Coalition pushes ahead with gambling tax cuts to position Estonia as an online gaming hub

Estonia’s ruling coalition is moving forward with plans to reduce taxes on gambling income, framing the reform as a long-term strategy to attract foreign investment and strengthen the country’s standing as a regional technology hub. The initiative comes amid rising tax rates across much of the European Union, with ministers suggesting Estonia could emerge as a rival to Malta in hosting online gambling businesses.

A committee comprising members of the Reform Party and Eesti 200 has begun drafting the measures outlined in the Coalition Pact 2023–2028, which supports the policy agenda of Prime Minister Kaja Kallas. The coalition agreement, published in June, sets out economic objectives, including fortifying national security, reforming the social welfare system, and accelerating the transition toward climate neutrality.

As part of its fiscal reforms, the government plans to gradually reduce the Remote Gambling Tax by 0.5% each year until the rate reaches 4% by 2028. The drafting of the new gambling tax bill is being led by Reform Party MP Madis Timpson, who chairs the Riigikogu’s Legal Affairs Committee.

Timpson has become one of the most vocal proponents of the tax reduction, arguing that lower rates would draw remote gaming operators currently based in jurisdictions such as Malta and attract fresh investment into Estonia.

“A remote gambling paradise is indeed what we could become,” Timpson said. “Those people who are playing somewhere, I don’t know, in France, in Spain, their profits would come to us.”

Timpson has also stated that the reform is linked to broader cultural and national development goals. The coalition pact calls for the creation of a national sports infrastructure fund in collaboration with the Estonian Olympic Committee and a private co-financing mechanism. A second fund would allocate 20% of new gambling tax revenues to a system of matched donations, with one-third provided by the state and two-thirds by private sponsors.

“We have been talking here about this famous large [sports] hall that could be built, but all the time it’s as if we deliberate and deliberate. Every cent we manage to obtain to fund this large hall is, in my opinion, a welcome deed for athletes and cultural figures,” Timpson said.

Before the reform can be enacted, the Riigikogu must introduce a separate bill on gambling taxes, as such changes cannot be included within the national budget. Lawmakers consider this an important step to ensure transparency and oversight, particularly regarding how gambling revenues are collected and spent.

The proposal has drawn criticism from opposition parties, most notably the Centre Party. Deputy Chair of the Finance Committee Andrei Korobeinik has questioned the assumption that lower taxes will generate the expected influx of investment. He contends that investors and gambling operators value predictability and economic stability more than marginal tax differences.

“The initiators of the bill believed the lobbyists, who promised that if this tax rate is lowered, casinos and remote gambling service providers will come here. The reality is that no analysis has been carried out,” Korobeinik stated.

While the coalition remains committed to making Estonia more competitive in the gambling sector, Prime Minister Kallas has expressed a measured stance on the issue. She has insisted that any tax proceeds must be directed toward national priorities such as rebuilding Olympic-standard sports facilities.

Kallas has also reminded industry stakeholders that her government has previously tightened rules on gambling marketing and consumer protection. In 2024, the administration imposed restrictions on celebrity endorsements, banned “risk-free” bet promotions, and prohibited advertising aimed at minors.