- Media
Estonia reduces online gambling tax to 4%, triggering oversight debate
The bill passed with a vote of 51–31 in the Riigikogu, Estonia’s parliament. One member of the ruling Reform Party, Liina Kersna, abstained; two other Reform MPs, Aivar Sõerd and Signe Kivi, did not participate in the vote.
The legislation, part of a broader initiative by the parliamentary group Eesti 200, was spearheaded by Tanel Tein, a member of the Riigikogu’s Finance Committee and a former professional basketball player. Tein argued the cut would modernize Estonia’s gambling framework, encourage licensed operators to register in the country, and ultimately increase tax revenue. “We want to bring global accounting to Estonia,” he said, adding that the government does not expect physical casinos but aims to attract remote operators.
Tein also said the new structure would unlock funding for a long-proposed major sports arena. As part of the reform, the Cultural Endowment of Estonia will receive two new endowments — one intended to draw private capital and another earmarked for sports facilities.
Government’s vision
Government backers frame the move as a way to strengthen Estonia’s competitiveness in the European iGaming market and secure stable funding for culture and sport. According to Margus Tsahkna, Estonia’s Foreign Affairs Minister and a member of Eesti 200, current online gambling revenues hover around €22 million annually; with the tax cut and an influx of new operators, revenues could rise to €30 million by 2028.
Under the law, the tax rate reduction will be implemented gradually in increments of 0.5 percentage points, contingent on benchmarks being met. Officials have indicated that if revenue thresholds are not met, further rate reductions may be halted.
The plan also ties the new tax receipts directly to cultural and sports funding, a mechanism intended to reduce reliance on traditional funding sources such as excise duties on alcohol and tobacco. The design aims to create a more predictable and autonomous funding stream for cultural institutions and sports infrastructure.
Critics raise alarm over shrinking revenues
Despite official optimism, critics—both within the governing coalition and in the civil service—warn the move may backfire. The Ministry of Finance cautioned that if the expected influx of foreign operators fails to materialize, the tax cut could result in significant revenue losses roughly €6 million in 2026, €8 million in 2027, €10 million in 2028, and up to €13 million by 2029.
Regulators already report difficulties in supervising remote-gambling operators, many of whom maintain servers, executives, and customer bases abroad. Evelyn Liivamägi, Deputy Secretary General at the Ministry of Finance, said the tax cut could exacerbate these challenges: “It’s difficult to exercise oversight now, and it will remain difficult going forward.”
Some coalition members voiced their discomfort ahead of the vote. Kersna, who abstained, said she supported the reform’s aims but could not ignore the looming impact on the cultural sector. “According to official forecasts, €13 million will be pulled from culture over the next three years,” she warned.
One of the most outspoken critics, former finance minister and Reform MP Mart Võrklaev, described the final vote as a political compromise under pressure — and dismissed the legislation as “the worst law of the year.” Võrklaev warned it could exacerbate money-laundering risks, drain public coffers, and leave culture underfunded.
Opponents also question the assumption that a modest tax cut — from 6 to 4 per cent — will be sufficient to sway operators currently licensed in other jurisdictions such as Malta to relocate their operations, particularly given regulatory and compliance uncertainties.
Uncertain payoff
The debate highlights a broader tension in Estonia’s policy: balancing the ambition to make the country a competitive hub for online gambling, while safeguarding public funds and ensuring rigorous oversight.
Proponents argue that linking gambling revenues directly to culture and sport creates a stable, long-term funding stream. The dedicated endowments are meant to attract private investment, reduce dependence on alcohol and tobacco excise duties, and lay the groundwork for future infrastructure projects such as a national sports arena.
But critics warn that the plan hinges on optimistic assumptions. namely, that foreign operators will flock to Estonia simply because of a 2-percentage-point tax cut, and remain transparent and compliant under remote oversight. If the projections fall short, the result may be shrinking budgets for culture and sport, reduced regulatory grip on remote operators, and a missed opportunity for new revenue.
As Liivamägi warned, remote operations are difficult to oversee even under current rules, a problem likely to worsen as the law incentivises more operators to register while operating largely from abroad.
With Estonia now having enacted the tax cut, the coming months and years will test whether the gamble pays off for the state budget, the cultural sector, and regulatory integrity.
