Members of Estonia’s ruling coalition parties have announced proposals to reduce the rate of gambling tax in the Baltic state, going against the trend of tax increases in numerous other jurisdictions around the world. Supporters of the plan say it could make the country a remote gambling ‘paradise’.
Estonia’s current rate of tax for remote gambling is 6 per cent of gross revenue, having been increased from 5 per cent in 2024. Gambling tax was originally raised to help pay for an increase in individuals’ tax-free income allowances and the intention was to put it up to 7 per cent in 2026.
Now, however, a new bill has been drafted by MPs from the Reform Party and Estonia 200 that would reduce gambling tax by 0.5 percentage points annually, taking it to 4 per cent by 2029.
Reform Party MP and chair of the Legal Affairs Committee Madis Timpson is one of the proposers of the new bill and he has an ambitious vision for Estonia’s online gambling sector: “A remote gambling paradise is indeed what we could become. The idea would be that those foreign firms which are currently operating somewhere with their place of business officially registered in, for instance, Malta, would come to Estonia. Those people who are playing somewhere, I don’t know, in France, in Spain, their profits would come to us”.
Estonia already has a well-established online gambling sector with 37 licensees operating more than 40 brands, which is a similar number of licensees to Germany. Existing licensees in Estonia include bet365 and PokerStars, as well as regional brands such as Optiwin and Tonybet.
Playtech was founded in the city of Tartu and the company is still one of the largest software development employers in Estonia with more than 700 staff.
Yolo Group has its headquarters in Tallinn and Bally’s Interactive also has a development office in Estonia’s capital.
There are also almost 50 land-based gaming venues in Estonia for a population of 1.3 million people, covering casinos, gaming halls and poker rooms.
Sales of the state lottery in Estonia increased by 6 per cent in 2024 to €93.6 million, with e-instant lottery games being the fastest growing category.
In 2024, digital channels accounted for 68 per cent of the Estonian Lottery’s sales, up from 65 per cent in 2023.
As well as being a member of the European Union like Malta, Estonia’s positioning as an advanced digital state is a clear advantage to help it become the “remote gambling paradise” that Timpson envisages.
All public services are available online – the first country to claim such a feat – and every Estonian resident has a secure digital identity, with 90 per cent of citizens using it to access government services.
The government has created a ‘Data Embassy’ in Luxembourg to ensure digital continuity. The facility is under the full control of the Estonian government and it enjoys the same rights as a traditional embassy, such as immunity.
But Estonia is also a NATO member and its proximity to Russia is the obvious risk to the country’s stability in the current geopolitical climate.
In October 2023, the EE-S1 fibreoptic communications cable between Estonia and Sweden was damaged, as was the Balticconnector gas pipeline between Finland and Estonia.
A new submarine communications cable system is currently being built between Sweden and Estonia, which is due for completion in 2027. The Mjölnir East system will help to improve resilience to deliberate damage of the Baltic Sea’s infrastructure.
Domestically, there is opposition to the bill from other political parties who question the idea that simply reducing the tax rate will necessarily attract new licensees.
Deputy chair of the Riigikogu’s Finance Committee Andrei Korobeinik (Center Party) argues the bill’s lower tax will lead to less revenue.
“The initiators of the bill believed the lobbyists, who promised that if this tax rate is lowered, then immediately casinos and remote gambling service providers will come here,” he says. “The reality is that no analysis has been carried out and the experience of other countries shows that such a small percentage drop [in tax rate] does not affect the market much. For them, a stable economy and that certainty are much more important”.
At the start of October 2025, Estonia’s Ministry of Finance presented its national risk assessment and the country’s gambling sector was highlighted as a money laundering vulnerability.
Finance Minister Jürgen Ligi (Reform Party) suggested that lower taxes for gambling operators would be a new ‘political risk’, if the sector was to expand.
For governments, tax revenue – its protection and collection – is a key concern, and EU states will note Madis Timpson’s aim that the profits from French and Spanish customers, for example, will come to Estonian-based operators in his vision for remote gambling.
Malta’s numerous legal cases with other member states over the last two decades show that offering cross-border gambling services within the EU is not as straightforward as it appears. This was true when member states were trying to protect monopolies and even more so now they have regulated their online gambling markets.
Estonia could face the same legal complaints from other states, if it succeeds in creating a remote gambling hub and attracting more licensees. Several operators licensed in Estonia already run .COM sites with multiple language options, not just .EE sites.
The timing of the new bill is interesting because it coincides with a substantial change of strategy by Yolo Group, one of Estonia’s key licensees.
Yolo Group announced in September 2025 that it would be leaving behind its Sportsbet.io and Bitcasino.io brands in favour of a single Yolo.com brand that will focus on Tier-1 regulated markets.
The immediate impact was that Yolo laid off around a third of its Estonian employees, 280 people, as it turns its attention to markets like Canada, Sweden and Finland.
Yolo has also secured two B2B Vendor licences issued by the UAE’s GCGRA.
If the proposals are approved and Estonia does actively pursue an expansion of its remote gambling sector, it will face a number of challenges:
- Existing hubs will respond to the competition and will adapt to prevent their licensees from leaving.
- The era of gambling hubs for regulated operators might have passed with the trend for local licensing by market – Yolo’s change of strategy signals this shift.
- Other EU governments will challenge any attempts to divert profits and tax revenue outside their borders.
- Operators will need a compelling business case to relocate to Estonia because the immediate risks will be more apparent than the longer-term benefits.
Update: The bill to gradually lower the tax rate was approved by the parliament of Estonia on 21 October.
The bill secured final approval and passed into law on 3 December.