The Riigikogu of Estonia has voted to cut the online gambling tax rate from 6% to 4%, a move designed to attract foreign investment and modernise the country’s digital gaming framework — but one that has stirred political turmoil within the ruling Eesti 200 coalition.
Approved by the Riigikogu on Friday in a narrow 51–31 vote, the measure overturns earlier government plans to raise the levy to 7%, signalling what lawmakers have called a “pro-growth pivot” in Estonia’s approach to gambling policy and the figure that appeases ministers’ sensitivities to gambling.
Supporters say the drop to 4% aligns with Estonia’s ambition to compete with leading iGaming jurisdictions such as Malta, Gibraltar, and the Isle of Man. Eesti 200 MP Tanel Tein, who authored the amendment adopted into law in June, argued that the lower rate will make Estonia more attractive to international operators, help modernise oversight, and increase long-term tax revenues through sector growth.
“This is about future-proofing Estonia’s position,” Tein said. “We can’t attract serious international operators if we burden them with outdated taxation and complex oversight. The goal is to build a transparent, competitive, and responsible industry.”
Tein stressed that the reform was part of the spring 2023 coalition agreement, noting that “the proposal passed all parliamentary readings with solid support and without any last-minute changes.”
The Eesti 200 coalition, made up of the Reform Party, Eesti 200, and the Social Democratic Party (SDE), was formed in 2023 under former Prime Minister Kaja Kallas, bringing together liberal and centre-left forces around a pro-European, reformist agenda.
However, the Ministry of Finance quickly criticised the tax cut, warning that without the projected industry growth, the state could lose up to €13m in revenue by 2029.
“If market expansion fails to materialise, we’re simply cutting public income at a time when the state faces growing fiscal pressures,” an official from the Ministry warned. “The numbers must add up.”
Questions have also been raised about regulatory supervision of offshore operators, as well as the timing of the reform amid ongoing restructuring and job losses at Yolo Entertainment.
Political tensions escalated after former finance minister Mart Võrklaev alleged that Tein had threatened to collapse the coalition if the bill did not advance — describing the move as a “political suicide vest.”
“Tanel Tein clearly said that if this bill does not progress, there will be no coalition,” Võrklaev told ERR. “I do not consider the use of a political suicide vest appropriate in government.”
Both Prime Minister Kristen Michal (Reform) and Kristina Kallas who remains leader of Eesti 200 have denied the claim, insisting the gambling tax reform was a long-standing component of government policy.
“I certainly do not know of any such threats having been made,” Kallas said. “This was agreed well before any political tensions emerged.”
Michal added: “It’s not unusual for our coalition to debate fiscal policy, but this reform was never a dealbreaker — it’s part of a broader strategy to modernise Estonia’s economy.”
The government maintains that the lower tax rate will help stimulate new investment projects, including plans tied to sports infrastructure and the Estonian Olympic Committee.
“The broader aim is to ensure that sport, culture, and innovation continue to benefit from a growing and regulated gambling market,” Tein added.
Opposition slams decision
Opposition parties, however, seized on the controversy. Center Party chair Lauri Laats branded the administration a “hostage government”, accusing it of sacrificing cultural funding and integrity to cling to power.
“It is sad to see that, as a result of an ultimatum from one MP, the Reform Party is willing to cut funding from Estonian culture and increase the risk of money laundering,” Laats said. “This is not statesmanship — this is survival politics.”
Despite the uproar, the gambling tax reduction is set to be phased in over the next two years, underscoring Estonia’s determined bet to position itself as a European online gaming powerhouse — even as the reform tests the stability and credibility of its governing coalition.