Estonia’s online gambling tax cut plan draws political and industry scrutiny

Estonia’s government has greenlighted a plan to cut the country's online gambling tax rate, aiming to attract new operators and expand the gaming sector. However, critics argue the move is based on uncertain assumptions and that the proposal could backfire.

Under the proposed amendments to the Gambling Tax Act, the online casino tax rate would be gradually reduced from 6% to 4%. The bill, submitted by MPs from the Reform Party and Eesti 200, was approved by the government and passed its first reading in the Riigikogu on October 21.

Foreign Minister Margus Tsahkna (Eesti 200) said the proposal is intended to increase gambling tax revenue for the state. “The current plan is that while about €22 million is collected at the moment, if everything works and the forecasts hold, this could grow to €30 million by 2028,” he said.

According to Tsahkna, the additional funds would be directed entirely to culture and sports. “Hopefully, this will ease the pressure of the annual negotiations over how much direct support can be allocated from the state budget to culture and sports,” he said.

Former finance minister questions forecasts

Former Finance Minister Mart Võrklaev of the Reform Party has been one of the most vocal critics of the proposal. He said that lowering the remote gambling tax should be postponed or scrapped because the government’s projections are uncertain.

“The Ministry of Finance’s forecast shows that this tax cut will cost us €6 million in 2026, €8 million in 2027, and €10 million in 2028,” Võrklaev said in an interview with Eesti Ekspress. “The new scheme is based on the assumption that lowering the tax will bring a large number of gambling operators to Estonia. But after we decided to raise the tax in 2023, nine new operators still entered the market. That brought in €4 million per year.”

He added that the policy discussions had involved “a representative of a narrow interest group,” which he described as unusual in coalition agreement talks.

Tsahkna defends the mechanism

Tsahkna responded that the plan was based on reviewed data and would be implemented with precautionary measures. “The reductions are being made in 0.5-percentage-point increments. And if revenue reaches the target level — €27 million, up from the current €22 million — then other steps will be activated,” he said.

He added that if the forecasts do not hold and revenue does not increase as planned, the government will not proceed with further reductions. “We’ve already planned for that. We’re not acting recklessly or randomly,” he said.

Prime Minister’s position

Prime Minister Kristen Michal (Reform) compared the proposal to Estonia’s previous abolition of corporate income tax, noting that it was initially met with skepticism but ultimately contributed to economic activity.

Michal said the Ministry of Finance’s projections could not fully capture the potential effects of the gambling tax cut, which may draw more licensed operators to the country. He also said the Financial Intelligence Unit will enhance oversight of gambling operations.

He added that if the measure does not bring in new licenses or increase revenue, the government would compensate by reallocating funds to maintain cultural funding. “We will not leave a hole in culture. If necessary, we’ll reallocate funds from elsewhere to fill the gap,” Michal said.

The measure has also drawn criticism from Finance Committee Chair Annely Akkermann, members of the opposition, and the Ministry of Finance.