Increasing Sweden’s gambling tax will be a counterproductive failure, warns LeoVegas CEO

An increase in the tax Sweden levies on online gambling activities, due to come into effect on 1st July 2024, will make unlicensed iGaming platforms more attractive to players, according to Gustaf Hagman, Co-Founder and CEO of LeoVegas.

LeoVegas is a major Malta-based iGaming firm that in 2022 was bought by the US firm MGM Resorts in a landmark $600 million deal.

Sweden is one of Europe’s top iGaming markets, and many of the top firms operating out of Malta are active in Sweden, making the tax increase a matter of considerable concern to the Maltese online gambling industry.

In a social media post, Mr Hagman referred to “troubling predictions” by Copenhagen Economics, a, economic consultancy firm.

“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 operator,” he said.

Commissioned by the Swedish Trade Association for Online Gambling (BOS), the report analyses the upcoming gambling tax increase from 18 per cent to 22 per cent.

It predicts that the tax hike will reduce the legal market’s share by 1.2 to 2.5 percentage points, shifting 2,881 to 6,085 individuals to unlicensed alternatives.

This shift could lead to 591 to 1,247 new gambling problems due to the lack of consumer protection in the unregulated market.

It further asserts that the Swedish Ministry of Finance’s expected tax revenue increase of SEK 539 million (€46.7 million) is likely overstated, estimating instead a total increase of SEK 214-399 million (€18.6-34.6 million).

“At the price of a modest net addition to the treasury, the tax increase creates around 1,000 new cases of people with gambling problems,” said BOS Secretary General Gustaf Hoffstedt.

“Thus, gambling problems that would never have occurred without the increase in the gambling tax. 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.”

On his part, Mr Hagman urge the Swedish 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.”