Estonia Approves Gradual Reduction of Online Gambling Tax to 4% by 2029
Estonia has officially approved a phased reduction of its online gambling tax rate, decreasing it from 6% to 4% by 2029. The reform reverses earlier plans to increase the rate to 7% and is designed to attract additional licensed international operators, strengthen the country's competitiveness in the European iGaming market, and increase long-term funding for sports and cultural initiatives.
The Riigikogu voted 48–18 in favour of the bill. The rate will fall in increments of 0.5 percentage points annually, with each step tied to specific tax-revenue performance criteria. If revenue goals are not achieved, further reductions will be suspended.
Government projections indicate tax revenue is expected to rise from approximately €22 million in 2024 to €30 million by 2028 due to increased operator participation and expanded market activity.
Government Perspective: Stimulating Growth Through Market Competitiveness
Foreign Minister Margus Tsahkna stated that all additional tax revenue will continue to support culture and sports. He emphasised that the phased model provides safeguards and allows the state to halt reductions if expectations are not met.
Prime Minister Kristen Michal compared the reform to Estonia’s earlier decision to remove corporate income tax on reinvested profits — a move initially questioned but later recognised as a catalyst for economic growth and transparency. According to Michal, the new approach will help bring more regulated business activity, technology jobs and accounting functions to Estonia while ensuring financial oversight remains strong.
The government has also confirmed that the Financial Intelligence Unit (FIU) will receive increased resources to maintain compliance rigor as market activity expands.
Opposition Concerns: Revenue Risks and Uncertain Operator Influx
Former finance minister Mart Võrklaev has criticised the reform, noting that new operators have already shown interest in the Estonian market even without a tax cut. He pointed out that nine new licensed operators entered after a previous tax increase decision in 2023, collectively contributing approximately €4 million in annual revenue. According to critics, projections for a significant surge in new market entrants may be overly optimistic.
Strategic Positioning: Estonia Aims to Become a Leading EU iGaming Hub
The tax strategy aligns with broader ambitions to position Estonia as a competitive base for remote gambling operations, particularly those currently located in Malta and other European jurisdictions. Reform Party MP Madis Timpson, who has been vocal in support of the proposal, has described Estonia as having the potential to become a leading hub for remote gambling and fintech-driven gaming platforms due to its digital infrastructure, regulatory clarity, and established licensing framework.
The change also comes as several Estonian-based operators restructure operations in response to global strategic shifts. Yolo Entertainment recently announced redundancy plans as part of a broader reorganisation focused on expanding into markets in Northern Europe, the Middle East and North America.
Industry Outlook
The upcoming years will be crucial for assessing whether Estonia’s structural tax reduction translates into increased investment, new licensing applications and stronger long-term market competitiveness. The initiative places Estonia among European jurisdictions experimenting with tax-driven incentives to attract regulated gaming operators while maintaining high standards of compliance and financial integrity.
