Estonia may be small in size, but it is thinking big when it comes to gambling regulation. With a major reform bill now before parliament, the Baltic nation is signalling its intent to compete head-to-head with established iGaming jurisdictions like Malta and Gibraltar.
At stake is whether Estonia – already one of the world’s most digitised economies – can convert its technological advantage and forward-thinking tax policies into a credible and sustainable hub for online gaming.
“Estonia is indeed moving toward positioning itself as a more attractive and competitive jurisdiction for gambling operators,” says Margus Reiland, partner and head of regulation, gambling and tax at Tallinn-based Law Firm Widen.
Reiland explains that Estonia’s new gambling bill currently being debated in parliament represents the most significant update to Estonia’s gambling framework in over fifteen years.
New measures being considered
Among its key measures are:
- Updated definitions of remote and additional gambling
- Broader scope for licensed operators to offer support services such as IT and accounting within the same group
- Mandatory audits of annual financial reports
- Clearer anti-money laundering (AML) data requirements for licence applications
- The Tax and Customs Board becoming the single point of contact for licences
- Tighter rules on gambling venues located near youth facilities
- Tenfold increases in fines and penalties
- And perhaps most importantly, a reduction in the remote gambling tax rate
According to the bill’s explanatory memorandum, its aim is to “modernise rules that have remained largely unchanged for over 15 years, strengthen supervision and improve the reliability and transparency of the gambling sector”.
“In other words,” Reiland adds, “the reforms aim to encourage licensed operators to base their operations in Estonia instead of elsewhere in the world.”
The timeline for reforms remains uncertain but Reiland says the bill is currently under parliamentary discussion and has not yet been adopted. “That being said, if the government coalition remains stable and continues to support the proposal, it is likely that the amendments will eventually pass,” he adds.
Estonia new gambling bill’s tax reform
One of the headline changes is the proposed lowering of Estonia’s gambling tax. For Reiland, this sends a clear strategic signal. The proposed bill by MPs from the Eesti 200 and the Reform Party would gradually reduce the remote gambling tax rate by 0.5 percentage points per year, aiming to reach 4% by around 2029.
“From a regulatory standpoint, the intent appears to be to strengthen Estonia’s position in the gambling sector,” Reiland says. “And that intent is without a doubt positive.”
Operators have largely welcomed the move, viewing it as recognition that “their long-standing concerns and challenges are being acknowledged by policymakers,” says Reiland. Although he also points out that the wider political debate “has been more divided”.
The main question seems to be whether lowering the gambling tax truly benefits the wider economy or primarily favours the operators.
The most prominent opponents are members of the centre-left opposition party Keskerakond The underlining sentiment is that the proposed gambling regulation is a lobby project, with no real positive effect. Industry insiders, however, are cheering the direction of travel.
In an October blog post, Tim Heath, founder of crypto-driven gaming giant Yolo Group, praised Estonia’s new gambling bill, noting: “Only a year ago, the plan was to raise taxes. Proposing a different course took serious courage, and it shows the Estonian government understands how our industry really works.”
Yolo has been headquartered in Estonia for years. Lower tax friction, Heath argued, would attract more operators, which in turn could bring “more investment, more jobs and, ultimately, more tax revenue. By going down this path, Estonia is choosing to grow its share of the pie rather than fight over the crumbs.”
Digital credibility as a competitive edge
Reiland believes Estonia’s strengths go beyond gambling taxation. “Obtaining and maintaining a licence in Estonia is already relatively fast, cost-efficient and administratively straightforward,” he explains.
On top of that, “Estonia has strong IT infrastructure, robust cyber security standards and a well-developed anti-money-laundering framework. This raises the regulatory credibility to a high level.”
In his view: “Estonia has always been a solid and effective choice for getting a licence – it just hasn’t received the same level of international attention as some other jurisdictions.” That could soon change. Estonia’s X-Road data-exchange system – a secure interoperability platform connecting public and private databases – underpins much of the nation’s digital governance and has become a unique asset for regulators.
“It’s not just used in gambling supervision,” Reiland notes. “It’s also in data exchange across government agencies, health service providers and many private sector stakeholders. I wouldn’t go as far as to say it is a branding exercise but a widely used system that does actually support regulatory efficiency.”
Yolo Group’s Heath agrees that this technological backbone gives Estonia an advantage few others can match. The market’s use of crypto as a payment method for gambling is a huge benefit to the group. “Estonia’s embrace of crypto in this new regulation helps cement its reputation as the world’s most digital country,” he wrote. “It encourages operator transparency and turns it into a national advantage.”
Crypto and compliance in the EU
Unlike many European jurisdictions tightening their stance on digital assets, Estonia is keeping cryptocurrency as an approved payment method – albeit under strict AML and KYC rules.
“The Estonian approach allows crypto as a payment method for Estonian licensed operators,” Reiland explains. But he cautions that since MiCA – the European Union’s comprehensive legal framework for crypto-assets, designed to bring consistency, consumer protection and financial stability to the crypto sector – it is still a novel regulation and national practices differ.
“It should be analysed under other target market jurisdictions whether all necessary requirements have been met,” says Reiland. In practice, he says, “the key question isn’t whether to use crypto but whether the operators know how to apply the highest standards of AML, KYC, enhanced due diligence etc under self-regulation principles”.
In his blog post Heath echoed this pragmatism, arguing that Estonia’s openness “aligns with MiCA and EU best practice”. The integration of blockchain analytics tools such as Chainalysis, he suggests, allows for “real-time tracing and risk-scoring of crypto transactions,” thus enhancing transparency rather than undermining it.
Crypto casinos, which are largely unlicensed or illegal across most European markets, are gaining rapid popularity among younger players. Last month Yolo announced it would be leaning entirely into regulated markets, and in another blog post Heath said he believed crypto was becoming “mainstream”.
Predictability and digital expertise
Some in the industry remain cautious of Estonia’s new gambling bill and point to last year’s short-lived proposal to raise gambling taxes as a sign of political volatility. But Reiland dismisses this concern.
“Estonia has had a very stable regulatory framework for a long time,” he insists. “The only real changes have come in the past couple of years, largely because different interests were competing over how to modernise the system. Right now if the bill is passed, the expectation is that the framework will remain generally stable for many years and the likelihood of a reversed course is very low in my eyes.”
That sense of predictability – combined with Estonia’s digital expertise – could be decisive in drawing operators who are increasingly weary of the administrative burdens in older licensing hubs. The draft bill also introduces modest reforms to responsible-gambling measures, including expansion of the Estonia´s self-exclusion register, HAMPI.
“There were different ideas floating on the self-exclusion list amendments but right now the latest parliamentary bill seems to be quite conservative,” Reiland notes. “It is my view still that probably the HAMPI regulation will be overhauled pretty soon since the existing system has been in place for quite some time.”
Heath, meanwhile, highlighted this as one of the most important improvements, arguing that the reforms “lay the foundation for a safer, fairer environment – one where players can simply enjoy the thrill of the game, confident that they’re spinning in a trusted, regulated space”.
Estonia’s new gambling bill a blueprint for Europe?
If Estonia succeeds, could its model influence EU-wide discussions on digital gambling regulation? Reiland is cautiously optimistic. “Hopefully, if Estonia’s system proves effective, it could serve as a model for EU discussions rather than an outlier,” he says.
“The underlying logic is not to prohibit or overregulate, but to use IT systems and secure information exchange to support legitimate business while maintaining continuous oversight.”
Marriage of innovation and integrity could pay off
For now, Estonia’s new gambling bill’s parliamentary journey continues. “It might be expected that after this bill has been adopted, the Ministry of Finance might also present a bill covering the remaining issues,” Reiland says – mentioning future clarification on crypto and the HAMPI system as likely priorities. “No seismic changes are to be expected.”
As Heath of Yolo Group put it: “What Estonia is proposing right now could become a blueprint for how small, smart countries lead global industries – by marrying innovation with integrity.” And with legal experts like Reiland pointing to stability, efficiency and credibility as the cornerstones of the new framework, Estonia’s gamble on innovation might just pay off.
Estonia’s new gambling bill eyes lower taxation, and legal experts believe its crypto regulation could entice operators looking to exploit the increasing popularity of crypto casinos.