Latvia is preparing one of the most significant overhauls of its gambling sector in more than a decade, tying stricter regulation and higher taxation to a sweeping budgetary reform package due to take effect in 2026. The move comes at a time when the gambling industry is already struggling with declining revenues and shifting consumer behaviour.
Finance Minister Arvils Ašeradens, in collaboration with Signe Birne, Director of the Lottery and Gambling Supervision Inspectorate, is driving the reforms. The Parliament is on track to review the proposals in April 2026, just before record defence spending commitments in 2027 and 2028.
Regulatory Restructuring
At the heart of the plan is a consolidation of oversight. The IAUI will be merged into the State Revenue Service (SRS), placing gambling supervision and operator licensing directly under state financial control.
“The integration of gambling oversight into the State Revenue Service will allow us to establish unified management faster, make better use of our resources, and deliver higher-quality services to the public,” Ašeradens said.
Prime Minister Evika Siliņa has framed the reform as part of her government’s core agenda, alongside higher excise duties on alcohol and tobacco. “Security, support for families, economic growth, and reducing bureaucracy, bringing public administration closer to the people,” she said.
Tax Hikes and Fiscal Goals
The draft budget, scheduled for submission by October 14, proposes significant increases to gambling taxes. Under the proposal, slot levies would rise from €6,204 to €7,440 per unit.
In the meantime, table games are projected to spike from €33,696 to €40,440. Online casino gambling and telephone wagering would each face a 3% tax hike, and bingo a 2% increase.
The government sees these changes as a way to bolster revenues, particularly as military spending is set to climb to unprecedented levels.
Industry in Slight Decline
The timing of the reform coincides with a noticeable cooldown in the gambling sector. According to IAUI, total gambling revenues in the first quarter of 2025 fell to €66.39 million, a decline of €6.54 million, or 9%, compared to the same period in 2024. Compared with the previous quarter, revenues fell even worse, by €12.59 million or 16%.
Slots saw the largest drop, with revenues down 18.9% year-on-year, while interactive gambling declined by 1.1%. The number of gaming halls fell by 16 units compared with early 2024, and 388 fewer machines were in operation. Applications for license cancellations are also being filed, indicating further contraction.
Birne explained that the low performance of the gambling market this quarter affects both land-based and online casino operators.
“Seven closed the first quarter with losses, while two more broke even. The industry clearly reflects how economic instability and slower growth are impacting various sectors of the national economy. People are more cautious and more carefully evaluate how to spend their free funds,” added Birne.
Tax Contributions and Employment
Latvia’s gambling sector may be in decline, but it’s still a major source of funds for the state budget. In Q1 of 2025, gambling operators spent €14.6 million on special taxes and fees. However, this was €1.15 million short of the projected.
Municipalities received €0.5 million, while other taxes accumulated by operators reached €8.7 million. Last but not least, the sector had 2,724 employees in that period.
Tackling Illegal Gambling
In the meantime, authorities are also trying to address the issue of the rising number of unlicensed websites. In the first quarter of 2025 alone, a total of 90 gambling websites were blocked for operating in the country’s market without proper authorisation.
According to data from British research agency H2GC, illegal gambling accounted for 24% of Latvia’s online casino market by the end of 2024. This was down from 41% in 2020, a decrease which officials connect to sustained enforcement efforts.
Addressing Addiction Risks
In addition to revenue, the government has emphasised social responsibility as a key element of the upcoming reform. Still, the IAUI continues to provide support for at-risk players, having held over 200 consultations in the first quarter of 2025.
On top of that, as of March 31, 35,461 individuals had voluntarily self-excluded from gambling for at least 12 months via the country’s Register of Self-Rejected Persons.
What’s to Come?
With the parliamentary discussions scheduled for 2026, Latvia’s government has the tricky task of finding a balance between pocketing some extra revenue against industry concerns over rising taxes and dipping performance. Experts predict that the reforms are most likely to be greenlighted, considering their importance in funding Latvia’s long-term defence and social priorities.
However, possible amendments could soften the blow for third-party operators, who already experience difficulties in the market. It remains to be seen what approach the country will take and how it will affect the remote casino sector and its consumers. Still, the picture will become clearer pretty soon.
