The Netherlands’ gambling tax increase has fallen spectacularly short of government expectations, raising just EUR 2 million in additional revenue during 2025 when policymakers had projected EUR 108 million. A joint assessment from the Ministry of Finance and gambling regulator Kansspelautoriteit reveals a sobering picture for tax planners who believed higher levies would bolster the public purse.

Tax Increases That Didn’t Deliver

The government raised the gambling tax from 30.5% to 34.2% at the start of 2025, with a further jump to 37.8% from 1 January 2026. That second move was supposed to double the revenue gain to EUR 216 million annually. Instead, authorities now expect just EUR 57 million additional revenue in 2026; barely a quarter of the original target.

Total gambling tax revenue in 2025 reached EUR 1.036 billion, up marginally from EUR 1.034 billion the previous year. Hardly the windfall the treasury was counting on.

The Taxable Base Problem

What went wrong? The report pinpoints a shrinking taxable base as the culprit. Gross gaming revenue, on which most gambling tax is levied, tightened considerably through 2025 and into 2026. Multiple regulatory changes happened simultaneously, making it genuinely difficult to isolate the tax hike’s individual impact.

Player protection rules introduced late in 2024 capped deposits at EUR 300 monthly for under-24s and EUR 700 for older players, unless they could demonstrate affordability. These weren’t cosmetic changes. Combined with advertising restrictions and sponsorship bans already in force, they materially reshaped the market’s size and shape.

Land-Based Venues Hit Hardest

Physical gambling has taken the sharpest hit. Visits to arcades and Holland Casino locations dropped 11% year-on-year, from 4.6 million in Q1 2025 to 4.1 million a year later. Arcade operators were already wrestling with rising operational costs and post-pandemic recovery challenges. Some have simply closed their doors.

Holland Casino itself faces significant pressure. The report estimates the tax increases will cost the operator EUR 27 million in pre-tax profit for 2025, with larger impacts expected in 2026. The Dutch Lottery, another state-linked entity, has also seen reduced contributions to sport and community causes.

The Unintended Consequences

This is a textbook example of how tax policy can miss its mark when the underlying market is simultaneously being reshaped by regulation. The government sought revenue. What it got instead was a smaller taxable base, squeezed by deposit limits, advertising rules, and competition from online platforms that proved more resilient to change.

Authorities acknowledge the difficulty in drawing firm conclusions about what caused what. Too many variables shifted at once. But the message from the numbers is unmistakable: higher tax rates on a contracting base produce disappointing results for government budgets.

What the team thinks

PHILIPPA ASHWORTH: Baz’s piece highlights a fundamental miscalculation by Dutch policymakers who underestimated operator agility and player migration. When you push tax rates above market tolerance, you don’t just lose revenue streams, you lose the entire customer base to regulated alternatives in neighboring jurisdictions. The EUR 106 million shortfall isn’t a market failure, it’s a policy design failure.

CARL MITCHELL: Spot on about the migration angle, Philippa, but I’d add that operators also got smarter about reporting structures and product mix optimization. Players didn’t necessarily flee the Netherlands entirely, many just shifted to lower-taxed verticals or adjusted their betting patterns. The government learned an expensive lesson about the elasticity of demand in gambling markets.

PHILIPPA ASHWORTH: Absolutely, and this creates a ripple effect across Europe. Every treasury minister watching the Dutch model will now recalibrate their assumptions about tax yield projections. We’ll likely see more nuanced, phased approach taxation rather than aggressive single-bracket increases that governments attempted in the 2020s.

CARL MITCHELL: That’s the silver lining here, really. Baz’s reporting exposes the mythology around gambling taxes being a painless revenue solution. Regulators and players benefit when governments understand that sustainable taxation requires genuine partnership with operators, not confrontational rate-setting that destabilizes the entire market.