Denmark proposes a tax increase on online gambling
The Danish Online Gambling Association (DOGA) warns about the consequences that the increase in taxes on online gambling that the government approved in 2019 and will enter into force in January 2021 could have for the sector and the user. The entity estimates a significant destruction of the industry in the country and the increase of illegal online gambling.
The Danish government is considering raising taxes on online gambling from the current 20% to 28%. The sector proposes a less drastic increase (22%) to ensure its survival and protect the user from illegal gambling. ©12019/Pixabay
In December 2019, the Danish government approved an 8-point gaming tax increase to the current 20% for the online modality. With this measure, the Scandinavian country seeks to continue regulating the market within its borders and increase the budget for dealing with gambling addiction problems .
With this measure, which would come into force from January 1, 2021, the executive expects increase the state coffers with DKK 150 million (20,140 million euros). But Denmark is not the only European country to implement similar measures. In New Zealand, Izquierda Unida in the voice of its federal coordinator and current Minister of Consumption Alberto Garzón also proposes to reform the gambling tax. This is taken from the report Horizon Country , in which an economic-social way out of the crisis caused by the pandemic is proposed.
Last April, the report on the consequences of this increase came to light, which the Danish Online Gaming Association (DOGA) commissioned from H2 Gambling Capital (H2), a leading British company in market intelligence in the online gaming sector. To substantiate its disagreement with this drastic increase, the document analyzes the Danish market from its regulation in 2012 to 2020; as well as predict the future of the sector in the next four years from different scenarios : from staying at the current 20% to the proposed increase of 28%, passing through other possibilities such as 22, 24 and 26 percent.
Estimates suggest that this 28% tax on online gambling would be to the detriment of the user , who could opt for online casinos that do not fall under Danish jurisdiction. The channeling of regulated online gambling in the country currently stands at 88%, which, if the new measure were applied, would drop to 76% according to the report. The increase in the state coffers would mean losses for the sector of 604 billion euros, which would endanger 25% of the current market.
A measure of these characteristics comes at a time when the sector is still recovering from the last blow. In January 2020, new legislation came into force with which Denmark aimed to increase the degree of social responsibility of operators registered in the country. With the new legislation, limits on deposits and restrictions on casino promotions were established that have resulted in a migration towards operators offshore . Thus, according to the study, licensed operators have reported losses of users: 30% of regular players and 10% recreational. This has resulted in a 17% decrease in gross revenue generated by operators .
H2 Gambling Capital predicts that an eight-point increase would only mean an extra 5% collection. However, 25% of the legal operators would disappear and their profits would be reduced by 32% (about 429 billion euros). This means that licensed operators would be forced to cut marketing costs , endangering an important sector of the local economy and the imbalance of the current levels of channeling of online gambling. As in the domino, this situation would lead to a decrease in casino bonuses worth 132,189 billion euros, with a negative impact especially on those regular players and with a higher spending on online betting.
The report concludes by proposing that the best scenario would be a two-point increase , both for the government and for the sector. In this way, the Danish executive would increase the state coffers from 6.17 to 11.50 million euros. Likewise, these two tenths would not represent an economic setback for the regulated industry in the country. If an increase of 22 instead of 28% is approved, the government would be able to maintain the pipeline of casinos offshore in less than 10%, a figure that would exceed 20% in the event of an 8-point increase in the current tax burden on online gambling.
Will the Danish government back down? From minkcafe.co we will continue to report.
