The rapid progress of the Estonian government to correct an error, which meant that operators avoided paying tax altogether, should be welcomed as the sector moves to becoming a hub for iGaming.
Estonia has been in the midst of a major transformation as it seeks to become a key location for iGaming capital within the Nordics and wider Europe – rivalling Malta and Gibraltar.
However, the transformation was off to a shaky start after a legislative slip in wording adopted late last year accidentally exempted online gambling from tax by referring only to ‘games of skill,’ leaving out ‘games of chance’.
Unsurprisingly, lawmakers in the country have moved quickly to implement an essential amendment eradicating that wording so that all online gambling is taxed equally.
The country can now move back onto its vision for a new haven for iGaming in Europe. However, regulatory bumps in the road like the one just encountered must be avoided if the country is to evolve into a key hub.
Such is the strong rapport between the regulator and operators, reports have emerged that many in the industry have revealed they will make voluntary donations in a bid to cover the costs. Reports suggest that the error could cost the Ministry of Finance and the state approximately €4m for the first quarter of 2026.
Pressure on Estonia will be significant as it embarks on a very different approach to proposals in other countries, embracing a staged decrease of the remote gambling tax.
Estonia’s remote gambling tax will drop from 6% to 4%, falling by 0.5% per year. During the first reading of the bill, which took place earlier this week, the government assured that all funds will go to ‘culture and sports.
It comes at a time when tax hikes are being implemented across European markets in a bid to boost the economy – Estonia could pave the way for a new approach.
Stephen Hodgson, the BGC’s tax expert, has even previously praised the Estonian model, at a time when tax debate raged in the UK.
He stated: “Estonia’s model demonstrates that alignment of tax, regulation and compliance is more effective than simply hiking the duty.”
Nonetheless, Evelyn Liivamägi, Deputy Secretary General of Estonia’s Ministry of Finance, warned that tax revenues “are more likely to decline”.
“To collect as much as currently forecast in the state budget strategy, at least 10 new operators would need to enter the market each year and pay as much tax as the average gambling organiser has been doing so far.”
iGaming Expert Analysis: Such an error in the early stages of a transition that will have been politically polarising domestically and drawn major attention internationally is the last thing that was needed for Estonia’s lawmakers. However, the rapid remedying of the issue and the seeming willingness of the industry to support the fixing of the issue hopefully mean the country can now kick on and embrace a new approach to gambling taxation.
