A proposal to introduce a coordinated European tax on online gambling operators has emerged from Brussels, promising billions in revenue for education and youth programmes. But the idea, however well-intentioned politically, appears to collide with both the legal structure of Europe’s gambling market and the fiscal realities already facing operators in some member states.

Victor Negrescu, vice-president of the European Parliament and a Romanian MEP from the Socialists and Democrats group, has floated the concept as part of discussions around the EU’s multiannual budget framework. The proposed levy, set at 1% of gross gaming revenue, could raise between €2 billion and €4 billion annually, according to Negrescu’s estimates. Over the lifetime of the EU’s long-term budget, that could total €28 billion.

More than 20 MEPs have signed an amendment backing the proposal.

Negrescu frames it as a proportionate contribution from a sector that benefits from the Single Market and shared digital infrastructure. “Online gambling is an inherently digital, cross-border sector,” he told iGB. “It makes sense to ask for a small, proportionate contribution to help manage the societal costs of the digital transition.”

The proceeds would fund education and training initiatives, alongside addiction treatment and prevention programmes. Negrescu also suggests the levy could help regularise contributions across a fragmented landscape where national tax rates range from 5% to nearly 40%.

Fiscal Sovereignty and Market Fragmentation

The challenge is structural. Unlike telecoms or banking, gambling regulation remains firmly within national competence, reflecting its moral, social, and cultural sensitivities. Member states set their own licensing regimes, consumer protections, and tax structures. The result? A patchwork of vastly different systems. Some jurisdictions tax gross gaming revenue at high rates, others apply product-specific levies, and still others use turnover-based models.

For critics, that diversity is precisely why a common European levy would be problematic. Claus Hambach, founding partner of German legal firm Hambach & Hambach and a specialist in gambling regulation, argues the proposal has been framed misleadingly. “This has nothing to do with harmonisation,” he says. “It’s just an additional way to collect more money from a specific sector.”

Hambach points to the economic logic underpinning gambling regulation: channelisation, the process of steering players toward regulated operators. Excessive taxation can undermine that objective entirely.

“If taxation and regulation become too heavy, you simply grow the black market,” he says. “An additional tax like this would, in Germany at least, just increase the size of the black market.”

Germany’s Cautionary Tale

Germany provides a striking case study. The country taxes online slots and poker through a turnover-based stake tax rather than a gross gaming revenue levy, which dramatically alters the economics of the games. The 5% stake tax has already put licensed operators at a disadvantage compared to unlicensed competitors.

Operators have responded by redesigning products, lowering payout rates, and altering game mechanics to remain viable. Even so, profitability remains uncertain for many. “Some operators manage to make a little money, but many have already exited the market,” Hambach notes. “The black market in Germany is growing and growing because nobody can realistically pay that level of tax.”

If an additional European levy were layered on top of existing national taxes, he argues, the outcome would be predictable. “If you now add another tax on top, you’ll simply accelerate the growth of the black market. That’s the only outcome.”

Political Ambition Meets Industry Economics

Negrescu and his backers acknowledge the need for stronger enforcement against illegal operators. “By upgrading cross-border enforcement and disruption tools for payments and advertising, we intend to shrink the illegal market,” he says. Whether such measures could actually keep pace with the economic incentives created by higher taxation remains an open question.

The proposal fits neatly into a broader political narrative in Brussels: identifying sectors perceived to generate social costs and redirecting their revenues toward public good. But the gambling industry’s cross-border nature doesn’t necessarily make it suitable for EU-level taxation. The sector operates within a framework where fiscal sovereignty remains jealously guarded by member states. Regulatory success depends on maintaining a delicate balance between tax revenue and market channelisation.

For now, the proposal remains an amendment under discussion. Its political appeal is clear. Its legal and economic viability, rather less so.