Dutch Gambling Tax Hike Falls Far Short of Revenue Target

The Netherlands’ gambling tax increase has delivered far less revenue than expected, raising serious questions about whether higher tax rates are damaging the regulated market instead of strengthening public finances.

The Dutch gambling tax was increased in two stages. The rate rose from 30.5% to 34.2% on 1 January 2025, followed by a further increase to 37.8% from 1 January 2026. The policy was introduced as a revenue-raising measure, with the government expecting the gambling sector to contribute more to the state budget.

However, early results suggest that the first stage of the increase has failed to deliver anything close to the projected outcome. Industry reporting based on Dutch government and regulatory analysis indicates that the 2025 tax increase generated only around €2 million in additional revenue, despite expectations of more than €100 million.

That is not a minor shortfall. It suggests that the tax base itself may have weakened, meaning the higher rate did not translate into proportionately higher receipts.

A Higher Rate Does Not Always Mean Higher Revenue

The Dutch case highlights a basic but often overlooked point in gambling taxation: raising the headline tax rate does not automatically raise total tax income.

Gambling tax depends on the size and health of the taxable market. If licensed operators generate stable or growing gross gaming revenue, a higher tax rate may increase public revenue. But if the market contracts, margins shrink or customers move away from licensed platforms, the state may collect less than expected.

This appears to be the concern in the Netherlands. The increase from 30.5% to 34.2% was already significant. The subsequent rise to 37.8% has placed even more pressure on operators.

At those levels, licensed gambling businesses may have less room to invest in marketing, bonuses, technology, compliance, customer retention and product improvement.

The result can be a weaker legal market. Operators may reduce activity, customers may see less attractive offers, and illegal platforms may become more competitive. In that environment, the government may win a higher percentage of a shrinking market.

Channelisation Is the Core Problem

The biggest regulatory concern is channelisation. This refers to the percentage of gambling activity that takes place within the licensed, supervised market rather than through illegal or offshore operators.

A regulated gambling market only works if customers use licensed operators. Those operators pay taxes, follow player-protection rules, comply with AML obligations, report suspicious activity, apply responsible-gambling controls and remain subject to regulatory supervision.

Illegal platforms do none of that. They may offer more aggressive bonuses, fewer checks, faster onboarding and fewer affordability controls. For some consumers, that can make them more attractive, especially if the licensed market becomes more restrictive or less competitive.

The Dutch market has already been under pressure from tighter player-protection measures and advertising restrictions. Those policies may be justified from a social-responsibility perspective, but they also affect commercial behaviour. When high taxes are added on top, the legal market becomes less flexible.

This is the difficult balance facing Dutch policymakers. The government wants higher tax income and stronger consumer protection. But if the combined burden pushes players towards illegal operators, both objectives are undermined.

The Black Market Risk

The underperformance of the tax hike strengthens a warning that the gambling industry has been making for some time: if licensed operators are squeezed too hard, the black market benefits.

This is not only an industry-protection argument. It has a regulatory basis. Illegal gambling operators do not contribute tax revenue, do not apply Dutch consumer-protection standards and may expose players to fraud, non-payment of winnings, problem-gambling risks and misuse of personal data.

There is also a financial-crime dimension. Unlicensed gambling platforms can be attractive for money laundering, payment fraud and underground financial flows. Where operators are outside the regulated perimeter, authorities have limited visibility over customer funds, payment methods, beneficial ownership and suspicious activity.

A strong legal market is therefore not only a commercial preference. It is part of the enforcement model. If customers remain with licensed operators, the regulator has visibility. If customers migrate to illegal operators, enforcement becomes much harder.

Why the Revenue Target Was Missed

The gap between expected and actual revenue suggests that government forecasts may have overestimated the resilience of the gambling market.

When policymakers model tax increases, they may assume that gambling activity will continue at broadly similar levels. But gambling behaviour is responsive to price, product attractiveness, restrictions and availability of alternatives. Customers can change platforms easily, particularly online.

Operators also respond. If taxes rise sharply, companies may cut marketing, reduce bonuses, change odds or withdraw from less profitable segments. Some may reconsider their position in the market entirely if profitability becomes too low.

In the Netherlands, the tax hike did not happen in isolation. It arrived alongside a stricter regulatory environment. This means the revenue shortfall cannot be understood only as a tax issue. It is the combined effect of taxation, compliance costs, advertising rules, player-protection limits and competitive pressure from unlicensed sites.

The result is a warning for other jurisdictions considering similar increases. Gambling tax policy must be designed around real consumer and operator behaviour, not only fiscal need.

Impact on Licensed Operators

For licensed operators, the Dutch tax increase creates a direct financial squeeze. Higher gambling tax reduces margins immediately. Unlike some other business taxes, gambling tax often applies to gross gaming revenue, meaning operators pay based on gambling revenue before many operating costs are considered.

This leaves less room for compliance investment, responsible-gambling tools, customer support, product development and marketing. Smaller operators are likely to feel the pressure most heavily because they have fewer economies of scale.

There is also a competitive imbalance. Licensed Dutch operators must comply with national rules, pay the higher tax and maintain regulatory systems. Illegal competitors can target the same consumers without carrying those costs. That can distort the market and weaken the position of compliant businesses.

If more operators reduce their Dutch exposure, consumers may face fewer legal options. That again risks pushing demand towards unlicensed alternatives.

A Wider European Lesson

The Netherlands is now becoming an important case study for gambling-tax policy in Europe.

Governments often view gambling as a politically acceptable sector for higher taxation. Unlike broad-based taxes on income or consumption, gambling taxes can be presented as targeting a discretionary activity that carries social risks. This makes increases easier to justify politically.

But gambling markets are sensitive. If taxation is too aggressive, it can reduce regulated activity and produce less revenue than expected. The Dutch experience shows that fiscal policy cannot be separated from channelisation, consumer protection and enforcement strategy.

Other European regulators will be watching closely. Many countries are debating how to balance gambling revenue, harm prevention, advertising restrictions, affordability controls and black-market risk. The Netherlands provides a practical example of what can happen when the fiscal burden may exceed the market’s ability to absorb it.

The Policy Question Now

The Dutch government now faces an uncomfortable question: should it continue with a very high gambling tax rate if the evidence shows that the measure is not producing the expected revenue?

Keeping the higher rate may satisfy a political desire to tax gambling heavily, but it may also weaken the regulated sector further. Reducing or adjusting the rate could be criticised as favourable to gambling operators, but may improve channelisation and produce more sustainable revenue.

The choice is not simple. Gambling policy must take social harm seriously. But consumer protection depends partly on keeping players inside the regulated market. If tax policy undermines that market, the wider policy framework becomes less effective.

The Dutch experience shows that gambling taxation is not just about setting a rate. It is about designing a system that keeps the legal market viable, protects consumers, reduces illegal activity and generates predictable public revenue.

For now, the numbers suggest that the tax hike has not achieved its intended fiscal result. The Netherlands may have raised the rate, but the market response has made the revenue target much harder to reach.

By fLEXI tEAM