The online gaming industry, also known as iGaming, has exploded in popularity and revenue in recent years. A number of countries have emerged as leading markets, benefiting tremendously from the rise of internet casinos, poker, sports betting, and other forms of online gambling. In this post, we’ll take a look at some of the top countries earning the most from iGaming today.
The UK has long been at the forefront of the iGaming industry. Online gambling is legal and regulated in the country, with the UK Gambling Commission overseeing all operators. Many of the biggest iGaming companies in the world are based in Britain.
With over 2,000 licensed online gambling sites, the UK iGaming market is estimated to be worth around £5.7 billion annually. This makes it the largest regulated market in the world. British players spent over £2.2 billion just on online casino games in 2020 alone.
The UK government also benefits tremendously from iGaming revenue. Operators pay a 15% point of consumption tax on British players’ deposits and bets. Additional licensing fees, duties, and other taxes result in the UK treasury earning nearly £400 million per year from online gambling.
The small Mediterranean island of Malta has become a major hub for iGaming companies. Over 240 operators are licensed in Malta due to the country’s clear regulations and business-friendly tax policies.
While Malta has under 500,000 residents, iGaming generates around 12% of the country’s GDP. Malta collects over €163 million in taxes from online gambling per year.
Many of the world’s largest iGaming corporations, software developers, payment processors and affiliates are based in Malta. The country’s skilled workforce and advanced digital infrastructure make it an ideal location.
Italy is one of Europe’s largest iGaming markets, with over 1,500 authorized gambling sites. Online poker, casino games, bingo and sports betting brought in estimated revenue of €1.7 billion in 2021.
When Italy began regulating online gambling in 2008, it applied a 20% tax on gross gaming revenue. This makes Italy one of the most lucrative markets in Europe. Taxes and fees on iGaming generate around €300 million annually for the Italian government.
Italy’s large population, passion for gambling, and smartphone penetration have all contributed to the growth. However regulations continue to tighten in an effort to combat problem gambling.
Denmark legalized online gambling relatively early in 2002. The Danish market is now estimated to be worth around €250 million per year.
All iGaming operators must apply for a license with the Danish Gambling Authority. Taxes on gross gaming revenue start at 20% and rise as high as 80% depending on the game type.
This taxation makes iGaming highly profitable for Denmark’s government. The DGA collects over €470 million annually from licensed gambling sites. This provides significant revenue for Denmark’s treasury and social welfare programs.
The small Baltic nation of Estonia has become an unexpected beneficiary from iGaming. Online gambling represents around 1.5% of Estonia’s total GDP.
Most of this revenue comes from just two Scandinavian operators – Betsson and Kindred Group. These companies hold over 85% of Estonia’s online gambling licenses. While generating little domestic revenue, their international operations are significant.
Estonia taxes licensed operators’ revenue at just 5%. But due to the massive scale of these corporations, this still added up to over €15 million in tax revenue last year. As Estonia seeks to expand its IT and digital economy, the iGaming sector has proven highly lucrative.
One interesting fact about gambling in Estonia is that it’s legal in only one region, Macau. This region is home to some of the best brick-and-mortar casinos, such as the Venetian and Sands Macao. However, online gambling is not technically legal. The government of Estonia doesn’t do much to stop online gambling in Macau.
Greece legalized and regulated online gambling in 2011. This opened the door to licensed casino sites, poker rooms, and sportsbooks entering the Greek market.
Over 34 companies have been granted iGaming licenses to date. In 2021, estimated revenue from Greek players topped €150 million. This growth has benefited both operators and the government.
Greece applies a 35% tax rate on iGaming revenue. Taxes and licensing fees from regulated gambling now contribute around €40 million per year to the government budget.
As Greece continues rebuilding its economy following years of crisis, the GDP contributions and tax revenue from its iGaming industry have become invaluable.
Japan ($20.615 billion)
Online gaming, particularly gambling, has been gradually growing in popularity in Japan. This country earned a gaming revenue of $20.615 billion in 2020, which is roughly half that of China and the United States. The most popular online games in Japan include Pokemon Go, Monster Strike, and Puzzle and Dragons.
Online gambling is considered legal in Japan, but it could be because there isn’t any online gambling authority that prohibits punters from wagering online. The laws aren’t exactly clear, but most Japanese players access online gaming through foreign websites. A report by Statista shows that online gaming revenue in Japan is expected to reach $3.904 billion in 2021 and $5.217 billion by 2025. The user number is also projected to grow to 30.4 million by 2025.
Canada is in the midst of opening up legal regulated online gambling, province by province. Ontario, British Columbia, Quebec, and several other provinces have introduced or are drafting iGaming laws.
Research predicts the Canadian online gambling market could be worth up to $3.8 billion CAD annually. With competitive tax rates between 20% to 30%, this would result in significant tax income for local and provincial governments.
The regulated iGaming industry is widely seen as a huge financial opportunity for Canada. Allowing licensed and controlled offshore operators to serve the Canadian market could generate hundreds of millions in annual taxes, even with moderate rates.
As more provinces like Ontario prepare to issue licenses in 2023, Canada is poised to become a major player in the global iGaming industry in the years ahead.
The US market is opening up at the state level as well. Online poker, real money casinos, sports betting and more have been legalized in multiple states so far. Revenue exceeded $3 billion in 2021 and is projected to reach $8 billion by 2025.
This has already resulted in over $315 million in state tax income in 2021 alone. As more states continue passing iGaming legislation, regulated US gambling will become even more lucrative.
New Jersey was one of the first movers, launching legal online gambling back in 2013. The state has earned over $1 billion in iGaming taxes so far. At rates up to 17.5%, plus additional license fees, the financial incentives for states are clear.
With a huge addressable market and favorable tax policies, the economic potential of iGaming in the US could surpass most countries worldwide.
The rise of the internet and mobile devices has fueled massive growth in the online gambling industry. A number of countries have embraced regulated iGaming markets as a way to channel this activity into licensed, controlled operators who must adhere to strict standards.
For forward-thinking governments, the taxes and economic benefits from legal online gambling have been tremendous. The United Kingdom, Malta, Italy, Denmark, Estonia, Greece, Canada, the United States and other jurisdictions are earning hundreds of millions to billions annually in much-needed tax revenue from iGaming corporations.
As more nations realize the financial incentives of properly regulating iGaming, this list of top beneficiary countries is likely to expand even further in the years ahead. The future looks bright for economies that build a thriving licensed online gambling industry and develop smart taxation policies around it.
What countries currently earn the most from iGaming taxes and licensing fees?
The United Kingdom, Malta, Italy, Denmark, Greece, and Estonia are currently the top countries earning significant tax revenue from regulated online gambling. As major markets like Canada and the United States continue opening up, they may join this list in the future as well.
Why do some countries tax online gambling at higher rates than others?
Countries decide their own tax policies around iGaming. Some implement high rates above 20% specifically to maximize revenue. Others like Estonia offer lower 5% rates aimed at attracting operators. Different models can both prove successful.
Are the taxes from online gambling added to the general government budget?
In most jurisdictions, yes. Just like other industries, iGaming tax revenue goes into the overall treasury funds of each country. Some channel portions to specific programs, like gambling addiction treatment.
Which countries are likely to regulate online gambling next?
The Netherlands, Portugal, and Spain have passed laws legalizing online gambling that will soon launch. Countries like Brazil also appear likely to regulate iGaming. Germany’s complex state-level laws make progress slow but ongoing.
How can online gambling generate so much tax revenue relative to population size in some countries?
Smaller countries can earn outsized tax revenue by licensing major international operators with global customer bases. Most revenue comes from non-domestic players, with companies simply headquartered locally.
Does increased internet access and smartphone usage impact iGaming growth?
Absolutely. Rising digital connectivity and mobile penetration rates allow more people easy access to online gambling. This tends to drive greater adoption and revenue as seen in countries worldwide.
Why do some opponents argue against legalizing online gambling?
Common concerns include risks of increased problem gambling, lack of consumer protections, and fears around integrity of games. However most evidence shows well-regulated markets mitigate these risks successfully.