Sweden’s gambling sector is currently engulfed in a heated debate concerning the application of taxes, with a clear division forming between online gambling operators and the horse racing giant, ATG. This contentious issue gained momentum after the UK significantly increased its tax rate on online gambling, a move that has been met with widespread criticism from gambling companies across Europe.
ATG has put forth the argument that online casinos should shoulder higher tax burdens, whereas horse betting should benefit from reduced rates due to its contribution to employment, cultural heritage, and the maintenance of race tracks. Meanwhile, the online operators, backed by the trade group BOS, staunchly oppose this perspective, cautioning that escalating the costs for casinos could drive players towards unlicensed platforms, thereby stripping away vital consumer protections.
In a formal correspondence to the government dated December 15, representatives of Sweden’s licensed operators, under the aegis of BOS, have articulated their opposition to ATG’s proposal for a UK-style differentiated tax model. They urged the government to maintain the current 22% tax on gross gaming revenue uniformly across all gambling products. ATG’s suggestion to reduce the tax on horse betting to 18% while increasing taxes on online casino and other gambling activities to 26% was firmly rejected. They highlighted that ATG had already enjoyed a preferential tax rate of 35% before the 2019 reforms.
The argument put forth by the companies emphasizes the necessity of prioritizing consumer protection. They referred to Sweden’s channelisation rate—the proportion of gambling occurring within the regulated market—currently standing at approximately 85%, which falls short of the government’s target of 90%. They noted that betting channels operate with robust compliance, boasting rates between 92% and 96%, whereas online casinos lag with compliance levels ranging from 72% to 82%. Horse betting, on the other hand, maintains an impressive channelisation rate of around 98% to 99%, indicating that it already effectively retains players within licensed frameworks.
The letter warned that increasing taxes on casino play could result in more gambling activity being pushed offshore, where essential safeguards are non-existent. “The primary objective of gambling policy is consumer protection. To then lower the tax within the gambling segment, horse betting, which has no problem with channelisation, at the expense of the gambling segment that has major channelisation problems, online casino, would be reckless,” the operators asserted.
Conversely, ATG’s CEO, Hasse Lord Skarplöth, remains steadfast in his position that Sweden should adopt a risk-based approach to gambling taxes akin to the UK model. He underscored the UK’s decision to raise taxes on online casinos and betting from 21% to 40%, justifying it on the grounds of “higher harm,” while maintaining horse racing taxes at an effective 25% through a combination of a 15% rate and a 10% statutory levy.
Skarplöth argued that this represents “tax policy based on risk assessment and social benefit,” whereby fast-paced, high-risk online gambling is taxed more heavily, while horse racing is considered part of a broader ecosystem that warrants lighter taxation. He maintained that Sweden faces a similar decision following its tax rate hike in July 2024. According to him, online casinos present greater harmful effects, whereas horse betting poses a “significantly lower risk profile” and bolsters jobs, race tracks, breeders, and related events.
ATG has reported that the recent tax increase has reduced its annual contribution to trotting and galloping by SEK 200 million. Skarplöth attributed this shortfall to inflation and rising operational costs across the country. “If you tax the horse industry, you bite yourself in the tail,” he remarked.
ATG’s proposal is simple: restore the tax on horse betting to 18% and raise the tax on online casinos to 26%. However, this proposal faces significant opposition from other gambling operators, who argue that it would jeopardize consumer protection and destabilize the regulated market.
As the debate rages on, industry observers are divided on the potential outcomes. Some argue that differentiated tax rates could indeed reflect the varying levels of risk and social impact associated with different forms of gambling. Others warn that such a move could undermine the stability and fairness of the gambling market, ultimately harming consumers and legitimate operators alike.
The discussion around Sweden’s gambling tax policy is emblematic of broader challenges faced by the industry globally, as regulators seek to balance economic interests with the need to protect consumers and maintain the integrity of the gambling market. As the Swedish government considers its options, the stakes remain high for both proponents and opponents of the proposed tax changes.
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