Malta of the North? Estonia’s unique iGaming expansion plan
On 24 March 2025, the Estonian Reform Party and the Estonia 200 Party signed a coalition agreement that may change the expansion strategy of iGaming operators. The document consists of a fundamental agreement signed by the parties and approved sectoral plans. One of them is the introduction of new models for funding sports and culture in Estonia through tax revenues from remote gambling operators.
The Estonian government’s approach is unique in that, instead of increasing tax rates, it has chosen to lower them until 2028 gradually.
Reducing taxes and increasing regulations
Estonia’s ruling parties intend to initiate an amendment to the Remote Gambling Tax Act in Parliament by this autumn. It envisions reducing the tax rate by 0.5 percent per year, reaching 4 percent by 2028. The tax reduction is accompanied by increased supervision of the Financial Intelligence Unit and higher requirements for licence holders in line with the coordination of the EAMT and FIU, according to a publication on the Reform Party website.
Financing of Estonian sports and cultural facilities
A separate fund will be established to finance nationally necessary sports facilities from the remote gambling tax by the end of this year. It will finance sports facilities of national importance, as per the Estonian Olympic Committee’s list of priorities.
In addition, amendments to the Gambling Tax Act are planned to attract private money to the culture and sports sector. They also envisage that 20 percent of the additional revenue received will be channelled to the relevant fund. The aim of the amendment is that in the case of donations, 1/3 of the financial contribution will be the state’s share, and 2/3 will be the company’s contribution.
A smart move by the Estonian government to attract operators
According to Ilya Nikiforov, corporate lawyer at Eesti Firma, the amendments will significantly reduce the tax burden for online operators in Estonia compared to many other European jurisdictions. ‘Previously, local authorities had planned to raise the tax to 7 percent by 2026, but politicians changed course after the industry warned that higher rates could discourage new operators from registering in Estonia’s gambling sector,’ Nikiforov explains.
Officials expect that due to the lower rate, annual gambling tax revenues will increase to €50-60 million by 2028, the expert continues. The coalition believes that the influx of foreign gambling operators, attracted by the lighter tax burden, will offset the rate cut by doubling overall tax collections. This competitive tax regime is the cornerstone of Estonia’s strategy to expand its gambling sector and strengthen its position in the EU iGaming industry.
Revenue from gambling taxes as an alternative to excise taxes
Under Estonian law, the funding for physical education and sports, which is channelled through the Cultural Foundation, comes from revenues from excise taxes on alcohol and tobacco. As Margus Allikmaa, head of the Cultural Foundation, noted in an interview with ERR, the growth of gambling tax revenues has been steady and far outpaced the growth of excise tax revenues. Based on the Ministry of Finance’s budget forecasts for the period up to 2028, revenues from excise taxes on alcohol and tobacco are expected to see no or minimal growth.
Allikmaa notes that funding for sports has stagnated, with its budget remaining virtually unchanged since 2022, and no expected changes are anticipated until 2028.
In contrast, tax revenues from the gambling industry are proliferating, rising from €21m in 2013 to €48m in 2022, mainly from foreign sources. According to iGaming expert Andrius Alishauskas, the significantly higher online gambling revenues in Estonia are not primarily due to revenues generated domestically but because Estonian gambling regulation is favourable for investments by foreign companies targeting international markets. Estonia is, in a sense, the Malta of Northern Europe, concludes Alishauskas.
This article was first published in Russian on 11 June 2025.
