The Dutch gambling industry has delivered a stark warning to government: aggressive tax increases are backfiring spectacularly, costing the treasury €43.5 million in lost revenue during 2025 while simultaneously fuelling an illegal market boom.

In a joint letter to ministers, trade body VNLOK alongside VAN, the Netherlands lottery, and Holland Casino have called for an urgent review of the country’s gambling tax regime, demanding a parliamentary submission no later than Q2. The message is unambiguous: the current approach is achieving the opposite of its stated objectives.

Europe’s Highest Tax Burden Drives Exodus

The Netherlands rolled out a phased tax escalation that brought the levy on gross gaming revenue to 34.2% in January 2025. This January, it climbed again to 37.8%. Among the highest rates anywhere in Europe, frankly.

The impact has been immediate and damaging. VNLOK data from August revealed overall GGR in the first half of 2025 plummeted 25% year-on-year. Operators cannot absorb such punishing taxation without passing costs to consumers. The industry coalition argues consumers are responding predictably: by moving to unlicensed alternatives that offer better value and fewer regulatory constraints.

“The measure has undesirable effects on player protection, illegal supply and the financing of sport and charities,” the letter states, highlighting the policy’s failure across multiple fronts.

Black Market Overtakes Licensed Operators

Perhaps most damning is recent data from the KSA regulator showing illegal gambling sites generated higher GGR than licensed operators during the first half of 2025.

This represents a catastrophic regulatory failure. The very outcome Dutch policymakers claimed to be preventing through their crackdown.

The irony is sharp: in attempting to constrain the sector through taxation, authorities have effectively driven consumers toward entirely unregulated operators offering no player protections, no contribution to public finances, and no oversight whatsoever.

Political Timing Complicates Reform

The industry’s plea for reform comes as the Netherlands operates under a new coalition government that has adopted an explicitly hostile stance toward gambling. The coalition agreement promised a complete advertising ban and suggested exploring caps on operator licenses. Measures the industry warns will only accelerate the shift to black market alternatives.

The letter has been timed to precede a 12 March debate among the government’s tax committee, though whether politicians will demonstrate the pragmatism to reverse course remains uncertain. The industry is calling for future tax decisions to explicitly balance revenue collection against illegal market growth and player protection. A reasonable framework that acknowledges the complex realities of modern gambling regulation, to be fair.

The Dutch situation offers a cautionary tale for other jurisdictions contemplating aggressive tax increases. Push too hard, and the regulated market doesn’t simply shrink. It collapses into the shadows, taking tax revenue, consumer protections, and regulatory oversight with it.

What the team thinks

Sheena McAllister says:

This is a textbook case of what happens when policymakers ignore the economic reality of gambling markets. Push tax rates too high and operators simply can’t compete with unlicensed alternatives on value. I’ve seen similar patterns emerge in other jurisdictions where treasury departments treat gambling purely as a revenue maximisation opportunity rather than understanding the delicate balance needed to keep consumers within the regulated framework. The Dutch government would do well to look at the UK’s approach of regular gambling tax reviews that factor in competitiveness and channelisation rates, because €44m in lost revenue is just the beginning if players become comfortable operating outside the licensed market.