Estonia to review tax increase on all gambling products

The Ministry of Finance of Estonia has published a ‘draft law’ recommending that the new government increase taxes on online gambling, casino games, and lottery draws. 

An increase in gambling taxes is proposed as the Ministry cites significant growth in online casino revenue, which has surged by 260% from €78m in 2020 to €281m in 2022, as reported by the Estonian Tax and Customs Board.

The draft Tax Laws Amendment Act, submitted for approval on April 26, outlines a phased approach to raising the tax rates. Under the proposal, the tax rate for online gambling would increase to 6% in 2024 and 7% in 2026. The gaming table tax rate is set to rise by 10%, and the lottery tax rate will see an increase from 18% to 22%.

These tax increases are estimated to generate additional revenue of €8m in 2024 and 2025, €12m in 2026, and €13m in 2027. Due to the urgency of the bill, it is scheduled to enter into force on January 1, 2024. The Estonian government attributes the growth in tax receipts from remote gambling to the current low tax rate of 5%.

As of April 2023, Estonia has licensed 29 online gambling operators, with 14 of them being Estonian operators and 15 being foreign operators. The draft law highlights that a significant portion of gambling tax revenue comes from bets placed by players from other countries, such as Finland and Germany.

The proposed legislation also includes tax exemptions on pensions and a universal tax-free income of €700 per month for citizens. To help fund these changes, the government is proposing increased excise duties on alcohol and tobacco products. With these amendments, Estonia aims to strike a balance between encouraging the growth of the online gambling industry and ensuring a fair contribution to the country’s revenue.

Led by PM Kaja Kallas, Estonia’s new ‘centrist coalition’ government has outlined a commitment to revise the Baltic nation’s gambling laws in 2023.

Last month, Estonian media was informed by the Ministry of the Interior that the government will propose a toughening of advertising laws related to gambling. Estonia’s new government is expected to announce measures that have been replicated across western European markets such as Italy, the UK and Spain including a blanket ban on gambling advertising.

The Estonian Gaming Operator Association (EHKL), a trade body representing Estonian operators such as Optibet (Entain Plc), Yolo Group, and CoolBet, has pleaded that the government cooperate with operators to raise standards and protect funding for local sports.

Consisting of the Reform Party, the Social Democrats, and the Eesti 200 Party, Estonia’s coalition government has yet to publish its governing agenda.