Estonia to reassess iGaming tax reduction

• Prime Minister Kristen Michal’s government will reassess the phased online casino tax cut, moving from 6% toward 4% by 2029, during 2027 Budget talks.
• The Finance Ministry confirms only two licence applications remain under review, with a third applicant already withdrawn.
• The reassessment comes as Estonia forecasts a budget deficit of 4.4% of GDP and negotiates a critical 2027 Budget.

Estonia’s government will reassess the phased reduction of its online gambling tax as it enters talks on the 2027 Budget, Prime Minister Kristen Michal has said.

The tax on licensed online casino income is being phased down from 6% to 4% by 2029, following a law the Riigikogu passed in December 2025. Michal said it remains too early to draw firm conclusions but signalled the measure will come under scrutiny as budget negotiations continue.

Drafting error fallout

Michal’s comments follow a turbulent year for Estonia’s gambling tax framework. A drafting error discovered at the start of 2026 temporarily removed the tax obligation for certain forms of remote gambling.

The Riigikogu corrected the legislation in February, effective 1 March. Operators were encouraged to make voluntary contributions to offset the missing receipts, covering the gap left by the legislative typo.

Kristen Michal told ERR that culture funding would not be allowed to suffer as a result:

“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.”

Reduction underdelivers

Separately, the phased tax cut has yet to deliver its intended results. The Finance Ministry confirmed in June that only two licence applications remained under review, with a third applicant already withdrawn, according to Deputy Secretary General Evelyn Liivamägi.

Michal acknowledged the measure has been in force for too short a period to draw firm conclusions. He said the government does not yet know why gambling-tax receipts have fallen, and expects a clearer picture in the coming weeks.

Michal added that if tax revenue does not increase, continuing the reduction would not be justified.

The reduction was championed by Eesti 200, the junior coalition partner, and steered through parliament by MP Tanel Tein. Eesti 200 chair and Education Minister Kristina Kallas defended the policy as a way to attract international operators, expand the tax base and fund culture and sport, framing it as part of Estonia’s wider bid to rival Malta as a European iGaming hub.

The Finance Ministry had warned the cut could reduce gambling-tax receipts by roughly €6m in 2026, rising to €13m by 2029, if the hoped-for influx of operators failed to materialise.

Budget on a knife-edge

The reassessment lands as Michal’s government tries to reconcile competing demands in the 2027 Budget. Estonia forecasts economic growth of 2.5% in 2026, but expects a general government deficit of 4.4% of GDP, above the EU’s 3% reference level.

Michal will negotiate from a weakened position: following two MPs’ departures, the Reform-Eesti 200 coalition now controls only 50 of the Riigikogu’s 101 seats. Sign-off on the Budget is regarded as a critical test of his PM mandate, and the outcome of the gambling-tax reassessment may hinge on how much fiscal room the wider negotiations leave him.

Estonia is not alone in revisiting gambling tax policy this year: Bulgaria recently shelved a proposed tax hike in favour of a wider Gambling Act review, showing how fiscal pressure and industry pushback are sparking tax debates across the region.