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Latvia’s gambling sector has been dealt another curveball. Just months after swallowing a hefty tax increase, operators are now facing the prospect of yet another rise — brought forward a full year earlier than planned. Industry insiders warn the move could backfire, shrinking the market further instead of filling state coffers.
From January 2026, interactive gambling will be taxed at 15% of gross gaming revenue, up from the current 12%. Phone betting will climb to 18%, while annual fees on slot machines will rise to €7,440 per unit. Table games, including roulette and blackjack, are set to face an even steeper jump, from €33,696 to €40,440 per year.
The Ministry of Finance claims the changes will bring in an extra €9.2 million, a small but useful slice of the €565 million the government wants to raise for education, family support, and security projects. But operators on the ground argue those numbers are detached from reality.
A market already in retreat
The warnings aren’t without context. Latvia’s gambling market has been shrinking steadily for years. Back in 2005, more than 300 gambling halls dotted the country. Today, fewer than 170 remain. Slot machines, once numbering close to 5,000, have also thinned out, with just over 4,000 still in operation by late 2025.
Revenues tell a similar story. In the first half of this year, slot machine income fell 12% to €55 million. Gaming tables were hit even harder, posting a 12.5% drop compared to last year.
Operators say they are already running on thinner margins after the 20% tax hike introduced at the start of 2024. That increase led to the closure of 24 gambling halls in less than a year. Another round of rises, they argue, will simply accelerate the decline. Industry forecasts suggest more than 20 additional venues and around 10 gaming tables could close in 2026, leaving the government not with a surplus, but a €2.5 million tax shortfall.
Lessons from abroad
If the warnings sound alarmist, Latvia doesn’t need to look far for proof that tax hikes don’t always deliver the expected windfall. In the Netherlands, where rates were raised earlier this year, gross gaming revenue tumbled by a quarter in just six months. Despite higher tax rates, state income fell to less than 85% of the previous year’s take. Another increase is already scheduled for 2026, raising fears of further damage.
Latvian operators are now pointing to the Dutch case as a cautionary tale — a sign that pushing too hard risks driving players to unregulated markets, shrinking the taxable base, and ultimately leaving the state worse off.
A fight over numbers
What makes the current debate particularly heated is how little dialogue there has been between policymakers and the industry. The Association of Licensed Gambling Operators in Latvia accuses the government of rushing the decision without consultation, relying on projections that ignore clear market trends: fewer halls, fewer machines, less revenue.
Parliament is set to take up the 2026 budget package, including the gambling tax hikes, on 15 October. For now, the government appears determined to press ahead. But if past trends are any indication, Latvia could soon find itself collecting less from a shrinking industry while watching more gambling halls go dark across the country.
Source: igamingbusiness.com
