Reinsalu: Tax break for online casinos to cost Estonian state €31 million

Estonia's parliament, the Riigikogu, held a special open session of its state budget oversight committee on Monday, August 31, to review gambling tax revenue following a cut in the tax rate for online casinos, and to assess the impact on the state budget and on sectors funded through this tax.

Committee chairman Urmas Reinsalu (Isamaa) told ERR that, according to the Ministry of Finance's forecast, the state will miss out on roughly €31 million in revenue compared with earlier expectations, counting through 2029. He said ministry officials had already anticipated this outcome when the law was passed, but the decision had been political, and the government has so far given no instruction to reconsider it. Reinsalu said he is now convinced, based on input from the Finance Ministry, the Tax and Customs Board and the Culture Endowment Fund, that the decision should be reversed without delay. Since raising the rate requires six months' advance notice, he urged parliament to swiftly introduce a bill restoring the previous rate, warning that further delay would deepen the shortfall in both state and Culture Endowment revenue.

Culture Endowment already cutting support

Culture Endowment Fund head Margus Allikmaa said the drop in gambling tax revenue is forcing the fund to reduce grants and revise its investment plan for culture buildings of national importance. Nothing is being cancelled outright, he said, but grants to event organizers, authors and performers will end up somewhat smaller than initially expected. Some payment schedules agreed with cultural sites, including ERR, will need to be stretched out. He warned that if the tax rate falls further next year, as current law provides for another 0.5-percentage-point cut equal to nearly a 14% revenue drop, the situation would become more serious, since all eight target funds are having to repeatedly scale back their budgets.

Since the rate change, only one operator has obtained a license to operate on the Estonian market, with two more in the process; tax revenue from them, Allikmaa said, cannot be expected before late 2027 or early 2028. He added that even Prime Minister Kristen Michal's suggestion of raising the rate back toward the level planned in the 2024 budget strategy would not offset the losses, noting Estonia's rate is already the lowest in Europe and that a 2024 rate hike had previously boosted both state and fund revenue significantly.

Allikmaa said the tax cut had been actively pushed by the Eesti 200 party, including MP Tanel Tein, in hopes of funding sports infrastructure, a goal he called understandable but based on misplaced trust in gambling operators, since the expected money never materialized. The Riigikogu passed the gambling tax law amendment on December 3, 2025; the president promulgated it on December 18, but a drafting error forced parliament to re-pass it on February 10.