By Euro Weekly News Media • 25 September 2020 • 13:17
Over the last few decades the online gambling industry has grown into one of the biggest businesses in the world, with the European sector leading the way.
Europe has always had a fairly relaxed attitude to gambling, with most of the western countries embracing the pastime. Land-based casinos have been a common feature in major cities all over the continent, but they have since been overshadowed by the dominance of their online counterparts.
Online casinos are easy for players to access, offer a wider variety of games because they don’t have to worry about space, and are available at any hour of the day. Improvements in video game technology mean better graphics and even interactive experiences, making online casinos a top-quality alternative.
One of the reasons Europe has been so quick to embrace the online gambling industry, is that they have levied taxes on the companies that run them. Unlike countries like Japan where the player’s winnings are taxed, gambling income in most of Europe is tax free, with the taxes coming from the casinos instead.
This encourages more players to participate, knowing that they will walk away with 100% of their earnings, which is beneficial for the casinos, and in return, the governments who are collecting their cut. Taxes from the gambling industry go into public funds, to be paid towards healthcare, education, the maintenance of public spaces, and facilities like roads and parks.
Different countries charge different tax rates, which can either encourage or put off online casinos from launching there. Greece has one of the highest tax rates at 35%. They also require operators to possess a licence, but the government grants very few. As a result, the online gambling market in Greece is rather small.
However, many companies have expressed a desire to invest in what they see as an untapped market, but the Greek government remains unmoved. Given the financial issues the country has had over the past decade, it might be time for them to consider opening up what could prove to be a very lucrative market.
By contrast, one of the best tax rates in Europe is available for businesses in the United Kingdom. The UK charges only 21% on a point of consumption basis, meaning that online casino operators don’t have to be based in the UK to pay it. The UK also requires a licence to operate, however they are available to anyone who meets the criteria put in place to promote responsible gambling. As a result, the UK has seen a huge surge in online gambling providers both onshore and offshore with sites offering a wide range of slot games, roulette and blackjack to attract punters such as online slots, roulette and blackjack.
Perhaps it is seeing how well the online gambling market has benefitted these countries that has prompted The Netherlands to finally legalise online gambling in 2021. The country has a thriving land-based casino industry, even though it remains one of the few countries where players must declare their gambling income and could be taxed on it.
The government also charges a higher tax rate for casinos, a whopping 29%. On top of that, online casino operators must contribute 1.5% to the gaming authority – the country’s equivalent of purchasing a licence – as well as setting aside 0.25% to go into the country’s fund for fighting addiction.
Italy holds the second-largest share of the European online gambling market – after the UK – and charges a moderate 22% to the casinos. Their gross gambling revenue is climbing year on year, despite a recent ban on advertising during football matches. Sweden is another major player, and they again follow a system of selling licenses and charging a reasonable amount of tax; this time 18%.
A totally different approach is taken by the Czech Republic, with the government operating a varying system of taxes, depending on how the profits are earned. For example, sports betting operators, whether online or land-based, will need to pay 23%, however, anyone wishing to run slot machines are subject to a massive 35% tax on their income.
The government has also taken extreme measures to prevent people gambling their way into financial hardship, with anyone who receives financial assistance from the government forbidden from gambling.
Europe consists of a diverse range of countries with different cultures, so it’s not surprising that they all have their own approaches to regulating the gambling industry. Clearly some are more successful than others, with the UK, Italy and Sweden enjoying nearly half of the market share between them.
Their lower tax rates, as well as the way that they don’t put too harsh a restriction on the number of licences they grant to operators, means that they are very attractive to gambling operators. While land-based gambling seems to be waning, interest in online gambling continues to climb, and it looks as if these countries are poised to reap the benefits.
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