Towards the end of lotteries financing Swedish political parties?

In Sweden, the government will work on a ban on lotteries financing political parties, because of its immoral aspect and the negative consequences of gambling. But it also aims to deprive an important source of funds from the Social Democrats, the country’s largest party now in the opposition, that other parties don’t have.

Sweden lottery scratch card
Glädjelotten, translated as “Lottery of joy,” is a Swedish scratch card lottery ticket available on a subscription whose profits help finance the Social Democratic Party | © Kombispel

In Sweden, political parties can organize lotteries, bingos and sell scratch cards to collect funds.

But the government and the Sweden Democrats agreed to work on a bill banning revenue from gambling for political parties. The Social Democrats, the political party which ruled the country in the last nine years and the primary beneficiary of lotteries, is particularly targeted by the move.

First reported by the Swedish newspaper Expressen on April 28, the ruling coalition parties agreed with the Sweden Democrats to discuss legislation banning political-party-related lotteries and other games of chance. The government justifies the bill because it is immoral to organize lottery activities because of the negative consequences of gambling. It also aims to deprive their main opponent of an important source of revenue that they don’t enjoy.

A ban targeting the Social Democrats

Tobias Andersson (Sweden Democrats), chairman of the Riksdag’s business committee, which elaborates on bills to send to Parliament, clearly told Dagens Nyheter that the bill’s purpose would be to “tighten the tap of funding” to the Social Democrats. “We are going after the corrupt system that the Social Democrats have rigged for themselves.”

The Social Democratic Party, or Social Democrats also called S, is Sweden’s oldest and largest political force. It was in power from 2014 to 2022 and is still the first party in the Riksdag with 107 seats in Sweden’s unicameral Parliament after last September’s general election. But its weak coalition collapsed and the government is now made up of its former ally, the Moderate Party (68 seats), along with the Christian Democrats and the Liberals, which all three only gather 30 percent of seats in Parliament.

The Sweden Democrats (SD), a right-wing populist political party and now the second largest group in the Riksdag with 73 seats, is not part of the government. However, it has a major influence on the political agenda. The Sweden Democrats can give the government a thin majority by three votes thanks to a confidence-and-supply agreement.

Tobias Baudin, the Social Democratic Party’s secretary, now in opposition to the right-wing bloc, strongly rejects the plan, arguing that such legislation would only restrict funding opportunities and the operations of a political opponent. “The fact that the government and the SD want to use political power to make things more difficult for the opposition with targeted legislation is familiar for countries with a dubious vision of democracy. We have warned about this authoritarian slide before and it is now showing up in practice,” told Mr. Baudin to Aftonbladet in a written comment.

The Moderates Party has recently started lottery operations because it “didn’t want the Social Democrats to be the only one with this funding. But now that we are in government, we think the best thing to do is to completely remove the possibility” of earning revenue from gambling, according to Victoria Ericsson, press secretary at the Moderates.

Lotteries in Sweden, a major source of financing for the Social Democrats

In Sweden, political parties can finance their operations and election campaigns with income from commercial activities in addition to the public funds and external contributions they can receive.

The lotteries for the Social Democrats are organized by A-lotterierna, an economic association created in 1956 owned and run by the political party. Launched in 1981, its Kombilotteriet, with a weekly prize of 1,000,000 crowns (97,500 dollars) in cash every week and many smaller cash and product lots, is one of Sweden’s largest subscription lotteries. The association also operates lotteries for other non-profit organizations through fully-owned subsidiary companies.

The Swedish Gambling Authority forbids lottery tickets sold on credit to licensed operators except when they are “games for public benefit purposes,” a category that applies to political parties. Moreover, lotteries with public benefits are exempt from an 18 percent tax collection. Swedish people can even subscribe to lotteries and pay directly with automatic debit bank transfers, a recurring source of revenue for operators.

According to data from the Kammarkollegiet, the legal, financial and administrative services agency, six political parties collected money from lotteries and other forms of gambling between 2018 and 2021. It showed substantial revenue differences.

Three parties got insignificant revenue for their budget from lottery operations. Then the Center Party collected 39,000 Swedish crowns (3,800 dollars) in four years and the Moderates generated 5.3 million crowns (517,000 dollars). But they are far behind the 1 billion crowns (97.5 million dollars) the Social Democrats collected from lotteries during the same period.

In 2021, the latest full-year period reported, the Social Democrats collected 273.5 million crowns (27 million dollars) from lotteries. The earnings contributed to 38 percent of the party’s budget for the year, which amounted to 723 million crowns (70 million dollars), the largest budget of a political party in Sweden. They accounted for the primary source of financing right before public support (37%).

Meanwhile, lotteries accounted for less than 2 percent of the budget for the Moderates, the second-largest funded party with a total budget of 245 million crowns (24 million dollars) in 2021, three times as less as the Social Democrats.

New laws for transparency on political parties’ sources of funds

For nearly all political parties, public support accounts for two-thirds of their resources, completed with personal contributions and other business-related revenue.

Since 2018, the law on transparency in party financing has been tightened to prevent corruption. Swedish political parties need to report their sources of finances publicly. Contributions higher than 24,150 crowns (2,350 dollars) cannot be anonymous.

But it was revealed last year that all four parties governing the country had methods to circumvent the law. A lottery can also be one of the ways of providing anonymous contributions to a party.

In 2017, Dagens Nyheter published an investigation revealing that the Social Democrats used aggressive marketing tactics selling tickets on credit, including to people already in debt. In three years, 8,000 people have been sent to Kronofogden, the enforcement authority on debt recollection, because they couldn’t pay for the tickets.

The government expects the bill to be proposed in the coming months and the ban to come into force by next spring.

The legislation would need to specifically target political party lotteries, not those that non-profit or civil organizations, like sports clubs, schools or cultural associations may organize to collect money for their budgets.

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