However, the plan has drawn sharp criticism from opposition lawmakers and former finance officials, who warn it could leave a hole in public finances.
The changes reverse earlier plans to raise the rate to 7% next year.
Under the amendments to the Gambling Tax Act, the rate will fall in 0.5-percentage-point increments until it reaches 4% in 2029. Each reduction is contingent on revenue benchmarks being met.
According to Foreign Minister Margus Tsahkna, the government expects annual gambling tax revenue to climb from €22m today to €30m by 2028, assuming new operators enter the market.
“This money will go entirely to culture and sports,” Tsahkna said, adding that the plan includes safeguards to halt further cuts if revenue targets are not achieved.
The bill passed the Estonian parliament on 21 October, with 48 voting in favour and 18 against, and has now been approved.
Critics warn of losses
Former finance minister Mart Võrklaev of Estonia’s Reform Party has been among the most vocal critics.
He questioned the assumption that more operators would enter the Estonian market.
“The new scheme is based on the assumption that lowering the tax will bring a large number of gambling operators to Estonia,” Võrklaev said in an interview with Eesti Ekxpress.
“But after we decided to raise the tax in 2023, nine new operators still entered the market. That brought in €4m per year.
“The forecast expecting a massive influx of gambling operators is built on shaky ground,” he added.
Prime Minister defends reform
Local media outlet ERR reported that Prime Minister Kristen Michal (pictured) defended the plan, likening it to Estonia’s earlier abolition of corporate income tax, a reform that faced initial resistance but later became a model of fiscal innovation.
“That was a project marked by a minus sign. People said the calculations showed that no revenue would come in and that the economy would collapse.
“If I remember correctly, in the following years, profits grew ninefold, tenfold, elevenfold. In reality, it all came out of the shadows and the Estonian economy gained momentum,” Michal said.
He emphasised that what would come to Estonia is not gambling activity itself, but rather companies’ licences and accounting operations.
He said the key is ensuring that these operations remain under proper oversight, which is why plans are in place to strengthen the work of the Financial Intelligence Unit (FIU).
Push to become iGaming hub
The tax cut is part of a wider initiative championed by Madis Timpson, Reform Party MP and chair of the Riigikogu’s Legal Affairs Committee, who has called for Estonia to become a “remote gambling paradise.”
He argued that a lower tax rate would attract companies currently based in Malta and boost investment in Estonia’s tech-driven gambling sector.
The changes come as Estonia’s gambling industry faces restructuring and job cuts.
Last month, Yolo Entertainment announced large-scale redundancies in Estonia as part of a major reorganisation aimed at consolidating operations under a single regulated brand, Yolo.com, and expanding into new markets in the Middle East, Canada, and Northern Europe.
Dingnews.com 03/11/2025