Estonian Prime Minister Kristen Michal has ordered an early review of the country’s online gambling tax cut, well ahead of the assessment originally scheduled for 2028, after state receipts fell and no new operators registered.
The Riigikogu passed the law in December 2025, lowering the gambling tax on licensed remote gambling operators from 6% to 4% in stages over two years. It was intended to bring more international operators onto the Estonian register and raise the overall tax take. The budget has instead recorded several million euros in shortfalls.
Michal told public broadcaster ERR that the government has to weigh whether continuing the reduction is fiscally responsible.
“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.”
The Prime Minister said the cut has been in force too briefly to judge whether more casinos are registering in Estonia, while accepting that gambling tax receipts have fallen. Proceeds from the tax are earmarked for culture and sport, so the shortfall lands directly on those budgets.
“If tax revenue does not increase, there is no point in continuing with further tax reductions.”
No new operators after eight months
The Ministry of Finance confirmed in June that the change has not brought new operators into the market. Two licence applications remain under review. That is the test the policy was written to pass, and it is the number Michal is now using to judge whether the second stage of the reduction goes ahead.
The “remote gambling paradise” pitch
When the Riigikogu approved the cut, supporters presented it as a way to make Estonia competitive with larger licensing hubs. Eesti 200 MP Tanel Tein led the push, arguing the lower rate would help Estonia compete with Malta, attract gambling tourism, and give sport and culture a more stable funding base.
Foreign Minister Margus Tsahkna projected that annual gambling tax revenue could rise from €22 million to €30 million by 2028 if new operators entered the market, with the proceeds directed to cultural and sporting initiatives.
Reform Party MP Madis Timpson, chair of the Riigikogu’s Legal Affairs Committee, went further, promoting the idea of Estonia as a “remote gambling paradise” that would draw companies away from Malta.
The Finance Ministry warned about the hole
The Ministry of Finance opposed the measure at the time, estimating revenue losses of €6 million in 2026, €8 million in 2027, €10 million in 2028 and €13 million in 2029 if the expected influx of operators did not arrive.
Former finance minister Mart Võrklaev called the cut premature. He pointed out that nine new operators joined the Estonian market in 2023 after taxes were raised, bringing in €4 million a year, and said the forecast of a large operator influx was built on “shaky ground”.
Government figures dismissed those objections as political. Tsahkna defended the policy as evidence-based, and Michal compared it to Estonia’s corporate tax reforms, which were doubted at the time and later credited with driving investment.
A rollout the drafting error made worse
The first year of the new rate did not go to plan. A drafting error in the legislation left online casinos with no valid tax rate for 2026, exempting them from the levy until parliament corrected the text in February and reinstated a 5.5% rate from 1 March. Most operators paid roughly €1.4 million voluntarily to cover the gap, and the government compensated the Cultural Endowment for what was still missing.
That episode is what Michal refers to as the “legislative mistake”. A policy sold on the promise of a bigger tax base has so far produced a smaller one, a correction bill and a voluntary collection round.
What happens next
The review returns the question to the Riigikogu, which has to decide whether to let the reduction run to 4% as legislated, freeze it at the current rate, or reverse it. The evidence available to MPs is eight months of receipts and two licence applications sitting with the Tax and Customs Board.
If either application converts into a licensed operator paying tax in Estonia, supporters will have their first piece of evidence. If neither does, the government will be choosing between a policy that has not worked yet and a culture budget it has already had to top up once.
Source: Estonian Public Broadcasting (ERR)
