Licensing system for online gambling

The Swedish government has given a special investigator the task to submit a proposal for a new gambling regulation based on a licensing system, which will contain, among other things, a full system of taxes and levies.

Against this background, Copenhagen Economics conducted a report in order to provide insights into which tax-rate would yield high channeling rates, meaning that a large proportion of Swedish online gambling is done within the forthcoming licensing system, as well as high tax revenues.

The main conclusions of our study are:

• Tax-rates of 15-20 can achieve both high channelization as well as high tax-revenues
• Tax-rates above 20 percent are likely to lead both to lower channelization and tax-revenues, as gambling operators within the system become less competi-tive and consumers choose operators outside the system instead
• Tax-rates below 15 percent may lead to incremental increases in an already high level of channelization, but at the expense of substantially lower tax-revenues