Estonia’s online casinos temporarily exempt from tax in 2026 after legislative typo

• Estonia’s online gambling operators may not be paying gambling tax in 2026 due to a legislative error.
• The mistake stems from incorrect terminology in the amended Gambling Tax Act approved in December 2025.
• The government expects to lose approximately €22 million in tax revenue this year.

Estonia’s online casino operators will avoid paying gambling tax throughout 2026 after lawmakers failed to use correct terminology when updating the country’s gambling legislation in December 2025.

The error was discovered by members of parliament following the approval of amended gambling tax legislation. A clerical mistake in the legal wording has created an unintended loophole that exempts online gambling operators from tax liability for the current calendar year.

The oversight could cost Estonia approximately €22 million in tax revenue during 2025.

Clerical error in legal terminology

The problem arose when Estonia’s parliament amended the Gambling Tax Act in December 2025. The Riigikogu passed the bill on 3 December and President Alar Karis promulgated it on 18 December.

The amendments were part of Estonia’s broader strategy to reduce online gambling tax rates gradually, positioning the country as a more attractive jurisdiction for licensed operators. The changes aim to challenge Malta’s status as a remote gambling paradise by offering competitive tax rates to international gaming companies.

Aivar Kokk, member of the Estonian parliament’s Finance Committee from the Isamaa party, was the first to flag the technical error to ERR News.

“Games of chance and remote gambling were left out of this year’s taxation, meaning online casino games are not being taxed in 2026,” he said.

The mistake lies in a clause amending the Gambling Tax Act, which specifies that the 5.5% tax rate applies only to “skill games” as defined in Section 1, Subsection 1, Clause 5 of the law. However, online casino games fall under the category of “games of chance”, not “skill games”, creating an inadvertent exemption.

“There would have been no issue if the term ‘games of chance’ had also been included,” Kokk explained, adding that provisions for subsequent years were drafted correctly.

€22 million revenue shortfall anticipated

The clerical error could cost Estonia approximately €22 million in gambling tax revenue during 2026. This figure represents the sector’s annual tax contribution based on 2025 collection levels.

The Tax and Customs Board has confirmed it cannot retroactively close the loophole or compel operators to make payments for the current year under the incorrectly worded legislation. However, parliamentary sources indicate the government is moving rapidly to introduce corrective legislation and reverse this exemption.

Annely Akkermann, chair of the Finance Committee from the Reform Party, acknowledged the oversight to ERR News.

“This mistake is indeed in the Gambling Tax Act and we will fix it,” she stated.

Akkermann said that in her 12 years in the Riigikogu, this is the first such clerical error in one of her own bills.

“No one noticed it. I personally read through the bill. Everyone read it—lawyers at the Ministry of Finance, our committee staff, members of parliament, all the way up to the president,” she said.

Lauri Laats, Centre Party vice-chair and parliamentary group leader, accused the government of negligence.

“The tax burden rises for the weakest, the state loses millions and responsibility is dispersed. This is not governing the state. This is negligence, arrogance and shirking responsibility,” he wrote on social media, as reported by ERR News.

Unintended gambling paradise status

The temporary tax exemption inadvertently brings Estonia closer to the status of established gambling jurisdictions like Malta, where favourable tax regimes have attracted hundreds of international operators.

Whilst Estonia’s long-term plan involves structured tax reductions to remain competitive, the complete absence of tax liability for 2026 creates an unexpectedly advantageous environment for operators.

Riina Sikkut, member of the Riigikogu’s Finance Committee from the Social Democratic Party, criticised the error’s impact on public funding.

“The prime minister promised an end to the tax festival, but apparently the Estonian people were waiting for a tax circus to begin. Now the very thing that was feared is happening: culture and sports will be deprived of the expected (additional) revenue—a ‘typo’ that has become law exempts a large part of the gambling industry from paying tax,” she told ERR News.

Estonia’s online gambling market includes both domestic operators and international companies licensed to serve Estonian customers. The country has issued approximately 40 administrative licences to online gambling operators. The sector has grown substantially in recent years, with digital platforms accounting for an increasing share of total gambling activity.

The tax exemption applies specifically to online casino operations and remote gambling, whilst other forms of gambling taxation remain unaffected. Land-based casinos and physical gambling venues continue to pay taxes under existing arrangements.

Government moves to reverse exemption

Finance Committee officials have confirmed the error will be corrected within approximately one month through fast-track legislative procedures. Akkermann explained two options are under consideration to amend the problematic wording.

“One option is to attach the fix as an amendment to another bill. The other is to submit a separate bill to remove the word ‘skill games’ from the text. We’re more likely to go with the fastest option and bundle it with another bill,” she said.

The correction will restore the 5.5% tax rate on online gambling for 2026 as originally intended. This rate represents the first step in Estonia’s phased reduction plan, which aims to lower the gambling tax from 6% to 4% by 2028 through annual decreases of 0.5 percentage points.

The government’s gambling tax strategy remains controversial. Foreign Minister Margus Tsahkna has said authorities anticipate gambling tax revenue could grow from approximately €22 million currently to €30 million by 2028 if the tax reduction successfully attracts new international operators to Estonia.

The temporary tax exemption highlights the technical complexity of drafting gambling legislation and the need for meticulous review processes. Parliamentary finance officials have indicated they will examine approval procedures to prevent similar errors in future tax reforms.