Lithuania increases gambling tax

Lithuania has become the latest country in Europe to have considered and executed a tax increase on its gambling industry. The hike is modest by most accounts, with the rate going up to 22% from its existing 20%.

The decision was taken with the votes of 72 MPs who voted in favor of the measure, introducing the necessary legislative changes to the Law on Lottery and Gambling Tax. Nine of their colleagues have abstained from voting.

Lithuania passes gambling tax increase with overwhelming majority

The law has been approved, but it will only come into effect from 2025. This means that all gambling operations in the country, including but not limited to slot machines, bingo, table games, as well as land-based and interactive gambling in general, will be subject to the new rate starting early next year.

The rate is calibrated to bring in more revenue. The government estimates that the higher tax rate on the industry, which includes lottery games, will bring in an extra €4.4m to the state’s coffers, but it would not impinge on the market’s competitiveness, which is a common qualm cited in other jurisdictions such as the Netherlands, Sweden, and Italy, where much stiffer tax hikes have been considered openly.

Presently, the market is generating €222.2m a year, based on the 2023 gross gambling revenue results reported by the industry. Operators profit in that same year was €59m.

Lithuania’s Finance Minister, Gintarė Skaistė, believes that such fears are unjustified in his country and there should be no serious bearing on the industry or its competitiveness. The money will be used to balance the regulated market and its ecosystem better, the government explained.

No disruption to the regulated gambling market because of tax hike

For example, because Lithuania also voted for a ban on gambling advertisements in media, some of the proceeds will be given to the businesses impacted, to help them cushion the financial pinch.

The bulk of the funds, however, will be allocated to helping strengthen the country’s responsible gambling efforts, and educating the public on the potential harms that originate in the industry.

However, the tax hike is not going to be painless according to the National Association of Gambling and Gaming Business, which has warned that at least eight legitimate operators could find the new tax rate too steep and might revisit their relationship with the market.

This is a substantial number as there are currently 12 licensed companies in the market.

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