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

11 Jun 2024

LeoVegas CEO Warns against the Consequences of the Rise in Levy

Gustaf Hagman, CEO and Co-Founder of LeoVegas Group, recently drew the public’s attention to the “troubling predictions” about the upcoming rise in Swedish gambling tax, contained in a report by Copenhagen Economics, a leading economics analytics & consultancy firm.

The gambling tax in Sweden is set to increase from 18% to 22% on the Gross Gaming Revenue (GGR, total bets minus total payouts) from the 1st of July, 2024. The tax was introduced on the 1st of January, 2019, for operators in the licensed competitive gaming market, including Casino Games, Online Bingo, and Slots, while the State preserved its monopoly on Lottery.

The Swedish Ministry of Finance expects the upcoming hike to bring a net increase in tax revenues of SEK 539 million ($50.7 million, ₹425,3 crore) per year starting in 2025.

However, the impact analysis report by Copenhagen Economics suggests that the public servants in the Swedish Finance Ministry have got their calculations wrong by SEK 214 – 399 million ($20.1 – $37.5 million, ₹168.8 – ₹314.8 crore) and have largely underestimated the negative consequences on public health.

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

The alarming findings of the Copenhagen Economics report concerning a relatively small hike in gaming tax for Indian standards were presented at a seminar organized by the Swedish Trade Association of Online Gambling (BOS, Branschföreningen för Onlinespel).

“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.

According to the report, Government clerks misread a study on the price elasticity of gambling demand and subsequently failed to consider the loss of market share of licensed operators in favor of unlicensed ones resulting from the rise in tax.

The Copenhagen Economics report predicts that between 1.2% and 2.5% of gambling activities in Sweden will shift from legal to illegal platforms that lack consumer protection and responsible gambling tools.

The lowered channelization to legal and taxable venues will lead to direct tax losses between SEK 40 and 203 million ($3.76 and $19.1 million, ₹31.6 crore and ₹160.2 crore).

Still, more importantly, it means that between 591 and 1247 individuals out of Sweden’s population of 10.7 million will develop gambling problems, resulting in an additional negative tax effect of SEK 19 to 41 million ($1.79 to $3.85 million, ₹14.99 crore to ₹32.35 crore).

BOS Secretary General Gustaf Hoffstedt. Image: Bos.nu.

“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 for not only focusing its business on 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 aimed to expand knowledge on problem gambling and improve prevention.

“Problem gambling is a public health issue, and 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 with Karolinska Institutet and 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, which employs the GameSense responsible gambling program throughout its business, currently ranks sixth among the world’s biggest gambling companies, with a market capitalization of $12.76 billion (₹10,068 crore).

The Swedish Trade Association of Online Gambling – BOS, represents 18 gambling companies and game developers that operate on the Swedish market and target Swedish citizens, including 888 William Hill, bet365, and LeoVegas among its Board members, as well as Flutter, Entain, and Evolution among its ordinary members.

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