift is expected to result in direct tax losses of SEK 40 to 203 million (₹31.6 crore to ₹160.2 crore). More alarmingly, between 591 and 1,247 individuals in Sweden could develop gambling problems, adding further tax losses of SEK 19 to 41 million ($1.79 to $3.85 million, ₹14.99 crore to ₹32.35 crore). These findings highlight the unintended consequences of the tax increase, with the potential to harm public health and reduce overall tax revenue.

“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,” BOS Secretary General Gustaf Hoffstedt stated.

“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,” Hoffstedt urged.

LeoVegas Is Among the Frontrunners in Responsible Gambling Science

Swedish LeoVegas Group stands out among the world’s iGaming operators. Not only due to its responsible gambling practices. But also for being among the pacesetters in global responsible gambling science and research.

At the end of 2022, LeoVegas established an industry-academia partnership with the renowned Medical University in Stockholm, Karolinska Institutet. Aiming to expand knowledge on problem gambling and improve prevention.

“Problem gambling is a public health issue. Joining forces with an esteemed academic establishment like Karolinska Institutet will enable us to further understand the underlying issues that lead to problem gambling, thereby giving us the best chance at intervening and preventing it in an effective way,” a statement by LeoVegas explained.

Unfortunately, the Swedish operator left the Indian iGaming space a few months before announcing the collaboration. It migrated its users to Jackpot Guru and Casibee following the acquisition by MGM Resorts.

LeoVegas was acquired by US-based gambling giant MGM Resorts International in a $604 million (₹476.6 crore) cash deal in 2022. MGM Resorts, currently ranks sixth among the world’s biggest gambling companies. With a market capitalization of $12.76 billion (₹10,068 crore).

BOS, represents 18 gambling companies and game developers that operate on the Swedish market and target Swedish citizens. It includes 888 William Hill, bet365, and LeoVegas among its Board members. Present are also Flutter, Entain, and Evolution among its ordinary members.

All BOS members must have a valid Swedish gambling license to guarantee high quality and responsibility.