Insights From Study On Online Gambling And Taxes
Added: Nov. 28, 2016
As you probably know, in the locations around the world in which legal online casinos and online gambling sites operate there is always some sort of tax or fee structure imposed on these gambling operators. Yet until recently there has been no real attempt to discern the optimal tax rate for online casino action.
Before taking a look at a relatively new study conducted in Sweden that did examine this very issue, do understand that any such attempt to learn anything at all with respect to an optimal rate must understandably be based on one or more premises about the purpose of such a tax. For example, is the online gambling tax put in place to cover the cost of regulating the legal gambling sites or is to influence online casino players behavior or is this tax in place for another reason.
With that in mind, following is what you will want to know about this study conducted by none other than the consultancy firm Copenhagen Economics. For the record, understand the Copenhagen Economics is a leading economic consulting firm in the Nordic region. So what was in the most recent report by Copenhagen Economics?
Start with the suggested tax rate. According to these economic prognosticators, the optimal tax rate should be set somewhere within the 15% to 20% range. Note that this tax rate is applied to the online gambling site operator based on gross gaming revenues. It is important to understand the Copenhagen Economics was handed the task of conducting detailed analysis of online gambling taxes and their effect on state revenues as well as the proportion of those taxes that could be traced back to the regulated market.
Pay attention to the fact that the real purpose of this commissioned study was to determine the optimum tax rate for generating revenue. In other words, nothing about casino player protections, regulatory costs coverage or any other such aim. Instead the stated purpose of this study was clearly to optimize state revenue.
At the same time, it is important to note another section in the report by Copenhagen Economics that the suggested tax rate mentioned above will maximize the revenue to the state. Yet that being said, it will not in fact bring in the maximum amount of online casino players. Keep in mind that player behavior changes as with higher costs of play.
In other words, suggested tax rates aside, the ultimate goal of the majority of governments with legal online casino action is to ensure that the majority of online casino players enjoy their gambling at legal sites versus the numerous offshore unlicensed and untaxed casino operators.
Bottom line: this recent study is a step in the right direction but there quite obviously is more work to be done.