Estonia’s parliament has moved to correct a drafting error that briefly excluded online casinos from the country’s gambling tax system. The 5.5% levy on remote gambling will be reinstated starting March 1, 2026, following the amendment to the Gambling Tax Act introduced by MP Tanel Tein.
The correction clarifies that both games of chance and games of skill fall under the same regulatory framework, re-establishing equal treatment across the sector. The adjustment comes after a legislative mistake late last year temporarily exempted online gambling platforms from the tax, creating uncertainty for both operators and the government.
Key Insights on Estonia’s Online Gambling Tax Reinstatement
- Tax Reinstatement: The 5.5% tax on online gambling revenue will take effect on March 1, 2026, reinstating the levy after it was mistakenly omitted earlier.
- Error Correction: The amendment fixes a previous legislative oversight that had temporarily exempted online casinos from paying taxes on their gaming revenue.
- Revenue Impact: The reinstated tax is expected to generate €27 million in 2026, with approximately €2 million per month to support public services.
- Smooth Transition: The tax reinstatement is in line with monthly tax cycles, ensuring a seamless transition for operators and regulators.
- Public Funding Restoration: The tax will help restore funding for important sectors such as sports and culture, which were disrupted when the tax obligation was temporarily removed.
The Tax Error and Legislative Fix
The legislative error, revealed in January, unintentionally exempted online gambling platforms from the Gambling Tax Act, creating confusion for both operators and regulatory authorities. Without a legal framework, payments from these operators could not be treated as taxes, raising concerns about whether companies could continue contributing.
Finance Ministry officials explored alternatives such as donations or advances but concluded they were inadequate substitutes for a statutory tax levy. To close the gap, MP Tanel Tein introduced an amendment that clarifies the inclusion of online gambling under the same tax rules as land-based casinos and other gaming activities.
By reinstating the tax, the government ensures that online operators are treated equally and prevents further regulatory uncertainty. The correction also helps to restore key funding for public services, including sports and cultural activities, which had been disrupted during the tax hiatus.
Government and Industry Reactions
The reinstatement of the tax has been welcomed by both the government and the industry. Officials from the Ministry of Finance highlighted that the fix ensures regulatory clarity and restores a critical revenue stream for public services. The tax is expected to raise approximately €27 million for the year, with €2 million per month directed to important initiatives in sports and culture.
Industry groups, including Yolo Group and the Gambling Operators’ Association, have expressed their willingness to comply with the reinstated tax. However, industry stakeholders had stressed that voluntary contributions were insufficient and that a legally binding tax was necessary to ensure fair market conditions.
The quick legislative fix also provides operators with the predictability needed to plan their operations and comply with tax regulations moving forward.
This move comes after earlier pushback from Estonia’s Finance Ministry and lawmakers who opposed proposals to reduce the gambling tax, arguing that such a reduction could undermine revenue generation and public services.
Broader Regulatory Context
The correction of the online casino tax error is part of a larger regulatory overhaul in Estonia aimed at modernising gambling laws and aligning them with European Union standards. The Gambling Act of Estonia serves as the foundation for these regulatory efforts, governing how gambling is managed and taxed in the country. The move to reinstate the tax comes at a time when the government is also reviewing and adjusting tax rates and classifications to improve the overall integrity of the gambling sector.
Estonia’s swift action to restore the gambling tax highlights the government’s commitment to effective regulation and market fairness. This correction also mirrors broader regulatory efforts in other European countries, where governments are increasingly focusing on ensuring that online gambling is fully integrated into tax systems and regulatory frameworks.
Why the Reinstatement Matters
By quickly restoring the 5.5% tax, Estonia has avoided the risk of creating a two-tier tax system that could have distorted the market between online and land-based operators. The tax reinstatement also reinforces Estonia’s position as a competitive, tax-fair jurisdiction while safeguarding consumer protection.
For operators, this move provides regulatory certainty, which is crucial for long-term planning and investment. For the government, it preserves a key source of public revenue, helping to fund important regulatory activities and general state finances.
With the levy back in force from March 1, 2026, Estonia’s online gambling sector can now proceed with greater regulatory certainty—a critical foundation for market growth and oversight.