Online casino tax cut has not brought new operators to Estonian market

A gambling tax reform that reduced the tax burden on online casinos from 6 to 4 percent, which took effect at the end of last year, has so far failed to bring new online casinos to the Estonian market. According to the Ministry of Finance, two license applications have been submitted and are currently being processed, with operations likely to begin at the end of this year or the beginning of next year. Tanel Tein, the member of parliament who initiated the legislative change, believes that the overall impact of the amendments will only become clear after several years.

Estonia's online casino tax reform has produced modest results; several months after the gambling tax changes took effect, no new online casinos have been added to the Estonian market.

Background and objective of the amendment

Parliament approved changes to the gambling tax law at the end of last year, which gradually reduced the tax burden on online casinos from 6 to 4 percent. The goal of the reform was to attract foreign online casinos to register in Estonia and thereby increase the state's tax revenue. The amendment was initiated by Tanel Tein, a member of Parliament from the Estonia 200 faction.

Evelyn Liivamägi, deputy secretary general of the Ministry of Finance, told ERR that compared to the end of last year, no new online casinos have been added so far. "Two license applications have been submitted, but they are currently being processed and the applicants will likely begin operations at the end of this year or the beginning of next year. One remote gambling operator has relinquished its license," Liivamägi added.

Legislative error and voluntary donations

The reform was overshadowed by an unpleasant surprise that became public in January: a flaw was discovered in the legislation that resulted in zero gambling tax for this year. Remote gambling operators then promised to make voluntary donations to the Ministry of Finance. According to Liivamägi, approximately 815,000 euros was received in January for tax obligations along with income tax, and approximately 1.12 million euros in February. The shortfall of 220,000 euros was compensated to the Cultural Endowment with a supplementary budget.

Tein: effects will manifest over time

Tanel Tein acknowledges that the pace of new casinos being added depends largely on the speed of license processing, and admits that Estonia still has room for improvement in this regard. Nevertheless, he is convinced that the legislative amendment is moving in the right direction. "This is a long-term process. Some licenses take effect after half a year, some after ten months," explained Tein, adding that results from 2026 cannot yet provide any far-reaching conclusions.

Tein emphasized that gambling enterprises that have obtained a license in Estonia have passed all necessary filters, and the new law also introduced ten improvement measures and a requirement for a local contact person. "This does not affect the local person. We are talking about bringing global accounting here; no physical casino is created with this," he stressed.

Finland's market opening changes the situation

From a strategic perspective, Tein pointed out that Finland will also open its gambling market next year, and it is not yet known what regulation and tax environment Finland will choose. "For this very reason, we gave the sector a clear and cautious signal with our tax reduction strategy. The goal was to reduce the risk that licensed operators already operating in Estonia would begin to shift their activities or tax residency to Finland. Such a development would mean a decrease in tax revenues for Estonia and would clearly be a minus from a state budget perspective," he explained.

Kilvar Kessler, the former head of the Financial Supervision Authority, noted in an opinion piece published on Thursday that while the addition of international online casinos brings welcome tax revenue, oversight of them needs to be strengthened. Tein himself believes that the gambling tax's actual objective-increasing funding for sports and culture-has received too little attention so far.