Sweden iGambling Tax Revenues Nearly Doubled Estimates

Wednesday, August 7th, 2019 | Written by James Guill
Sweden iGambling Tax Revenues Nearly Doubled Estimates

There’s one nearly universal truth about regulated online casino gambling – it brings in tax revenue, and a lot of it. Sweden introduced sweeping changes earlier in 2019 that resulted in 86 licenses being issued to several online casino companies.

When the changes were made, Spelinspektionen predicted that approximately $100 million in tax revenue would be collected during the first half of the year. However, the final tally was much more than anyone expected.

Sweden Earns $190M in Tax Revenue Through June 30

Last week, the Skatteverket Tax Agency (STA) released figures for the first half of 2019. For the first half of 2019, the reported tax revenue was SEK1.84bn, or approximately USD $190.7 million. This almost doubled the initial prediction by state regulator Spelinspektionen.

This revelation was a bit of a surprise to some that have claimed that the new regulations and fees make it tough to compete. State-run Svenska Spel was among those critics to claim that they are struggling under regulations.

Part of the debate centers on the licensing fees that must be paid by online casino operators. They must pay a SEK67m (USD $6.94m) fee for the license and then pay another SEK57m (USD $5.9m) in “supervision fees.”

The supervision fees are the biggest point of contention. Many operators are claiming that Spelinspektionen was unprepared for the influx of licensing requests, and this resulted in the excessive fees.

Operators Flocked to Sweden Despite Fees

Despite what some are calling excessive fees, this did not stop 86 companies from applying for licenses with Spelinspektionen. This helped to produce the massive tax influx that the state is enjoying. As Spelinspektonen Head of Communications Anders Sims discussed on Sveriges Radio: “It is not too burdensome for the gaming companies. They have the opportunity to follow the rules and pay taxes and still make a good deal.”

On top of the licensing and supervision fees paid by casinos, they must also pay an 18% tax on gambling revenues. That means that over SEK14bn (USD $1.4bn) has been collected by online casinos in Sweden since it’s launch in 2019. As such, one can see why online casinos are willing to put up with so-called “excessive fees.”

Sweden a Good Case Study for the United States

Online casino gambling in the United States has been somewhat slow since the initial launch in 2013. Since that time, only Pennsylvania and West Virginia have successfully passed online casino gambling legislation. Online sports gambling is rapidly expanding, and we expect other states to soon follow.

One point of contention in some states has been the potential for tax revenue and how fees impact the bottom line for casinos. New Jersey has been a shining example of how online casino gambling can help the general casino economy. With reasonable fees and tax rates, online casino gambling can be put into a position to flourish.

However, as Pennsylvania and Sweden are beginning to prove, even unfavorable terms can work for online casinos. In Pennsylvania, tax rates are astronomical at 34% for table games and 54% for online slots. Despite this fact, multiple casinos have already launched online. Sweden online operators are complaining over excessive fees, yet they are bringing in more than double what regulators are estimating for taxes.

Beneficial for Governments and Economy

At its core, there will always be a market for online casino gambling and smart operators that know what they are doing. In other words, they will still find a way to make a profit despite unfavorable market conditions. For every New Jersey, there will be a Pennsylvania or Swedish market that appears unfavorable but still can produce a solid profit margin.

Needless to say, online casino gambling is profitable for both operators and the government. If other US states could come to this realization, we could see online gambling regulation explode.