Lost Tax Revenue Due to Changed Gambling Market

A Changing Gaming Market Results in Lost Tax Revenue for the State The Swedish gaming market has undergone significant changes since the deregulation in 2019. The goal was to create a safer and more controlled market with better transparency. Today, the majority of all gambling takes place with licensed Swedish operators. However, some of the turnover remains outside the system, leading to lost tax revenue. The Licensed Gaming Market and Online Gambling The Swedish gaming market is a large and stable sector. In 2024, the total turnover for companies with a Swedish license amounted to SEK 27.8 billion. Most of this consists of online casino and sports betting, i.e., online casino and sports betting games. Last year, this segment generated around SEK 17.8 billion, and in the second quarter of 2025 alone, SEK 4.6 billion. The popularity of this type of gambling is largely due to its accessibility. Since it is digital, via computer or mobile, players can gamble wherever they are and at any time of day. Internationally, the market is enormous, but the domestic offerings are also increasing, with new sites like Flax Casino growing in Sweden. However, measurements by authorities also show that this area has the largest leakage to gambling outside the Swedish licensing system. Many Swedish players are attracted by what is offered there, such as bonuses, a wider selection of games, or the ability to continue playing despite self-exclusion from Swedish gambling. Channeling Rate – The Goal Has Not Yet Been Reached The channeling rate, which measures the proportion of Swedish gambling conducted through licensed operators, is an important indicator of how well the Swedish gambling regulation functions. A high channeling rate means that a significant portion of gambling occurs under state supervision, with requirements for consumer protection, responsible gambling, and taxation. According to the Swedish Gambling Authority (Spelinspektionen), the channeling rate was 85% in 2024. This is a decrease of 1 percentage point compared to the previous year. When the system was introduced in 2019, the target was set at 90%, which has not yet been achieved. There is also a significant difference between various types of gambling. For betting, the channeling rate is as high as 96%, but for online casinos, the figure is much lower, between 72% and 82% depending on the measurement method. Balancing an attractive offering with effective player protection remains, and continues to be, a challenge. This Year’s Tax Increase for Licensed Gambling Companies The tax on gambling companies’ turnover was increased this year from 18% to 22%. The purpose of the increase was to strengthen the state’s tax revenues and create a fairer balance between the gambling industry and other sectors that are taxed more heavily. The government has justified the change by stating that the licensing system is now well established and that companies should be able to bear a slightly higher tax burden. For large gambling operators, the change primarily means reduced margins. However, for smaller companies, it can make it significantly more difficult to remain profitable. If the competitive situation is affected, it could lead to a limited offering on the licensed gambling market. Pressured margins may also pose a risk of some operators reducing their bonuses to cut costs, which in turn could lead more players to seek out foreign sites, where regulations are considerably more relaxed. The State’s Loss of Tax Revenue Due to Unlicensed Gambling When gambling shifts from licensed Swedish sites to foreign sites, the state loses control, which is problematic enough. But it also loses tax revenue. Let’s make a rough estimate based on 2024 figures for the commercial online gambling and betting sector, with a gambling tax of 22%. Since the channeling rate varies between the two types of gambling, we will use the figure 85%: - Turnover for licensed gambling: SEK 17.8 billion - Channeling rate: 85% - Estimated turnover for unlicensed gambling: SEK 3.1 billion - Lost tax revenue: approximately SEK 690 million These are funds that, if they remained in the country, could have contributed to societal benefits. It also affects the resources available for addressing social consequences of gambling problems. When unlicensed operators gain market share, the state not only loses tax income but also misses opportunities to protect consumers and enforce responsible gambling standards. A Constant Balancing Act The Swedish gambling market is in a delicate position. The government is working hard to find a balance between revenue opportunities, consumer protection, and healthy competition. The recent tax increase provides higher income for the treasury but also increases pressure on licensed operators. If the costs for gambling companies become too high, it risks driving both them and Swedish players towards unlicensed alternatives, which undermines the very purpose of the licensing system. At the same time, regulations must be sufficiently strict to protect consumers from harmful gambling and unscrupulous operators. Online commercial gambling is, in other words, both the most profitable and the most challenging part of the market from a control perspective. The main challenge lies in maintaining an attractive, regulated market that also provides the necessary revenue for the state. The Swedish model is based on this balance – between free competition and a high level of responsibility for player safety.