Estonia’s coalition keeps pledge to cut taxes on gambling income, viewed as a strategic lever for foreign investment amid rising levies across all EU states. Ministers view opportunities to rival Malta as tech hub for online gambling businesses.

In Estonia, the Coalition government maintains its plans to lower taxes on gambling licences, viewed as an economic opportunity to increase foreign investment in the Baltic state.

A committee of ministers of the governing Reform Party and Eesti 200 party have begun work on the tax plans of the Coalition Pact 2023–2028, supporting the mandate of Prime Minister Kaja Kallas.

In June, Reform and Eesti 200 published their governing pact agreeing on economic objectives that include strengthening national security, reforming social protections, and accelerating the transition to climate neutrality.

Economic revisions saw the parties agree to review the Remote Gambling Tax in incremental steps, with the rate falling by 0.5% each year until it reaches 4% by 2028.

The drafting of the gambling tax proposal has now begun, led by Reform MP Madis Timpson, Chair of the Riigikogu’s Legal Affairs Committee. Timpson has emerged as the leading advocate for lowering the levy on remote gambling, framing it as an opportunity to attract new foreign-licensed operators to Estonia.

“A remote gambling paradise is indeed what we could become,” Timpson said, pointing to operators currently domiciled in Malta and other EU jurisdictions. 

“Those people who are playing somewhere, I don’t know, in France, in Spain, their profits would come to us.”

Timpson further linked the reforms to the government’s cultural agenda, citing the importance of visible national projects. The coalition pact outlines the creation of a dedicated national sports infrastructure fund, working in partnership with the Estonian Olympic Committee, as well as a private fundraising mechanism. 

A second fund would direct 20% of new gambling tax revenues into matched donations, with a funding model split between the state (one-third) and corporate sponsors (two-thirds).

“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. Every cent we manage to obtain to fund this large hall is, in my opinion, a welcome deed for athletes and cultural figures.”

However, forthcoming procedure requires that the Riigikogu introduce a specific bill on gambling taxes, which cannot be passed as part of a state budget. Parliament views this process as necessary to ensure full transparency and accountability, given sensitivities around gambling revenues and their allocation.

The pledge faces pushback from the opposition, most notably the Centre Party. Finance Committee Deputy Chair Andrei Korobeinik has questioned whether tax cuts will deliver the promised investment, arguing that international operators value economic stability and predictability more than marginal rate cuts.

“The initiators of the bill believed the lobbyists, who promised that if this tax rate is lowered, casinos and remote gambling service providers will come here. The reality is that no analysis has been carried out,” Korobeinik stated.

Despite the pledge, PM Kallas remains cautious in her support of lowering gambling taxes. While the coalition pact envisions Estonia becoming more competitive as a gambling hub, she has stressed that gambling revenues must contribute directly to national priorities, particularly funding sports infrastructure and rebuilding Olympic-standard venues.

Kallas underscored that she is no soft touch on gambling, pointing to her 2024 intervention, when strict advertising controls and consumer protections were imposed on gambling licences. 

The measure led to a ban on celebrity endorsements, inducements such as “risk-free” bets, and marketing aimed at underage audiences. These measures, she argued, underscored that while the industry may bring investment, its growth must be balanced with responsible safeguards.