Estonia’s government is rushing to correct an unexpected loophole that left online gambling untaxed in 2026. A recent amendment to the Gambling Tax Act, meant to adjust taxes on online gaming, inadvertently exempted remote games of chance due to wording that only applied to “skill games.” The oversight allows online casino-style operators to legally argue they are not subject to the tax for the year.
Cultural and Sports Funding at Risk
The shortfall in gambling tax revenue threatens funding for sectors that rely heavily on it, particularly culture and sports. Prime Minister Kristen Michal assured the public that these programs would not suffer while the mistake is corrected. “My position is that culture and sports should not go without funding because of this,” he said. Lawmakers expect the correction to be implemented by January or February once parliamentary procedures are complete.
Possible Interim Solutions
While the revenue impact is still being calculated, officials are exploring temporary solutions. One proposal would allow gambling companies to make direct contributions to the Cultural Endowment of Estonia, treated as taxable income, to offset the lost revenue. Another suggestion, proposed by Parliament member Aivar Kokk, is to temporarily increase the tax rate above 5.5% once reinstated, ensuring the planned €27 million in annual revenue is eventually collected. However, the Taxation Act mandates six months’ notice for tax changes, complicating immediate implementation.
Estonia’s Broader iGaming Strategy
The timing of the mistake comes amid Estonia’s broader push to become a major online gambling hub. At the end of 2025, the country reduced its online gambling tax from 6% to 4% to attract global operators, a move contrary to the rising tax trend in much of Europe. Increasing the tax temporarily to recoup lost revenue could delay Estonia’s iGaming growth strategy by several months, though officials emphasize fixing the loophole remains a priority.
