Poker Legislation

Swedish Poker Regulations - An Example to Follow?

While Sweden takes it seriously to enforce regulations and tax players who play in online rooms outside the European Economic Area (EEA), they do not cut off their citizens form the global circulation of online poker.
author-picture Admin - 2012. November 23.

The Swedish government introduced its monopoly on gambling in 1934 and, since 1997, Svenska Spel holds those rights. Svenska Spel made online poker available for the citizens of the country in 2005 and they maintain to be the single operator on the market. There are other nominally Swedish operators, like Betsson, but these are not registered in the Scandinavian country.

Monopoly in Sweden does not necessarily mean exclusivity, however, in as much as Svenska Spel is the only operator registered in the country that may provide services within the borders but foreign operators are not excluded, complying with EU regulations. The Swedish government does not grant licences but allows the presence of foreign operators, limiting only their advertisement platforms, namely to non-Swedish providers. The national television, radio and press may only advertise Svenska Spel, while foreign online gambling providers can advertise online and in foreign offline media channels, like cable television.

Revenues from poker is tax free, as long as the organiser of the game is registered within the EEA. Income from games organised by an operator outside the EEA is the subject to a tax of 30%. This stands for both online and live poker: a Swede winning money in a live tournament within the EEA need not to pay anything while outside the EEA their winnings are taxed.

Sweden

In the case of online poker, this is not as straightforward as it may sound: for instance, Full Tilt Poker is registered in Ireland, within the EEA, while its servers are on Alderney, outside the Area. Generally, however, not in a universally accepted manner, it is the location of the servers that determine if a room is or is not tax-free. This means that earnings at FTP, for example, are currently due to be taxed.

This is one of the reasons PokerStars launched its .eu domain in May, 2012: servers of this site are operated in Malta, part of the EEA. The PokerStars.com servers, however, ore located on the Isle of Man, therefore winnings from this site are subject to taxation in Sweden. Full Tilt Poker also plans the launch of an .eu domain.

The majority of smaller rooms and networks are operating tax-free under Swedish regulations, including 888 Poker, Ongame and PartyPoker. Of course, winnings from Svenska Spel fall into this category as well.

Apparently, Sweden is to popularise Svenska Spel, while they give relative freedom for other rooms on the market and do not cut off her players from the global circulation of the game. In addition, through Svenska Spel and players playing outside the EEA they generated a respectable income from online poker.

One major flaw of the Swedish system is, though, also related to the taxation. Players are required to pay after their annual winnings and losses per site, not based on hands. This means that an amount lost in one room cannot be deducted from the taxes paid after the winnings in another. For example, if a player wins $100,000 in room A and looses $100,000 in room B, his base winnings for taxation will not be $0 but $100,000. This is largely considered by players unfair.

While the Swedish regulations, in spite of the monopoly system and the aforementioned flaw, can be considered liberal as opposed to other countries. They also invest considerable resources into enforcing them. According to the latest news, the Swedish tax office Skatteverket launched an investigation campaign on 20 November, reaching out to professional players in a letter to have them account for their online and live poker incomes from the period of 2008 to 2011.

While the Swedish model is not perfect, the government continuously monitors it in practice to develop it further and make it more effective and even in its current form it is one of the most open systems and the most compliant with EU regulations. Professionals predict the fall of the closed markets, like those of Spain and Italy, where revenues and player numbers drop constantly. The Swedish regulations, however, can become a general example to be followed, while it is clearly in need of further refinement.

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