Introduction

Today, a governmental committee published its proposal on a new set of gambling regulations in Sweden based on a licensing system in which all operators on the Swedish market are to have an appropriate license. The proposal includes a new Gambling Act that transfers the national monopoly into two separate sectors, a competitive, open market sector and a non-competitive sector. The non-competitive sector will include landbased casinos in designated premises, token gaming machines, lottery and scratch cards and landbased bingo, while the open market will primarily include online gaming, sports betting and horse betting. The Act is intended to open the market to competition and competitive neutrality and establish a system of sanctions both for controlling the activities of licensees and for prosecuting those outside the licensing system, but that are targeting the Swedish market.

The committee has suggested that the proposal should be effective as per 1 January 2019.

Highlights of the proposal

Licensing

In essence, the proposal means that those wishing to provide or arrange gambling in Sweden are to have a license. Also those possessing or manufacturing certain gambling equipment are to have a license, as are those manufacturing, providing, installing or modifying software for games in connection with online gambling. In addition, heavy penalties are proposed for providing gambling that targets the Swedish market without being licensed. A ban on payment transfer is introduced against those outside the licensing system but which are still targeting Swedish customers. It is proposed that such payment transfer are being criminalized. It is also proposed that internet service providers, at the request of the regulatory authorities, are obliged to display warning messages when visitors attempts to play on illegal sites.
 

Taxes and fees

The committee proposes that a special gaming tax is introduced on gambling in the competitive sector with a tax rate of 18%. The gambling provider is liable to pay this tax and the tax is to be calculated monthly on net gambling revenue, i.e. the profits after paid winnings. For this purpose, a new Gambling Tax Act will be introduced. The committee also proposes that players should be liable for tax on winnings from gambling companies that allow participation in gambling in Sweden without a license, where this is required.

The committee further proposes that in principle all gambling companies are to pay a license and supervision fee. The license will be a valid for a certain period. The fees are based on the companies’ turnover and the number games involved. The license fees in the competitive sector very from SEK 60,000 to SEK 700,000 and the annual supervision fees in the same sector are proposed to be between SEK 30,000 and SEK 1 million.

KPMG's comments

One of the major drivers for the proposal is that the Swedish government would now like to increase its control and taxation of this sector. The proposal as such is designed to serve as a framework and detailed rules will have to be supplemented. The proposal also note the complexity of introducing a licensing system and reckons that this framework likely will have to be amended or adjusted, also after the relevant Act’s has entered into force.
 

The proposal aims for a significant move of operators to the license system and the 18% taxation on gambling (compared to the 22% statutory corporate tax rate) should in our view be seen as an attempt from the committee to attract providers to the system. The committee has based its analysis on the Danish (20%) and the UK (15%) taxation of the licensed gambling sector. An interesting note is that the tax is designed as a duty instead of being incorporated into the ordinary corporate taxation.

As a next step in the legislative process, the proposal will likely be circulated for formal consultation. Other parties than appointed consultation bodies may provide its views on the proposal.

Please contact us for further information.

Mattias Bergman 
Head of Legal Services
+46 70 939 66 64
mattias.bergman@kpmg.se

Josefin Gustavsson
Legal Services
+46 70 914 43 87
josefin.gustavsson@kpmg.se