Gambling Tax Revenue Doubles, Driven by online Legalization

The Netherlands is experiencing a surge in revenue from gambling taxes, hitting a record €1 billion in the past year. This figure, recently released by the Central Bureau of statistics (CBS), represents a doubling of tax income compared to just five years ago.

The primary driver behind this dramatic increase is the legalization of online gambling in 2021. The gambling tax applies to profits generated by casinos, online platforms, lotteries, and other games of chance.

The Pandemic Effect and the Rise of Online Platforms

The COVID-19 pandemic initially caused a dip in gambling tax revenues due to the closure of physical casinos and gaming halls. While income recovered after reopening, the real surge began with the introduction of regulated online gambling.

There were many new providers on the dutch market, and also foreign gambling sites that first operated illegally, now pay taxes.
Peter Hein van Mulligen, chief economist at Statistics Netherlands

More Revenue, Not Necessarily More Gamblers

it’s crucial to note that the increase in tax revenue doesn’t automatically translate to a corresponding rise in the number of people gambling. A significant portion of the revenue comes from bringing previously unregulated online activity into the legal and taxable sphere.

Consider the potential legalization of substances like XTC. As van Mulligen points out,not necessarily more use,but more tax revenues. This analogy highlights how regulation can shift existing behavior into a taxable framework.

However, the legalization and subsequent advertising by licensed operators may have contributed to a slight increase in overall participation.

Future Tax hikes and Potential Impact

Beyond the growth of the online gambling market, rising tax rates are also contributing to the increased revenue. As of January 1st of this year, the gambling tax was raised by four percentage points to 34%. Further increases are planned for the coming year.

The impact of these higher taxes on gambling behavior remains to be seen. While some individuals may reduce their gambling activities due to increased costs, consistent behavior would lead to even higher tax revenues for the Dutch government.

This may be that people start gambling less because it becomes more expensive. But if the gambling behavior remains the same,the tax revenues will rise further.
Peter Hein van Mulligen, chief economist at Statistics Netherlands

Where Does the Money Go?

Currently, the revenue generated from the gambling tax is not earmarked for specific purposes such as gambling prevention programs. Rather, it is indeed deposited into the general state treasury, contributing to overall government funding.