Social Democrats of Europe back EU gaming tax to be debated by MEPs

(AsiaGameHub) –   European Parliament members (MEPs) are set to commence discussions in Strasbourg concerning the implementation of a ‘unified tax’ on online gambling and betting operators holding licenses within the European Union.

Scheduled to start on Wednesday, May 27, the debate will be chaired by EU Budget Commissioner Piotr Serafin. This initiative aligns with Brussels’ ongoing review of proposals aimed at bolstering the bloc’s envisioned €2 trillion Multiannual Financial Framework (MFF) for the period 2028–2034.

The proposal for a European gambling levy originates from Victor Negrescu, who serves as Vice President of the European Parliament and a member of the Budget Committee.

Negrescu has reintroduced his suggested 1% levy in Strasbourg, a proposal that has garnered support from the Socialists & Democrats (S&D) Group. This levy is intended for significant online gambling and betting operators, with the goal of generating extra funds for education, youth, and health programs.

Subsequent to its introduction, the S&D Group indicated that a modest levy of approximately 1% on the revenues or turnover of prominent online gambling operators is projected to yield between €2 billion and €4 billion each year, potentially accumulating €14 billion to €28 billion over the EU’s seven-year budgetary period.

The S&D Group has endorsed the gambling levy, viewing it as an EU funding tool capable of assisting the bloc in repaying Covid-era recovery loans and funding future European objectives, such as mental health services, addiction prevention programs, and youth initiatives.

Speaking to iGaming Expert, Negrescu asserted that Europe’s gambling industry has developed into one of the bloc’s most substantial digital sectors, producing “tens of billions of euros annually” and increasingly conducting operations across national borders within the EU single market framework.

Negrescu emphasized that this proposal should not be perceived as an extra burden on consumers, but instead as a specific contribution from major operators who benefit from access to the European market.

“Daily in this Parliament, we advocate for increased investments, yet citizens also anticipate our explanation of how we intend to fund everything equitably and responsibly,” Negrescu informed iGaming Expert.

The Vice President indicated that the levy could support investments in education, youth programs, mental health services, addiction prevention, and initiatives safeguarding minors. He further noted that Europe ought to create “topic-specific financial streams” akin to funding structures already utilized by national governments.

Negrescu: Levy could combat black market 

As the author of the proposal, Negrescu additionally connected it to broader issues concerning unregulated gambling, cautioning that illicit online gambling diminishes public revenues and subjects consumers to greater dangers.

“We are advancing this initiative at a time when Europe’s online gambling and betting market is experiencing rapid growth, generating tens of billions of euros each year, and increasingly conducting cross-border operations while leveraging the single market,” Negrescu declared.

“Industry projections suggest that illegal online gambling already accounts for approximately 71% of the European market, resulting in substantial public revenue losses, diminished consumer protection, and elevated risks associated with money laundering and organized crime.”

The S&D Group has contended that the levy ought to be complemented by coordinated EU-wide actions against illegal gambling to bolster its long-term sustainability as a consistent EU funding mechanism.

Negrescu further elaborated: “Factoring in a 1% flat tax on revenues or turnover, the expanding market share of the online industry, and fresh measures targeting illegal platforms, this proposal has the potential to generate between €2 billion and €4 billion annually during the upcoming long-term EU budget cycle, possibly accumulating €14 billion to €28 billion between 2028 and 2034 – a sum equivalent to the present budget for Erasmus+ student exchanges.

“This proposition initiates a dialogue on prospective new resources and thematic financial flows, akin to national funding frameworks, which could garner broader endorsement among EU member states.”

Gómez López: EU requires robust debt reduction strategies  

Sandra Gómez López, a committee member and MEP, stated that the levy is an element of a broader S&D initiative designed to establish “sustainable, predictable, and resilient” revenue sources for the Union budget.

“We commend the Commission’s endeavors to pinpoint new resources,” Gómez López remarked.

“The provisional report on the forthcoming MFF also introduces novel concepts, such as an online gambling and betting levy, digital services taxation, and provisions related to crypto assets.”

She additionally pressed member states to resolve the impasse concerning EU revenue reforms, advocating for new funding mechanisms that could generate a minimum of €60 billion annually to facilitate the repayment of NextGenerationEU debt.

“We urge the member states within the Council to overcome the deadlock, persistent since 2020, regarding a collection of new genuine own resources, aiming to achieve an annual revenue level of at least €60 billion.”

Conversely, the trade organization, the European Gaming & Betting Association (EGBA), has voiced criticism of the proposal, labeling the concept as “fundamentally impractical” and cautioning that further EU-wide taxation could jeopardize regulated operators while inadvertently aiding black-market providers.

Separately, the European Commission has put forward five new EU-wide revenue streams, encompassing tobacco duties, e-waste fees, and corporate taxation measures, with the goal of generating roughly €58.5 billion annually through these novel funding avenues.

Nevertheless, any EU-wide tax framework necessitates unanimous approval from member states – a political obstacle that has consistently impeded joint fiscal endeavors in Brussels concerning the standardization of gambling laws among member states. 

For Europe’s gambling industry, these discussions signify the initial earnest effort to establish online betting as a direct contributor to the EU’s strategic funding objectives, potentially inaugurating a new phase in the discourse surrounding gambling taxation throughout the bloc.