The new government of the Baltic nation is sticking to its gaming reforms. The newly proposed taxation update proposes small, but gradual increases across all gambling forms. Estonia has one of the lowest tax rates on industry in Europe. The minor increase planned should allow the industry to remain attractive, despite stricter regulations.
Operators will still pay below average
Estonia has fully embraced a growing European trend towards tighter gambling regulations and more stringent measures to protect customers. As evidenced by the recently proposed Tax Laws Amendment Act, the coalition government of Estonia has largely rallied around the cause. The document proposes major changes in the corporate and private sectors. A special section is dedicated to gambling.
The draft legislation will see gambling companies facing sweeping tax hikes. Private operators should not be affected by the 3% tax increase on lotteries, as it is a state owned monopoly. This measure is aimed at retail companies that organize marketing campaigns and consumer games in order to promote their product.
Estonia is no longer tied with Malta for the lowest tax jurisdiction due to the increase in online betting. The current 5% tax rate will increase to 6% by 2024, and to 7% by 2026. This will contribute EUR8-13million annually to the government coffers. Estonia will still remain one of the most promising markets despite the increase. This means that the gambling industry should continue to be attractive.
The country tightens its grip on the industry
Estonia’s gambling market has grown explosively due to the low tax rate. Authorities are increasingly worried about the increase in gambling-related harm, with nearly 30 operators competing for the 1,33 million people of Estonia. The country has adopted the European trend towards stricter gambling regulations and proposed a total ban on advertisements.
Industry representatives rallied to oppose these measures and called for a nuanced approach. They called attention to the delicate nature of the relationship between stakeholders in sports and operators. They also urged government officials to have further discussions with them. The authorities are able to move forward with their plans due to the agreement between the ruling parties, and the growing threat of societal costs.
The planned tax increases and tighter regulations will bring an end to the honeymoon period Estonian operators enjoyed up until now. The measures may cause a temporary decline if implemented. However, other European countries have shown that the industry can still thrive with similar restrictions.
