Dutch Gambling Tax Hike Backfires, Offering a Warning Sign to U.S. States Eyeing Similar Measures

A sharp decline in gambling tax revenue in the Netherlands is raising concerns globally, especially in the United States, where several states are pursuing similar tax increases.

The Dutch government's recent hike in gambling taxes—from 30.5% to 34.2%—was intended to boost state income, but early data suggests the opposite is happening.

Figures from the trade body for Licensed Dutch Online Gambling Providers (VNLOK) show that gross gaming revenue for the first half of 2025 is expected to drop by 25% compared to the same period last year. The warning signs had been flashing well before the increase was implemented, with VNLOK cautioning the Dutch gambling authority Kansspelautoriteit (KSA) that such a move would backfire.

“All the facts and figures indicate that the tax increase will lead to a further depletion of the regulated supply,” VNLOK warned. “Tax revenues will fall as a result. At the same time, an increase in illegal and therefore riskier gambling is to be expected.”

As a result of the tax increase, KSA now anticipates collecting only 83% of the tax revenue it gathered during the same timeframe last year. Despite the evident shortfall, plans are already underway to raise the gambling tax again in 2026—this time to 37.8%—although those plans may now be subject to revision if revenues continue to decline.

Beyond the tax increase, additional regulatory measures are also squeezing the sector. The KSA recently enforced a blanket ban on gambling sponsorships across all sports. Although the regulator maintains that the ban has been successfully rolled out, VNLOK argues it has had a tangible impact on revenue.

Player restrictions have also contributed to the drop in returns. As of October 1, 2024, Dutch players are prohibited from depositing more than €700 per month, with that limit reduced to €300 for individuals between the ages of 18 and 25.

Michel Groothuizen, chairman of the KSA, acknowledged that the combined impact of these measures would dent the industry's financial performance. “The measures we have taken to offer players more protection have made it financially more difficult for providers. This has led to a decrease in the gross gambling result for the entire market. Consequently, the gambling tax revenues have also decreased,” Groothuizen told the NL Times.

However, he downplayed the direct impact of the tax increase itself, noting, “Even before the increase in gambling tax was implemented, the KSA indicated that this would be the effect.”

Legal experts are now voicing concerns that the situation is inadvertently fueling the unregulated market. Justin Franssen, a partner at Franssen Tolboom Lawyers, suggested that the added scrutiny and personal data requirements are driving players away from legal operators.

“Players are exiting the legal market once they have to start to share very personal financial information with licensed operators. It is incredibly naive to think those players simply stop playing,” Franssen told Sigma earlier this year. “I believe we have just seen the start of player migration to the black market. This will further accelerate when future additional restrictions will be put on the licensed market.”

Franssen argued that unless the financial consequences become dire, the government is unlikely to reconsider. “The government is not really interested in the commercial impact on the industry and currently there appears to be very little sympathy generally for the sector. Last year, the government collected more than a billion in gaming taxes. Once that number seriously decreases, only at that point may they come into action.”

Meanwhile, U.S. states are watching closely. Sports betting operators in the U.S. have already warned lawmakers of similar outcomes. Illinois recently implemented a state-wide betting tax and has since rolled out stricter advertising guidelines. Louisiana, Maryland, New Jersey, and Ohio have all approved new tax hikes as well.

But the unfolding scenario in the Netherlands may serve as a cautionary tale. As one of the first mature gambling markets to suffer financially from higher taxes and tighter regulation, the Dutch example may force U.S. policymakers to consider whether they're walking the same tightrope—risking reduced tax revenue and increased black-market activity in their pursuit of short-term gains.

By fLEXI tEAM