Estonia’s efforts to maintain continuing reductions in gambling tax until 2028 has passed first reading, as the government targets regional gaming hub status for the country.

The draft Bill was voted in the Riigikogu, winning over with 48 votes from the governing Reform Party and its political partners against the 18 from Isamaa Parliamentary Group and other opposition leaders.

2025 proceedings saw PM Kaja Kallas renegotiate  the governing terms and economic policies of Estonia’s Reform Party with coalition partner Eesti 200. The parties agree in principle to lower taxes on the income of gambling licences, with a view to raise new funds for Estonia Olympic Committee and the development of a national stadium.  

Reform, together with their coalition partners Eesti 200, introduced the proposal earlier this month with the argument that the current 6% tax level will gradually bleed the tax income dry as businesses opt in to leave Estonia.

To counteract this, the coalition partners tabled the proposal which envisions a 0.5% decrease each year until 2028, bringing the tax down to 4%.

This would make Estonia’s tax rate even lower than that of Malta’s at 5%, which government leaders say will incentivise foreign investments into the Baltic country and therefore compensate for the tax reduction with market growth.

The Bill also features several other amendments to the current remote gambling framework, including a more concise definition of “remote gambling”, raising the legal gambling age limit, increasing fines for regulatory breaches, and establishing strict AML and KYC rules around the use of crypto payments for gambling.

This last point in particular is interesting in the wider context of crypto regulation. With the European Union’s MiCA framework on the horizon, it remains to be seen whether tightening the rules around it would actually reduce the number of players in Estonia. It all depends on the actual number of crypto users in the country.

Some companies have also expressed confidence that Estonia could be a future regulated market for crypto gambling, with the practice being a grey market or black market across pretty much all of Europe. Yolo Group, for example, has earmarked Estonia as the first step in its own journey into regulated crypto betting.

Moving away from crypto, the Bill did face some scepticism from opposition when it was first introduced. Evelyn Liivamägi, Deputy Secretary General of Estonia’s Ministry of Finance, argued that the reduction in tax does not necessarily guarantee market growth.

She commented: “In our assessment, tax revenues are more likely to decline. To collect as much as currently forecast in the state budget strategy, at least 10 new operators would need to enter the market each year and pay as much tax as the average gambling organiser has been doing so far.”

However, Tanel Tein, MP from Eesti 200, maintained the point that the reduction of tax will bear fruit for the nation’s economy if it gets implemented: “If we hike the tax further, remote gambling operators may leave the Estonian market, which means our current state budget forecast could decrease.

“Many things might go undone, and within two years we’d just return to the same level where Estonia has always been — around five percent. We’re moving toward 4% as a signal to the sector that Estonia is once again worth considering”.

With two more readings to go, it is yet to be seen whether the Bill will become law under Estonian jurisdiction.