Denmark Set To Raise Online Gaming Tax To 28 Percent In 2020

The Danish government recently unveiled its 2020 Finance Act which is set to be enacted in 2021. One aspect of this plan is to increase the revenue gained from online gambling by raising online gaming taxes from the current rate of 20 percent which has been the tax rate since online gambling was legalised in Denmark in 2012.

Denmark is now poised to impose a 28 percent online gaming tax from 2020 and expects this change will generate DKK 150 million ($22.3 million) in additional tax revenue. The increased tax rate facing online gambling operators pales in comparison to the taxes levied on brick and mortar operations in Denmark.

Land based casinos have to pay a 45 percent tax while gaming machines located in clubs and restaurants pay a 41 percent tax rate. Both casinos and non-casino establishments also have to pay additional tax rate if their revenues surpass a specified amount. 

Reason For Tax Increase

There are different opinions floating around as to why the Danish government decided to increase the tax rate on the online gaming industry. 

Many in the gambling industry believe it is a way of curtailing the growth of online gaming in a country with a serious gambling problem. This is transparent from the fact that there is a long roster of Danes enrolling themselves in a self-exclusion registry for gambling. More than 20,000 Danes have enrolled in the registry, and it is estimated that 66 percent have selected to exclude themselves from gambling in their lifetime.

Increasing the tax burden of Denmark’s online gaming operators also decreases their advertising and marketing budget, which has produced a record-setting number gambling advertisements on TV and radio this year. In July 2019, online gaming operators willingly adopted a code limiting their TV advertisements, and clarifying standards on their marketing strategies.

Denmark’s new tax limits signals that the government finds such initiatives insufficient in addressing its citizens’ needs to be better protected from gambling addiction.

Tax Increase Will Slow iGaming Growth

Industry observers who have praised Denmark in their fluid transition from a gambling monopoly in Danske Spil to the free online gaming market introduced in 2012 worry about the continued health of the Danish market in light of the new taxes.

After a consistent climb, Danish gaming revenues have begun to decline this year; the new taxes may lower revenues even more going forward.