The attention of many European markets undergoing tax reforms is focused on an alternative path currently being explored in Estonia.
Estonian proposals foresee a gradual reduction of the remote gambling tax, as the country aims to increase funding for sports.
The remote gambling tax in Estonia will decrease from 6% to 4%, by 0.5% per year. During the first reading of the bill earlier this week, the government assured that all proceeds will be directed to “culture and sports.”
Foreign Minister Margus Tsahkna noted that mechanisms are in place to pause tax reductions if revenue targets are not met.
The development of the Estonian market and changes in tax revenues resulting from the new bill will attract significant interest from other European gambling markets, including the UK.
This week, during a heated discussion between the Betting and Gaming Council (BGC) and the Parliamentary Select Committee, after Parliament dismissed any comparisons with the Netherlands, BGC tax expert Stephen Hodgson highlighted the steps taken by Estonia.
“Estonia’s model demonstrates that aligning taxation, regulation, and compliance is more effective than simply raising the tax rate,” Hodgson said.
Domestically, the bill has faced criticism. Evelyn Liivamägi, Deputy Secretary General of the Estonian Ministry of Finance, warned that tax revenues are “likely to decline.”
“To collect the amounts projected in the state budget strategy, at least 10 new operators would need to enter the market each year, paying the same amount of tax as the average existing gambling operator,” she added.
Not Just Tax Reform
The bill is not only about tax policy: its aim is to create conditions for the growth of the legal market while simultaneously intensifying action against illegal operators.
This includes stricter sanctions for illegal operators and, importantly, giving the regulator the ability to block unlicensed domains and freeze operator accounts in a streamlined manner.
A key part of the initiative is strengthening anti-money laundering (AML) procedures. Estonia sets clearer and stricter requirements for the customer identification (KYC) process and the steps operators must take to verify players.
All these measures support Estonia’s strategy to develop the online gaming industry as a tool for economic growth, creating conditions where the regulated gambling sector can thrive and even compete with Malta as a hub for the industry.
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