HIGH TAXATION = FEWER LICENSED OPERATORS IN SWEDEN
Report commissioned by online gambling trade body confirms the obvious.
The Association of Online Gambling Operators, a trade association representing the interests of European Union operators active in Sweden, has commissioned an independent research company to confirm the obvious to Swedish politicians – set the tax rate in a liberalised Swedish market too high and there will be fewer operators interested in licensing, leading to a lower tax harvest at the end of the day.
And, as other EU nations have discovered, over-taxation also results in fewer players giving their business to licensed operators who have had to provide less attractive gaming opportunities due to onerous tax obligations.
Its all part of the activity surrounding the long-awaited liberalisation of the Swedish online gambling market, which politicians, spurred on by the European Commission, hope to achieve sometime late in 2018.
Lawmakers plan to have a draft for public consultation available by March next year and a final draft before parliament in December 2017, leading to implementation late 2018 before the national elections.
The Swedish government also has a special investigator working on how much the taxman can reap from the licensing of private online operators without scaring them away.
The Association commissioned Copenhagen Economics to prove its point, and the report has suggested that lawmakers keep the tax rate somewhere between 15 and 20 percent for optimum tax returns, bearing in mind that there is a need to present a market sufficiently attractive for operators, and helping them channel players to their sites.
The relationship between numbers of players and operator tax rates has been part of the calculations at Copenhagen Economics, which concluded that the optimum player channelling rate is achieved when operators are taxed at 15 percent of GGR, ensuring that unlicensed rivals are kept at bay.
Clearly tax rates below that would enable operators to offer even stronger incentives to players, but that would not satisfy the taxmans appetite.
The study found that when a tax rate of 20 percent or more is applied, player channelling commensurately declines and operators are discouraged from taking out Swedish licensing, resulting in lower tax revenues at the end of the day.
The experience of Association members has also informed the report; few have chosen to licence in EU markets where the tax rate exceeds 20 percent of GGR, and there are operator licensing statistics from the UK (15 percent), Italy (20 percent), France (45 percent), Spain (25 percent) and Denmark (20 percent) to prove it.
The nitty gritty of the CE report estimates that a 20 percent tax rate on GGR will increase operators’ average tax cost by SEK 33 million ($3.7 million) and constitutes a significant hit on profit margins…and at 25 percent it would be difficult for an operator to make any profit at all unless they passed the tax costs to the player by reducing their offer.