Estonia Faces Rift Over Proposed Gambling Tax Cut

A proposal to reduce Estonia’s gambling income tax by 2028 has sparked division in the Riigikogu, as the ruling Reform Party and its coalition partner Eesti 200 push forward with an initiative they say will attract investment and boost innovation.

Gradual Tax Reduction Plan
Under the plan, the gambling tax rate would fall from 6% to 4%, decreasing by 0.5% annually until 2028. Supporters argue that this would position Estonia more competitively against jurisdictions like Malta, where the rate is 5% and encourage foreign iGaming and tech operators to establish a base in the country.

Prime Minister Kaja Kallas endorsed the proposal as a strategic move to strengthen Estonia’s economy and support national sports development. The government envisions reinvesting future revenues into projects such as a new Olympic program and a national stadium in Tallinn.

Finance Ministry Raises Alarm
The Ministry of Finance, however, has voiced strong opposition, warning that the cuts could undermine state revenue and economic stability.
Deputy Secretary General Evelyn Liivamägi cautioned that “to maintain current revenue levels, at least 10 new operators must enter the market annually,” a target she described as highly unlikely.

The ministry’s review also flagged potential anti–money laundering concerns, urging a full impact assessment before further readings in Parliament.

Political Fallout in Parliament
Tensions escalated after lawmakers passed the bill’s first reading, effectively halting a previously planned tax increase to 7% next year  a proposal favored by opposition parties to fund public services.

Despite criticism, Eesti 200 MP Tanel Tein defended the bill, warning that higher taxes could drive operators away:

“If we raise the rate further, remote gambling firms might leave the market entirely. A lower tax sends a clear message that Estonia is open for digital business.”

Broader Economic Agenda
The dispute has revived debate over the Reform–Eesti 200 coalition pact (2023–2028), which aims to position Estonia as a European hub for cybersecurity, defense, and green innovation.

As the second reading approaches, the government faces mounting pressure to prove that its tax reform can both stimulate investment and safeguard fiscal responsibility, a balance that could define Estonia’s gaming and digital economy strategy for years ahead.