The Dutch Lottery has sounded the alarm over spiralling tax rates, arguing that successive increases have squeezed the regulated sector so hard that players are being pushed toward illegal operators. Chief executive Arjan Blok warned that further tax hikes would only worsen the problem, undermining both player protection and funding for good causes.

The Numbers Tell a Grim Story

The financial impact is stark. The lottery’s 2025 revenue fell to EUR 688.9 million, down 5% year-on-year. More striking still is the swing from a EUR 30.9 million profit in 2024 to a EUR 7.7 million loss this year. That’s not a blip. That’s the shape of a sector struggling under the weight of policy.

The cause is straightforward. The Netherlands has jacked up its gambling tax twice in quick succession, raising it from 30.5% to 34.2% a year ago, then jumping again to 37.8% more recently. At those rates, legal operators simply can’t compete on prize value or product appeal.

When Regulation Backfires

Blok’s core argument deserves serious consideration. When legal gaming becomes less attractive than the alternative, you don’t eliminate gambling. You just move it underground. The lottery chief points out that the Netherlands’ channelization rate now sits below 50% in terms of gross gaming revenue, meaning the regulated market is losing ground fast.

This creates a perverse outcome: the very regulation designed to protect players ends up driving vulnerable ones toward operators with no oversight whatsoever. That’s regulatory failure dressed up as consumer protection.

A Question for Policymakers

Blok isn’t arguing for a tax holiday. He’s making a subtler point: regulation needs to maintain balance. Drive the tax rate high enough and you erode the entire rationale for having a legal sector. The money that funds good causes dries up. Player protections evaporate. And black market operators gain market share.

The Netherlands is now considering even tighter ad restrictions, potentially including an outright advertising ban. Paired with further tax increases, that combination could finish the job of rendering the legal industry uncompetitive. Whether policymakers recognise that risk is another question.

What the team thinks

Philippa Ashworth says:

Baz raises a critical point about tax elasticity in the Dutch market, though I’d argue the lottery’s framing deserves scrutiny, the real issue isn’t taxation itself but the *progressive* nature of how it’s applied across regulated operators. What’s genuinely concerning is that a 5% revenue decline suggests market contraction rather than mere migration to black market alternatives, which points to either product stagnation or broader consumer shift away from traditional lottery products, a distinction regulators need to understand before reflexively cutting taxes. The Dutch government should indeed examine whether current tax structures are optimal, but they’d be wise to demand evidence that illegal operators are actually capturing lost players rather than accepting the industry’s standard assumption that regulation always drives migration.