Read all about the online casino taxes
Everything you need to know about tax as an online casino owner or operator
Online gambling is one of the fastest-growing industries today. Even though gambling is banned in some countries around the world, many governments are seeing the potential in growing their economy by taxing casino operators. The revenue generated every year from the online gambling industry is enormous. A recent report by Island Echo shows how the online gambling industry generated £2.83 billion in tax in the United Kingdom for the tax year 2020-2021. Also the previous tax year 2019-2020 brought in a whopping £3.02 billion. The online gambling industry carries a bulk of the tax funds generated and since 2018, it has accounted for 38% of the country’s tax revenue.
Although some countries have laws on taxing players’ winnings, this tax is nothing compared to what casino operations pay. Running an online casino business is no easy task, and operators need to know the legal issues that arise in the course of their business. This way, they don’t fall into the wrong side of the law and their business doesn’t suffer from it. In this guide, we will be looking closely at the taxes paid in different jurisdictions by online casino businesses.
Do online casino owners or operators pay taxes?
Casino operators are expected to pay tax in all the countries they obtain gaming licenses. Paying taxes in the country they reside in does not exempt them from tax obligations in other countries where they operate. The regulation for tax varies in all jurisdictions. To understand how tax works for casino operators, we will be comparing the taxes between land-based casinos and online casinos.
Casinos are taxed based on their Gross Gaming Revenue (GGR) and the rates vary in different countries based on their legislation. The way the tax is calculated is usually a percentage of the betting profit made from the casino. A lot of countries are more interested in profiting from the casino’s tax than actually getting the accurate GGR. So, what Governments do is increase the tax percentage every year to get more money from casino operators.
The tax for brick-and-mortar casinos is another ball game, as they come at a higher price. There is a significant difference between the taxes charged for brick and mortar casinos as opposed to online casinos. To understand better, we will compare the tax differences as seen in the United Kingdom, Malta, and Sweden.
The UK Gambling Commission is one of the strictest authorities compared to other gambling authorities. The regulation on tax on the GGR for remote or online gambling operators increased from 15% to 21% in 2019. Even with this shocking increase which will likely rise again, is nothing compared to what is being charged to land-based casinos in the UK. Land-based casinos are burdened with taxes amounting to 50% of their GGR. The tax is a tiered system so it is possible that some casinos may be paying as little as 15% but the highest taxes are charged against the leading casinos in the country.
Malta also has differences in its tax system in land-based casinos and online casinos. Although, they are quite fair compared to the UK and other jurisdictions. They have a mandatory annual license fee of €25,000 and an additional 5% tax on GGR. Now, for land-based casinos, they have separate levies paid for each gaming device in their casino. They are also made to pay up to 30% tax on their GGR. There is also a 4% tax attached to a Compliance Contribution depending on the games they offer for land-based casinos. The games for traditional casinos are split into 3 with a fixed tax charge of €375,000, €600,000, and €500,000 respectively.
Sweden has equal tax rates for both land-based and online casinos. They charge a fixed tax of 18% on the GGR. The country formerly operated state-run casinos which were both land-based and online. However, they relaxed their restrictions giving room for online casino operators around the world to obtain their gaming licenses. It is their tax rate is lower than the UK, which has drawn many casino operators to obtain their licenses.
How much is the tax?
We have given an idea of how much tax is paid in three countries. The rate, however, varies in all countries where gambling is legally approved. What we can do is give you a good idea of the minimum and maximum tax casinos will pay in any country. For instance, some countries are much higher, like Germany, which has the highest tax rate of 90%. Gibraltar is one of the lowest at 0.15% especially as the government recently reduced the rate from the former 1% tax. Interestingly, online casino operators with a Gibraltar license are allowed to operate in the UK because of their strict gaming regulations but they will have to pay the UK’s 21% tax for remote operations.
If there is any safe haven you should know about when it comes to casinos, it is Russia. They have a 0% tax rate for casino operators which makes it a catchy place for online operators to site their business. Looking at these numbers, it is easy to calculate how much tax you are expected to pay in different countries. The lowest which comes at no cost at all, seems like a good place to begin your investment. However, the maximum tax online casino operators are charged so far is 90%.
Countries with the lowest tax for online casino operators
Just as there are many countries that impose huge taxes on casinos, there are also countries with more relaxed rules. As a casino operator, it is important that you find the countries with fewer tax obligations as it will bring opportunities for growth. We have made a list of them to help you decide which country will be best to offer your online casino services. Here we have listed the countries that carry the lowest tax rates for gambling operators around the world.
- Sweden – 18%
- Portugal – 15%
- Argentina – 15%
- Singapore – 15%
- Finland – 12%
- South Africa – 9.6%
- United States – 8%
- Czech Republic – 6%
- Belgium – 2.5%
- Cambodia – 2%
- Italy – 0%
- Russia – 0%
These are the countries so far that offer the best tax rates around the world. Kenya would have made the list of the lowest tax as they previously charged online casinos 7.5% tax until recently. The Kenyan Government increased the tax to 35% in 2017. The reason why developing countries lower their tax rate is to encourage businesses both local and international to set up their gambling businesses in the country. This way, it will help in revenue generation and economic growth. It is a win-win for both the government and the online casino operators.
Now, Costa Rica is one country that does not impose any tax obligation on both local and foreign online gambling businesses. They do not tax individual gambling winnings and even online casino operators. They are also among the very few countries that don’t require a special gambling license for online casinos to operate. Costa Rica, which can be found in tropical South America, is a haven for online casino operators. It is no wonder the country has over 200 online casinos operating in the country today.
Do white label solutions offer tax handling?
White Label casinos have a lot of benefits and considering how taxes can be burdensome, it is a perfect solution to tax problems for investors. Sometimes investors or casino operators are unable to obtain a license because of some error in filing documents or some tax-related issue and then they turn to White Label casino solutions. White Label casino providers offer a ready-to-operate casino. The package comes fully equipped with all the tools needed to run a successful casino. Apart from providing a sublicense on their products, these software providers also have after-sales services at no extra charge. Considering how regulators can be strict when it comes to issuing gaming licenses, White Label casinos make this easy for investors wanting to start their own casino. The time and effort it takes to build the casino from scratch are taken away and also the hassles of dealing with licensing authorities.
Modular and scalable solutions
Affiliate marketing management system
24/7 customer support
User-friendly design and interface
Unified API integration
User-friendly interface and high-quality graphics
High level of security
White Label casinos may not have the solution to all problems but in the area of tax, they are readily available to assist their customers with all tax-related issues. They also handle administrative and business-related matters concerning their software. They prefer to stay behind the wheels while the casino owner manages the business side of the casino. However, the software providers are available to provide technical support and all other necessary support to ensure the smooth running of the platform.
|Provider||White Label Services|
|Slotegrator||24/7 support, Wide variety of games, Affiliate system, CRM System and marketing programs, Financial infrastructure, multilingual support, mobile integrated design, Anti-fraud Reporting, Financial Analytics tools, Licensing, Technical support, User-friendly Interface|
|SoftSwiss||Player Retention Services, Anti-fraud System, Customer Service, Reporting Engine, CMS System, Payment Management, Affiliate Program, Licensing, Bonus System, Custom Website Design, Game Management|
|EveryMatrix||Casino Games, CRM system, Technical Support, Payment Systems, API Integration, Licensing, Affiliate Program, Bonus Systems|
|Multiple payment options including cryptocurrencies|
|SoftGamings||Unified API Integration, Cross-Platform Mobile, Casino Games Integration, Casino Games,, CRM system, Affiliate Program, Live Chat, Payment Systems, Licensing, Advanced Reporting System|
Will I need a specific business accountant to open an online casino?
Casino operators will need the services of an accountant to manage the financial aspects of the company. An accountant working for a casino business is not just any kind of accountant. This position has to be filled with a professional with vast experience in and knowledge of the online gambling industry. There are Casino Accountants for this job who specialize in this field of study and can handle the responsibilities that come with the job.
The accountant must have vast knowledge and experience in tax law systems in various jurisdictions. They would be handling all the financial aspects of the business, analyzing profits, expenses, and any annual dues the casino will be paying. As a Casino owner, it is important you choose the right professionals because they have the capacity to help grow your online casino. If you have a good casino account, they will advise you on the best tax solutions and how to minimize costs.
Conclusion and FAQ
Although, taxes are more beneficial to Government than online casino operators, it is important that they comply with tax regulations. Fortunately for online casinos, their taxes are much lower than the brick-and-mortar casinos. They are lucky in most cases to be exempt from the levies which land-based casinos are charged regularly. Online casinos are fast-growing and many countries try to encourage their business by lowering the tax while it is not the case for all countries. Some countries take advantage of the fast-growing potential of this online business.
Online casinos have no other option than to comply with the heavy taxes if they want to continue operating in that country. There are strict penalties that are attached to the non-payment of taxes. If an online casino is guilty of such claims, they may have their gaming license revoked and will be unable to offer their games in that country. However, heavy taxes can also make an online casino business crumble especially if they have tax obligations in multiple jurisdictions. That is why you will need a professional to provide relevant advice on tax-related matters especially so it does not affect your online casino revenue.
We advise you to check our FAQs page, where we address all the questions you need to know about running your online casino business.