Europe’s online gambling industry has grown quietly into one of the continent’s most complex digital markets: cross-border in nature, and increasingly lucrative for government treasuries. Now a new political proposal in Brussels seeks to tap into that revenue stream at the European level.
Victor Negrescu, vice-president of the European Parliament and a member of Romania’s Socialists and Democrats party, has proposed introducing a coordinated European tax on online gambling operators. The idea, floated as part of discussions around the EU’s future multiannual budget, would allocate the proceeds to education and youth policies. “Online gambling is an inherently digital, cross-border sector that benefits from the Single Market and our shared digital infrastructure. It makes sense to ask for a small, proportionate contribution to help manage the societal costs of the digital transition,” Negrescu, who wants to introduce a 1% levy on gambling gross revenue, tells iGB.
More than 20 MEPs have signed the amendment backing the idea. According to Negrescu, the 1 % levy could raise between €2 billion and €4 billion annually, potentially generating €28 billion over the lifetime of the EU’s long-term budget. The funds would support education and training initiatives, while also helping finance addiction treatment and prevention programmes. “A flat levy would help smooth out the current fragmentation across the EU, where national tax rates fluctuate widely between 5% and nearly 40%. This would regularise contributions to the EU budget, providing a more harmonised and predictable framework for financing the Union’s long-term spending priorities,” Negrescu adds.
The idea fits neatly into a broader political narrative in Brussels: identifying sectors perceived to generate social costs and redirecting their revenues toward public good. Yet beneath the surface, the proposal collides with the legal architecture of Europe’s gambling market and the fiscal sovereignty of its member states.
EU gambling levy would only grow the black market
Unlike telecommunications, banking, or aviation, gambling regulation remains firmly in the hands of national governments, largely because of its moral, social, and cultural sensitivities. Member states set their own licensing regimes, consumer protection rules, and tax structures. As a result, the European gambling landscape is a patchwork of vastly different systems. Some jurisdictions tax gross gaming revenue (GGR) at relatively high rates, others apply product-specific levies, while still others use turnover-based models. Tax rates themselves too vary dramatically For critics of Negrescu’s proposal, that diversity is precisely why a common European levy would be problematic.
Claus Hambach, founding partner of German legal firm Hambach & Hambach and a specialist in gambling regulation, argues the proposal has been framed misleadingly. “This has nothing to do with harmonisation. It’s just an additional way to collect more money from a specific sector,” he says. “Harmonisation would mean finding common ground on taxation that achieves the goals you find in every law across Europe. Every law has to justify itself—usually with the aim of protecting customers and ensuring consumer safety.”
For Hambach, the economic logic of gambling regulation revolves around channelisation, the steering of players toward regulated operators. Excessive taxation can undermine that objective. “If taxation and regulation become too heavy, you simply grow the black market. An additional tax like this would, in Germany at least, just increase the size of the black market.”
Negrescu and his backers say the levy must go hand-in-hand with a coordinated EU approach against illegal operators. “By upgrading cross-border enforcement and disruption tools for payments and advertising, we intend to shrink the illegal market,” Negrescu says.
The tax reality
Hambach makes another point. The burden on operators in some jurisdictions is already extremely high. Germany provides a striking example. The country taxes online slots and poker through a turnover-based stake tax rather than a GGR levy, which dramatically alters the economics of the games. “Due to an extremely high tax in Germany e.g. for online-slots and poker of 5% on stakes the licensed operators already have a disadvange comparted to the black market. A higher tax on top would not be feasable,” says Hambach.
Operators have responded by redesigning their products, lowering payout rates, and altering game mechanics to remain viable. Even then, profitability remains uncertain. “Some operators manage to make a little money, but many have already exited the market. The black market in Germany is growing and growing because nobody can realistically pay that level of tax.”
If an additional European levy were layered on top, he argues, the outcome would be predictable. “If you now add another tax on top, you’ll simply accelerate the growth of the black market. That’s the only outcome.”
Concerns about illegal markets are not confined to Germany. In several European jurisdictions, regulators already struggle to keep players within licensed platforms. Justin Franssen, a Dutch lawyer at Franssen Tolboom, says rising taxes are contributing to that trend. “We started at [a tax rate] of 29% of GGR and we’re now at 37.8%. And I don’t think that’s the end of it. We’re already seeing huge growth in the black market. Government estimates suggest that more than half of the GGR generated comes from the black market.”
From his perspective, the economic mechanics of gambling markets are poorly grasped by policymakers. “Measures like this simply demonstrate a deep misunderstanding of how the gambling economy works,” Franssen adds.
Legal hurdles in Brussels
Even if the economic debate could be resolved, the legal obstacles facing an EU gambling tax are formidable. Taxation remains largely the prerogative of national governments under EU law. The Union may harmonise certain indirect taxes where necessary for the functioning of the internal market, but such measures require unanimous approval by all member states.
Giulio Coraggio, a lawyer at DLA Piper, says any attempt to introduce a harmonised gambling tax would likely have to rely on Article 113 of the Treaty on the Functioning of the European Union, which governs indirect tax coordination. “If framed as tax harmonisation, it would most likely require a directive under Article 113 TFEU (indirect taxation),” he said. “A regulation directly imposing a tax would raise serious competence and subsidiarity issues unless anchored in the EU own-resources framework.”
Either route would face significant political resistance. “Any measure under Article 113 would require unanimity in the Council, making adoption politically difficult,” Coraggio says. He sees the proposal above all as a political signal. “At this stage, it should be viewed more as that than an imminent legislative development. A full uniform rate across the EU would be politically very unlikely,” Coraggio said.
The sovereignty problem
Beyond the legal complexities lies a deeper political issue: fiscal sovereignty. Member states guard their gambling revenues closely. In many countries, the sector contributes hundreds of millions of euros annually to public finances. Redirecting even a small portion of that revenue to Brussels would require governments to accept a direct loss of fiscal control.
For Hambach, that alone makes the proposal unrealistic from the outset. “The only theoretical possibility would be if member states reduced their own taxes accordingly,” he says. “But how would that work?” Germany alone would illustrate the difficulty. “In Germany we have 16 federal states involved. They would all have to agree to give up part of their tax revenue and send it to a European fund. That’s simply not going to happen—especially if nothing comes back in return.”
What role could EU play in gambling legislation?
For now, the European Commission appears to share that scepticism. A spokesperson noted that the Commission’s own proposals for EU funding sources do not include a gambling tax. “The Commission put its own ideas for resources forward in July 2025. They do not contain any own resource based on a harmonised EU gambling tax,” the spokesperson said. The Commission also emphasised the legal reality of the sector. “Gambling taxation is first and foremost a matter of national competence of Member States.”
That does not mean the EU has no role at all. Cross-border gambling raises questions around administrative cooperation, anti-money-laundering compliance, and consumer protection. But those areas fall largely within regulatory rather than fiscal frameworks.
Malta is skeptical of the EU gambling tax
Regulators themselves are approaching the debate cautiously. The Malta Gaming Authority, one of Europe’s most influential gambling regulators, says discussions are still at a “very preliminary and exploratory“ level. “The MGA’s primary remit is to ensure effective oversight, player protection, and the integrity and sustainability of the gaming sector within our jurisdiction, rather than fiscal policy design.”
Legal experts in Malta also see fundamental structural and legal obstacles to the proposal. Terence Cassar of GTG Legal says the concept faces significant barriers under the EU’s current legal framework. “The proposal is not legally feasible in my view, and there is no relevance to speculate on what form any such measure may take, as it will simply fail from the get-go,” Cassar said. The question of EU competence is particularly sensitive.
“In my view, the EU does not have the legal competence to introduce any such harmonised gambling tax regime. Unanimity would be needed,” Cassar said. Attempting to justify such a measure under internal market rules would also face legal obstacles. “Framing the concept under internal market provisions presumes necessity for the functioning of the EU’s internal market – when there can be no such framing, at least until gambling regulatory harmonisation is first achieved.”
Integration has limits
Negrescu’s proposal also refers to the introduction of an EU directive against illegal and unlicensed platforms. “In that sense, the initiative could potentially be linked to a broader attempt to advance some level of regulatory harmonisation within the EU online gambling sector, ”says Cassar. For now, though, such harmonisation remains distant. “To date, however, attempts to achieve such harmonisation at EU level have proven largely unsuccessful.”
As Hambach notes, such coordination would have to begin with regulation, not taxation. “True harmonisation would start with regulation,” he said. “There have been attempts before at EU-level regulatory harmonisation, and they failed. Member states won’t accept it. And tax and regulation are closely linked—you can’t separate them.”
For now, Negrescu’s proposal seems destined to remain part of the political conversation rather than the legislative agenda. It captures a growing appetite in Brussels to explore new revenue sources—But it also shows that European integration still has limits, especially in areas that are closely connected to a country’s own national power and control.
