Despite expectations of boosting investment and tax revenue, Estonia’s online gambling tax cut has failed to attract the hoped-for wave of new operators.
Under legislative amendments passed by the Riigikogu late last year, the tax on online gambling is being reduced in stages from 6 to 4 percent, aimed at attracting foreign online casinos to register in Estonia.
Officials say the impact so far has been limited.
“Two license applications have been submitted, but they’re still being processed, and likely won’t begin operating until the end of this year or early next year,” said Evelyn Liivamägi, deputy secretary general for financial and tax policy at the Ministry of Finance.
She added that one other operator has withdrawn its application.
A legislative error discovered in January briefly left online casinos exempt altogether from the gambling tax, prompting operators to make voluntary payments instead. About €815,000 was collected for January and €1.12 million for February, with a €220,000 shortfall later covered through a supplementary budget transfer to the Cultural Endowment.
MP Tanel Tein (Eesti 200), who initiated the reform, said the effects of the cut will take time to emerge.
“This is a long process — some licenses take half a year, some up to ten months,” he said, adding that approval speed remains a key factor in where businesses choose to locate.
Tein said it’s still too early to draw financial conclusions but argued the reform is already drawing interest and should be assessed over the span of several years.
MP: Finland plans could draw operators away
On the heels of a recent cautionary opinion piece by Financial Supervision and Resolution Authority (FSA) ex-chief Kilvar Kessler, the MP also warned against overemphasizing risks.
Tein said licensed companies undergo strict checks and new rules include additional compliance measures and a requirement for a local contact person.
“We’re talking about bringing global accounting here,” he explained, adding that the goal of the tax is also to support sports and cultural funding in Estonia. “Not a single new brick-and-mortar casino will be built here as a result of this.”
Tein said the country must remain competitive, especially as neighboring Finland prepares to open its own regulated market next year, warning that stricter or less attractive conditions in Estonia could prompt operators already active here to relocate northward.
“A development like that would mean lower tax revenues for Estonia and, from a state budget perspective, a clear loss,” he said.
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