Executives at Holland Casino have voiced their worries regarding the potential long-term effects of a proposed increase in the Dutch gambling tax.
CFO Ruud Bergervoet highlighted the company's "vulnerability" following a challenging first half of the year, as it continues to face the challenges of high inflation and escalating costs.
In May, a coalition of the Netherlands' four political parties suggested raising the gambling tax from 30.5% to 37.8% in 2025, aimed at generating an additional €202 million (£171.5 million/$225 million) in annual tax revenue for the government. This proposal follows a 1% increase in gambling tax that took effect in 2024, which Holland Casino claims has significantly adversely affected its financial results for the first half of the year, leading to a net loss of €3.5 million for the six months ending June 30.
We can't raise prices anymore
Petra de Ruiter, the CEO of Holland Casino, has expressed concerns that additional tax hikes could jeopardise the casino's ability to remain profitable. She described the suggested 7.3% tax increase as "irresponsible," noting that it would push their total tax burden to nearly 50%. "This would lead to substantial losses for us," de Ruiter explained, highlighting the fact that, unlike supermarkets, the casino cannot simply raise prices to offset the tax increase.
Holland Casino Willing to Take 'Unwanted' Measures for the Sake of Profits
CEO De Ruiter stated that should the tax increases take effect, Holland Casino would be forced to implement "undesirable" strategies to maintain profitability. This could involve intensifying efforts to draw in new customers, prompting current patrons to spend more, or cutting back on prize pools for players. "These approaches are not acceptable for Holland Casino and are recklessly misguided from the standpoint of public gambling policy," the CEO remarked. "Furthermore, our planned investments in prevention initiatives are currently facing challenges as well."
The impact of the tax burden was reflected in the results of the first half of the year
For the six-month period ending June 30, turnover decreased by 2.4%, totaling €395.4 million. While certain sectors, such as retail and food service, showed slight gains compared to the previous year, overall turnover across the 14 branches fell by 0.5%, even with a small rise in total visits. Additionally, Holland Casino Online experienced a substantial decline of 14.7% in turnover, amounting to €48.9 million.
The rise in taxes contributed an extra €3.7 million to Holland Casino's expenses. Personnel costs also increased by 11%; however, the operator successfully reduced operating costs by €5.4 million.
CFO Ruud Bergervoet remarked on the financial results, describing Holland Casino's financial standing as "vulnerable." He cautioned that further cost increases would lead the operator into a "lose-lose situation." "Holland Casino’s finances are under significant strain due to rising costs, primarily driven by high inflation, collective bargaining agreement increases, and investments in our gaming offerings and staff.
Furthermore, we are still managing the debt incurred from the coronavirus pandemic. These challenges collectively contribute to our financial vulnerability. It's crucial for our financial stability that we do not encounter additional significant cost increases at this time; only then can we avoid losses and maintain operations," said Bergervoet.
The outlook for European land-based casinos appears bleak for 2023-2024, with the closure of two iconic Cosmopol casinos in Sweden and substantial losses at Stockholm's sole land-based casino, raising concerns about its future viability. The survival of European casinos amid pandemic-related losses, customer migration to online platforms, and tax burdens remains uncertain and will unfold over time.
