Estonia’s Gambling Tax Cut Has Yet to Draw New Operators

Estonia’s reduced online gambling tax has so far failed to deliver the expected rise in new operators, despite hopes that the change would attract foreign online casinos and increase tax revenue. The reform lowered the tax rate in stages, but officials say the early impact has been limited.

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Early Results Remain Thin

Under legislative amendments passed by the Riigikogu late last year, the tax on online gambling is being reduced from 6% to 4% in stages. The aim was to make Estonia more appealing for foreign online casinos looking to register in the country.

So far, however, the number of new entrants has been small. Evelyn Liivamägi, deputy secretary general for financial and tax policy at the Ministry of Finance, said 2 license applications had been submitted, but both were still being processed and were unlikely to begin operating until the end of this year or early next year.

She also said 1 other operator had withdrawn its application. That leaves the reform without the immediate surge in registrations that had been expected when the tax cut was introduced.

Tax Error And Interim Payments

A total of €815,000 was generated in January, while in February, the number grew to €1.12 million. However, a gap of €220,000 was bridged with the help of a supplementary transfer from the budget to the Cultural Endowment Fund.

While the problem attracted some attention, it does not seem to have resulted in any lasting increase in applications. The most recent numbers indicate that the reform is still in the beginning stages and has yet to influence operators’ actions.

Reform May Take Time

MP Tanel Tein of Eesti 200, who initiated the reform, said the effects of the tax cut will take time to appear. He noted that license approvals can be slow, with some taking half a year and others up to 10 months.

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Tein said approval speed remains an important factor in where businesses decide to locate. He added that it is still too early to draw financial conclusions from the policy, although he argued that the reform is already attracting interest and should be evaluated over several years.

His comments suggest that the impact of the tax reduction may only become clearer once more applications move through the system and companies begin deciding where to base their operations.

Competition From Finland

Tein also warned that Estonia must stay competitive, particularly as neighboring Finland prepares to open its own regulated market next year. He said less attractive conditions in Estonia could encourage operators already active there to move north.

The MP said licensed companies undergo strict checks and that the new rules include extra compliance measures and a requirement for a local contact person. He also said the purpose of the tax is not to expand the number of physical casinos, but to support sports and cultural funding in Estonia.

Tein argued that a move away from competitive conditions could reduce tax revenue and create a clear loss for the state budget. For now, the reform remains in place, but the response from the market has been slower than expected.

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Source: Err.Ee