Estonia’s governing coalition, led by Prime Minister Kaja Kallas, has introduced a bill proposing significant reductions in the country’s gambling tax rates, with a primary goal of attracting foreign investment. The bill, backed by the Reform Party and Eesti 200, seeks to lower the remote gambling tax from its current rate to just 4% by 2029. This measure aims to position Estonia as an attractive destination for international online gambling operators and, according to the bill’s proponents, could increase overall tax revenues despite the reduction in the rate.

Creating a Gambling Paradise

Madis Timpson, MP for the Reform Party and Chair of the Legal Affairs Committee, has been a key advocate for this proposal. He believes the tax reduction will turn Estonia into a “remote gambling paradise.” By reducing the gambling tax incrementally by 0.5% each year, the bill hopes to lure online gambling companies that currently operate from jurisdictions such as Malta, offering them an opportunity to establish their bases in Estonia. Timpson envisions the move will make Estonia a competitive hub for online gambling services catering to players outside the country, particularly in markets like France and Spain.

“We have been talking here about this famous large [sports] hall that could be built, but all the time it’s as if we deliberate and deliberate. In fact, I signed on to this initiative primarily as a member of the support group for elite sports and coaches,” Timpson remarked, highlighting the potential cultural and sports benefits tied to the initiative.

The new revenue generated from this proposal is intended to be reinvested into the country’s sports and cultural infrastructure, with a specific focus on building and renovating major sports facilities. The bill’s sponsors see the increased gambling tax revenue as a vital means of supporting the development of Estonia’s sports culture, with funds earmarked for elite sports venues and related projects.

However, not all members of Estonia’s political establishment are in favor of the tax cuts. Andrei Korobeinik, Deputy Chair of the Finance Committee from the Center Party, has raised concerns that the proposed cuts may lead to a loss of revenue rather than the anticipated gains. Korobeinik argues that the claim that international gambling operators will flock to Estonia due to marginal tax rate reductions is not substantiated by evidence. He emphasizes that operators prioritize economic stability and predictability over minor reductions in tax rates.

“The initiators of the bill believed the lobbyists, who promised that if this tax rate is lowered, then immediately casinos and remote gambling service providers will come here. The reality is that no analysis has been carried out,” Korobeinik stated, casting doubt on the bill’s potential to generate significant investment. Despite these concerns, he acknowledged that the debate surrounding the bill could foster important discussions about the transparency of funding allocations for sports and culture.

Tackling Gambling Transparency and Funding Issues

Korobeinik also pointed out the current lack of transparency in decision-making around the allocation of gambling funds. He mentioned that, before 2017, the gambling council played a critical role in determining how funds from gambling taxes were used, ensuring expert involvement and public oversight. Since its dissolution, however, there has been no formal body overseeing these decisions, and Korobeinik believes that the current system lacks accountability.

“The Riigikogu cannot influence it. They don’t ask an expert’s opinion, so why some other major event is left without support, no one knows,” he added, as reported by ERR, urging that any changes to gambling tax policies should be approached with greater scrutiny and a focus on transparency.

The bill is part of a broader strategic vision outlined in the coalition’s Pact 2023-2028. The government’s economic goals include fostering growth in various sectors, including national security, social protections, and the transition to climate neutrality. The gambling tax reform is expected to be implemented gradually over several years, with the rate reduced annually until it reaches the target of 4% by 2029.

While the bill has garnered support from some quarters for its potential to enhance foreign investment and improve the country’s sports infrastructure, the proposal faces a challenging road ahead. It must undergo further debate and scrutiny in the Riigikogu before becoming law.

Prime Minister Kaja Kallas, while supportive of the potential economic benefits of reducing the gambling tax, has maintained a cautious approach. She is keen to ensure that gambling revenues directly contribute to national priorities, particularly in the realm of sports infrastructure. Kallas pointed out her government’s strict stance on gambling advertising and consumer protections, emphasizing that while the sector may offer investment opportunities, its growth must be carefully balanced with safeguards to protect consumers and ensure responsible gambling practices.

In 2024, Kallas’s government imposed stricter advertising controls, including a ban on celebrity endorsements and promotional practices such as “risk-free” bets. These measures reflect her ongoing commitment to managing the gambling sector responsibly while simultaneously leveraging it for economic growth.