Sweden’s online gambling association, Branschföreningen för Onlinespel (BOS) is not happy with the government’s plan to increase the gambling tax. According to its general secretary, Gustaf Hoffstedt, this move would be a huge Christmas present to the black market.

For reference, Sweden just proposed to raise its gambling tax from 18% to 22%. The new tax rate would be applied from July 1, 2024, but is already attracting the industry’s hostility. BOS, which has previously critiqued the government of not understanding the market and its vulnerabilities, expressed its disagreement with the measure.

According to BOS, the new measure will undermine the legal market at a very bad time as more and more players are now playing with black market companies.

Spelinspektionen, Sweden’s gambling regulator, previously said that it doesn’t have firm objections to the measure but highlighted possible repercussions. BOS, on the other hand, scrutinized the Ministry of Finance’s decision, saying that it was counterproductive.

The Ministry of Finance Is Giving a “Christmas Gift” to the Black Market

In an official press release, Hoffstedt said that his team rejected the proposal and slammed the Ministry’s decision.

The government can hardly time its proposal to raise the gambling tax to a worse time. We are in a situation where fewer and fewer players choose to play on the safe licensed market, and more and more on the unregulated, unlicensed gambling market.

Gustaf Hoffstedt, general secretary, BOS

Hoffstedt added that the industry would only benefit the unlicensed market and further undermine the legal operators. He concluded that the proposal was “the best Christmas present” the Ministry of Finance could have given to the black market.

That the government proposes to raise the tax for licensed gambling is the best Christmas present you can think of – to the unregulated and unlicensed gambling market.

Gustaf Hoffstedt, general secretary, BOS

Consumers Misunderstand the Market Too

In other news, BOS recently released a new study, highlighting the public’s misconceptions about the industry. Its findings showed that many players believe problem gambling to be a much more prevalent issue than it actually is. In addition, consumers across the country believe that operators keep most of the players’ money, which is also incorrect.

Hoffstedt highlighted the importance of correcting these misconceptions since they are the reason the public has been okay with tougher gambling regulations. This, he says, is hurting the industry and threatening its health.

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The Swedish Trade Association for Online Gambling (BOS) has addressed the recently proposed changes to the Money Laundering Act. Put forward by the Ministry of Finance, the memorandum with proposals seeks to increase the penalty fee for certain violations.

The BOS, which represents around 20 licensed gambling companies in Sweden, expressed its delight to have been invited to comment on the matter. The body said that it sees the logic in increasing fines for AML violations to be similar to the fees for violations of the Gambling Act.

Gustaf Hoffstedt, BOS’ secretary general, confirmed that AML violations are among the most serious violations, which is why there is no reason to downgrade them. It concluded that would approve the Ministry’s proposal if the following points are taken into mind and included as necessary additions:

First of all, the BOS said that the Spelinspektionen’s sanction decision must be of high quality. Hoffstedt noted that courts could potentially cause trouble if they opt to change the authority’s decision to a large extent. He proposed initiating supervisory cases as a possible solution.

Secondly, Hoffstedt suggested that the level of sanction fees should be on par with the gambling industry’s “relatively marginal impact” on the financial system’s stability and credibility compared to financial actors.

Thirdly, the BOS proposed to base fines for AML breaches on the gross gaming revenue of gambling companies. Hoffstedt acknowledged that this is already outlined in the Ministry of Finance’s memorandum, which he praised on behalf of the gambling industry.

Hoffstedt: Fines Should Be Based on GGR

Hoffstedt commented on the difference between charging companies based on their total turnover and charging companies based on their GGR:

Typically, the gambling surplus makes up 5-10 percent of the total turnover, while profits to gambling consumers thus account for 90-95 percent. It falls on its own unreasonableness that penalty fees to be paid by the gambling company are based on money that does not belong to the gambling company, but that belongs to the gambling consumers.

Gustaf Hoffstedt, secretary general, BOS

The secretary general concluded that previously, the sanctions system had “lacked any form of proportionality.” However, the changes will set fairer standards that will nevertheless send clear signals to companies that violate the rules.

Speaking of turnover, the Spelinspektionen just published information about the performance of licensed operators in Q2 2023. The authority noted that turnover remains more or less stable, recording only a small decrease.

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The past few years have seen Sweden’s gambling industry undergo significant changes, motivated by the government’s commitment to enduring player protection and responsible gambling practices. Despite gambling revenue leveling out, operators in the country can still bring in substantial profits and contribute to a sustainable and socially responsible gambling landscape.

The Industry Has Reached an Equilibrium

In the first quarter of 2023, Swedish-regulated gaming operators recorded revenues of SEK6.6 billion ($609.3 million). These statistics are available via Spelinspektionen, the country’s gaming authority. The regulator uses this data to gauge the trends in the industry, contributing to its informed decisions on potential policy changes.

Q1 revenue was nearly identical to 2022’s results for the same period, though the overall figure fell compared to the last three months. While state lottery and slot games experienced limited growth, reaching SEK 1.4 billion ($129 million), it was not enough to offset losses in other verticals. 

Commercial online gambling and betting, which accounts for most industry revenue, dropped 1% compared to Q1 2022, settling at SEK 4.2 billion ($387.2 million). The third significant sector of games for public purposes also slumped 6%, generating SEK 812 million ($74.8 million), while community games and bingo recorded a modest SEK 38 million ($3.5 million).

Strict Regulations Ensure Sustainable Business Practices

While all operators hope for endless growth, market realities dictate that revenues eventually stabilize. The gradual stabilization of Sweden’s gaming industry reflects the market’s long-term sustainability and is a testament to the regulator’s successful efforts. The country remains an attractive jurisdiction for operators and suppliers, fostering a fair and transparent environment.

Sweden’s approach to gambling regulation involves close collaboration with licensed companies within the industry, enabling a swift response to emerging challenges and fostering a culture of continuous improvement. Spelinspektionen continuously implements new player protection measures, prioritizing their well-being above all else. While such an approach can impact operators’ short-term profits, it fosters a sustainable, people-focused market.

By prioritizing the well-being of its citizens over financial gains and rigorously enforcing its regulations, Sweden sets an example for other jurisdictions. Gambling revenue leveling out means the market has reached an equilibrium as operators focus on attracting players with quality offerings and superior experiences rather than resorting to potentially harmful practices.

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