Svenska Spel Decides To Close 2 Casino Cosmopol Venues
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Svenska Spel plans to officially close the Casino Cosmopol facilities in Malmö and Gothenburg. The main reason for this decision is the limited profitability of the facilities, the firm revealed on January 24.
The rise of online gambling as a cause of closure:
The increase in online casinos during recent years has led to a decrease in the number of visitors to the aforementioned Casino Cosmopol’s facilities. As a result, Svenska Spel’s land based casino brand has chosen to permanently shut down 2 of its 3 facilities to “limit losses.” However, before the final decision is announced, the union negotiations will take place.
The shutdown of the mentioned two casinos means that Sweden will now have only one land-based casino, which will be Casino Cosmopol in Stockholm. In addition, the liquidations could impact nearly 200 jobs.
In this regard, the chief executive of Casino Cosmopol, Ola Enquist, commented: “This is an emotionally tough step to take as it affects many of our employees. We have taken a number of measures in an effort to increase revenue and reduce costs. Despite hard work, we see that the measures are not sufficient.”
December’s AML fine adds to financial woes:
The aforementioned closure occurs following a fine of SEK2m that Casino Cosmopol received for anti-money laundering (AML) violations, following an investigation by Spelinspektionen, the Swedish regulator. In addition, Svenska Spel also received a warning.
A hint of what’s to come for Casino Cosmopol emerged during October. The report from the thrid quarter by Svenska Spel cited a slowdown in earnings and income because of the market-wide pressures on the retail segment.
The Vegas regions of Svenska Spel’s operations and the Casino Cosmopol experienced a 11% decline to SEK247m in net gaming income. For decline, the firm officially blamed risen competition from restaurant casinos and online games. Vegas and Casino Cosmopol also experienced a loss of SEK35m.
As a response to this, Svenska adjusted business methods at Casino Cosmopol, involving presenting fresh opening hours to fight competition from restaurant casinos. However, it didn’t work, hence the aforementioned decision, according to the source.
Increased gambling tax rate:
During September, the Regeringen, the Swedish government, revealed plans to increase the gambling tax rate in Sweden from 18% to 22% of GGR. If validated, the increase in taxes in the country will come into force from July 1 of this year.
Such a step could collect an extra SEK540m in tax income every year. But the step was met with tough opponents from the gambling industry.
On that note, the chief executive of Aktiebolaget Trav och Galopp (ATG), Hasse Lord Skarplöth, urged the said government to reconsider its suggestions. Instead of a blanket tax rate of 22%, he advocates for a differentiated form of taxation, where sports wagering will stay at 18% while online gaming will raise its rate.
“Strengthened by our research, we have now put quite a lot of energy into demonstrating the advantages of a differentiated gaming tax in Sweden as well. The hope is now that our analysis will move legislators from insight to action. It is a good starting point for our proposal; keep the tax on horse betting and sports, but raise it on online casinos.”
