Estonia’s government is set to reconsider its reduction of the online casino gambling tax after the measure has failed so far to attract the expected inflow of new operators and has contributed to a shortfall in gaming revenue.
Prime Minister Kristen Michal commented that the government will revisit the tax cut during upcoming state budget and fiscal strategy discussions, arguing that there would be little justification for keeping lower rates if they do not ultimately generate extra funds.
“Certainly, this debate will happen. The first clear principle I stated is that culture must not lose out. We have already compensated the missing funds caused by this legislative mistake, and we must find the rest as well so that culture does not suffer,” Michal said in a recent interview.
The Riigikogu approved the tax reduction last December, which essentially lowered the gambling tax on online casinos from 6% to 4% in stages over two years. Led by Eesti 200 MP Tanel Tein, the reform was launched to make Estonia more attractive to international betting companies and encourage them to apply for a license.
Proponents of the tax reduction argued that a larger operator base could potentially increase tax receipts, with the additional funds being used to support culture and sports.
However, the Ministry of Finance warned before the reform that the lower rate could initially reduce gambling tax income by €6 million in 2026, €8 million in 2027, €10 million in 2028 and €13 million in 2029.
Limited Evidence of Interested Foreign Operators
So far, there has been little evidence to suggest that there will be a huge inflow of online casino operators.
Back in June, Finance Ministry deputy secretary general Evelyn Liivamägi said that only two licence applications had been submitted since the reform. However, both were still under review. The operators were not expected to begin operating until late 2026 or early 2027.
At the same time, a third operator had withdrawn its application. Michal also acknowledged that it remains too early to determine whether the lower tax rate will eventually attract more companies, as the licensing process can take several months.
Tein has similarly argued that the reform should be assessed over a longer period, as he put it, obtaining a gambling licence can take between six and 10 months. He has also warned that Estonia needs to remain competitive as the neighbouring Finland prepares to open its regulated online gambling market in 2027. However, the government is already facing scrutiny over the immediate fiscal impact of the said measure.
Tax Failures Raise Concerns
The reform was also affected by a drafting error that briefly created the possibility of Estonian online casinos being exempt from gambling tax completely in 2026. Nevertheless, the Riigikogu quickly corrected the mistake and updated the legislation in February.
Operators subsequently made voluntary payments to cover the period affected by the error. Around €815,000 was collected in January and €1.12 million in February, while a further €220,000 shortfall was covered through a supplementary budget transfer to the Cultural Endowment.
Michal stated that the government has already compensated for the missing funds caused by the legislative error and would need to ensure that culture does not lose funding as a result of any further revenue gap.
The Prime Minister added that the government expects to have a clearer picture of why gambling tax receipts have fallen in the coming weeks.
If the lower rate does not result in higher revenues through increased activity and registrations, Michal said there would be no reason to continue reducing the tax.
The review could therefore determine whether Estonia continues with its strategy of using lower gambling taxes to compete for international online casino operators, or instead reverses course to protect state revenues earmarked for cultural and sporting activities.
Existing Operators Continue to Grow
Meanwhile, financial results from Estonia’s licensed gambling sector show that several existing operators documented strong growth in 2025. OlyBet parent OB Holding reported a solid 6% increase in revenue to €45 million, while PAF-linked AS Pafer saw an impressive revenue bump of 16% to €15.13 million, which was driven largely by remote gambling.
Some smaller operators also recorded significant increases, including Befuria GO, whose revenue surged from €93,000 to €8.9 million. However, results were mixed, with Betsafe and JallaCasino operator Triogames reporting an 8% decline in revenue.
Several major operators, including Coolbet operator StayCool, Ninja Global, Hitz Gaming and Tonybet, had also failed to submit their 2025 annual reports by the statutory June deadline, meaning a complete picture of the market is not yet available.
Despite the growth among established casino brands, the filings have so far provided little evidence that the lower tax rate has attracted new international operators to Estonia, reinforcing questions over whether the measure is delivering the additional revenue originally expected.
