Opinion: How Estonia is setting the iGaming industry example

A market report by Delasport:

Estonia’s iGaming market caught operators’ attention with its low tax on gross gaming revenue, being part of the EU, stable legislation environment, and a number of other important reasons.

So, what are those reasons exactly, what makes Estonia so highly regarded, and what does the data indicate?

Contents:

• Tax Benefits
• Market Stats
• Popular Sports to Bet On
• Popular casino games
• Rules for Gambling-Related Advertising
• Legislation Acts
• The Future of iGaming in Estonia

Tax Benefits

In May 2023, the Ministry of Finance of Estonia published a ‘draft law’ recommending that the new government increase taxes on online gambling, casino games, and lottery draws. Yet, as of mid-2023 the situation is still as it was: remote gambling tax in the Baltic country is a mere 5%.

Even if the bill passes and the law is changed as of January 1, 2024, the tax will increase by 1% during that year, and then again of another percentage point in 2026, up to a maximum of 7% which still makes Estonia a very attractive market for online gaming operators.

The proposed change in tax doesn’t come as a surprise, bearing in mind the significant growth in online gaming revenues. The income has surged by 220% - from €105 million in 2020 to €336 million in 2022, according to the Estonian Tax and Customs Board.

Market Stats

As mentioned, Estonia’s progressive legal framework, political stability, top-notch telecommunications, and a well-developed financial services sector serve as a magnet to operators and even players across Sports, Casino, bingo, and more.

Recent data indicates that 70% of Estonians have participated in betting for real money at least once in their lives, with nearly half of the population of gambling age having paid for gambling in one way or another just in the frame of the last two years. About 40% of adults have gambled offline, compared to about 30% of adults who have gambled online. It is predicted, however, that these proportions are going to get flipped as more operators enter the country and technology continues to evolve.

A study report on ‘Contacts of the Estonian residents with gambling’ by statistics firm Kantar, published in November 2021, shows a few other interesting points of data about Estonian players:

• Men between the ages of 30 and 39 make up most iGaming players in Estonia;
• The offline gambling market is dominated by men from rural areas, especially those aged 40 to 49;
• People living in rural areas are more likely to participate in lottery drawings and other offline games of chance, while urban residents choose poker and casinos;
• The lottery – both online and off - is the most popular game of chance;
• 25% of online players and 16% of offline players have been active on a weekly basis;
• On average, there are more weekly players both online and offline among men, 50–59-year-olds;
• Over the last few years, 36% of Estonians participated offline and 25% online in lottery raffles;
• 7% of the population play casino games;
• 7% of the population bet on sports;
• 10% of the population play other general games.

Popular Sports to Bet On

Just as expected for a European country, it stands to reason that football tops the list of sports bettors’ preferences in Estonia. As well as international competitions, the English Premier League is highly popular.

Other top football tournaments and leagues that Estonians bet on include La Liga, Major League Soccer, Bundesliga, Serie A, French League One, etc.

Basketball is a popular sport in Estonia. Korvpalli Meistriliiga is the national championship. However, Estonians also wager on basketball events held in other nations, such as the NBA. And lastly, other popular sports include horse racing, ice hockey, volleyball, tennis, rugby, and Esports.

Popular Online Casino Games

The most popular online casino games in Estonia are similar to those found in land-based casinos. Some of them are:

• Slots
• Roulette
• Blackjack
• Poker
• Baccarat

Live casino games in general have gained significant popularity in Estonia. They combine the convenience of online gambling with the immersive experience of playing with live dealers. Live blackjack, roulette, baccarat, and poker are among the most popular choices, as is expected due to the list above.

Rules for Gambling-Related Advertising

The Estonian regulator placed a ban on advertisement in 2008.

The law only permits the promotion of gambling games and services in the following circumstances:

• On the premises of gambling venues (such as hotels and casinos).
• Messaging over email, phone, or the post if the individual is subscribed and can cancel that subscription at any time of their choosing.
• Sponsorship announcements in the form of outdoor advertising.
• On board international ships/planes and in airports.
• On official operator websites.

Legislation Acts

There are two pieces of legislation that regulate all gambling in the Baltic country. They make up the regulatory, taxation, and legal framework for all types of online betting.

1. The Lottery Act of 1994 and Gaming Act of 1995

After Estonia gained independence and made gambling legal, these two acts were the first gambling regulations to be enacted in the nation. A state lottery, which was a monopoly at the time, was established under the Lottery Act, and the Gaming Act of 1995 was passed to make all offline gambling in Estonia legal. This included betting shops too.

• The Gambling Act of 2009

The Gambling Act, which was passed in 2009 and was implemented in 2010, addressed online gambling. The Gambling Act of 2009 was the first law in Estonia to address internet gambling, whereas earlier legislation, as mentioned above, concentrated on offline gambling. The requirement for a gaming license was established by this Act and is still effective to this day. The law also specifies which types of online gaming are permitted.

It's understandable that a big portion of the iGaming revenue is coming from abroad and various types of remote online gambling. There was a line in the Gaming Act which mandated that all servers be situated in Estonia. However, this paragraph was cut out of the act in 2012 when the legislation underwent some considerable changes.

Operators are permitted to conduct business in Estonia under this amendment, provided that their servers are situated in a country or territory with a valid license. Additionally, operators’ servers must be directly connected with the Estonian Tax and Customs Board.

As of Q1 of 2023, there are 29 online gambling operators licensed for the Estonian market, with 14 of them being Estonian and 15 being foreign.

The Future of iGaming in Estonia

As mentioned, the Estonian market serves as a great example to other EU countries in terms of iGaming conditions. The current system looks to be beneficial to operators, regulators, and gamblers alike. Additionally, to attract more foreign operators to apply for licenses, the Estonian government may decide to reduce licensing prices in the future.

Even with the potential gradual increase in tax, the legislation environment is rather stable. Thus, responsible gaming is coming into focus. There have been suggested changes with a player protection and safety focus, such as a nationwide self-exclusion list. To position themselves as proponents of responsible gambling, many operators will think about incorporating them.

With such a promising industry landscape, Estonia remains as one of Europe’s safest bets for suppliers and operators, and when it comes to online betting, the sky is the limit.

Delasport is one of the iGaming solutions providers fully compliant with Estonian regulations. Operators willing to obtain an Estonian license can easily do so by choosing Delasport’s products, no matter if they’re looking for a sportsbook, casino, or complete platform, ideally offering both types of gaming.