Estonia is considering imposing higher taxes on operators

Estonia’s new government is following through with its planned gaming reforms, including incremental tax increases for all forms of gambling. Despite currently having one of the lowest industry tax rates in Europe, the proposed update to the taxation policy aims to keep the sector attractive while complying with tightening regulations.

Operators will continue to pay below the average

Estonia has joined the trend of tightening gambling regulations and implementing more stringent customer protection measures across Europe. The country’s coalition government has largely supported this cause, as evidenced by the newly proposed Tax Laws Amendment Act, which includes a dedicated section on gambling.

The draft legislation proposes sweeping changes for both private and corporate sectors, with a focus on increasing taxes for gambling companies. While the 3% tax hike on lotteries won’t affect private operators due to the state-owned monopoly on the national lottery, retail companies that organize marketing initiatives and consumer games to promote their products will be affected.

The increase in taxes for betting and online gambling means Estonia will no longer be tied with Malta as the lowest-taxed jurisdiction. The current 5% rate will rise to 6% in 2024 and 7% in 2026, bringing in €8-13 million annually for the government. Despite the increase, Estonia will remain an attractive market for gambling, maintaining its allure for the sector.

The industry is being more tightly regulated by the country

Estonia’s gambling industry has experienced explosive growth due in part to its low tax rate. Despite having only a population of 1.33 million, nearly 30 operators compete in the country. However, with the rise in gambling-related harm, the government has followed European trends towards more stringent regulations, including a proposed ban on advertisements.

Industry representatives have voiced concerns over these measures, calling for a more nuanced approach and highlighting the relationship between sports stakeholders and operators. Despite these concerns, the ruling parties seem determined to proceed with their plans due to the threat of rising societal costs.

The planned tax hikes and tightening regulations will likely mark the end of the previously favorable conditions for Estonian operators. However, other European countries have shown that the industry can still thrive despite similar restrictions, and any downturn is likely to be temporary.