Insights from Karolina Ullman, Partner at NJORD Law Firm: Navigating Ad Bans, Tax Increases, and Responsible Gambling in Estonia
Karolina Ullman of NJORD Law Firm shares insights on Estonia's gambling industry, discussing potential ad bans, tax increases, and the importance of compliance and responsible gambling practices
As the new coalition government in Estonia contemplates a comprehensive ban on gambling advertising and payday loans, discussions have emerged regarding the proposed tax increase on online gambling, casino games, and lotteries. Karolina Ullman, Partner at NJORD Law Firm, shared her insights on these developments, shedding light on the potential implications for the industry.
Regarding the tax increase, Ullman acknowledged the need for the coalition government to generate additional state tax revenue. She recognized that the gambling sector's revenue has grown significantly in Estonia, fueled by the popularity of the liberal EU license and the country's favorable digital landscape. While Ullman believed that the tax hike would not significantly impact the market's attractiveness, she emphasized that the Estonian license's appeal lies in its flexible regulations and efficient public authorities.
As for the proposed tax adjustments, Ullman outlined the incremental steps planned for the casino, sports betting, lottery, and gaming tables sectors. Starting in 2024, the tax rate for casinos and sports betting would increase from the current 5% to 6%, followed by another increase to 7% in 2026. Additionally, lotteries would face a tax hike from 18% to 22%, while gaming tables would see a 10% increase from 1,278.23 EUR per table to 1,496 EUR per table. The suggested change for gaming machines is a minor rounding up, from 31.95 EUR to 32 EUR.
In response to the industry's anticipated reaction to these changes, Ullman acknowledged that increased costs and taxes are generally unwelcome. However, she suggested that the gambling industry could leverage the heightened focus on marketing compliance issues and the growing concerns about gambling addiction to demonstrate how they contribute to societal well-being through increased tax revenues.
Ullman also highlighted the recent scrutiny of gambling advertisements by the Estonian Consumer Protection Authority. During their April supervision, they found that 15 out of 19 companies holding an Estonian gambling license had ongoing marketing campaigns, with a staggering 150 out of 152 ads violating the Estonian Marketing Act. Breaches included prohibited marketing, non-compliant warnings about gambling addiction, and invitations to play or showcasing benefits from gambling. The authority has initiated supervisory proceedings against the license holders for these violations.
Regarding the ban on gambling advertisements, Ullman clarified that such ads are already prohibited under the Estonian Marketing Act. However, the supervisory authorities had previously been less active in enforcing these regulations. Ullman welcomed the renewed focus on enforcing the Marketing Act, emphasizing the importance of clear rules and consequences for breaches to establish a fair and transparent environment for all stakeholders.
As Estonia continues to navigate these proposed changes, the collaboration between gambling operators and regulatory bodies, such as the Ministry of Economic Affairs and Communications and the Consumer Protection and Technical Regulatory Authority, will play a vital role in modernizing advertising laws and ensuring responsible gambling practices in the country.