Dutch Lottery warns gambling tax rise risks black market shift

The Nederlandse Loterij, the state-owned gambling operator in the Netherlands, has voiced strong concerns over the government’s plan to further increase gambling taxes in the coming year. Arjan Blok, the Chief Executive Officer of the organisation, has stated that repeated tax hikes risk undermining the regulated gambling market, pushing players toward unlicensed alternatives, and threatening the contributions that gambling revenues make to Dutch sports and charities.

This warning comes at a critical moment, as the Dutch gambling industry faces a sharp rise in levies. The gambling tax has already risen from 30.5% of gross gaming revenue (GGR) to 34.2% at the start of 2025. A further increase to 37.8% is scheduled for January 2026. According to industry representatives, including Nederlandse Loterij, this steep escalation risks destabilising the legal gambling ecosystem, reducing channelisation, and ultimately undermining the government’s stated goals of consumer protection and public revenue generation.

Background to the Dutch gambling tax increases

The Dutch gambling market has undergone major reforms in recent years. Following the opening of the online gambling sector in 2021, policymakers have sought to balance revenue generation with consumer protection. Taxation plays a central role in this framework, ensuring the state benefits financially while creating conditions for responsible gambling.

Originally, the gambling tax was set at 30.5% of GGR. This already placed the Netherlands at the higher end of the European spectrum compared to countries such as the United Kingdom, which has historically operated at lower rates. However, due to fiscal pressures and broader budgetary considerations, the government introduced a rise to 34.2% on 1 January 2025. Now, less than a year later, the proposal is to raise the rate further to 37.8% in 2026.

Many in the industry argue that such rapid increases do not allow the market sufficient time to adapt. They also suggest that the growing tax burden could have the unintended effect of encouraging players to seek more attractive offers from unlicensed operators, many of whom provide services online without contributing to Dutch taxation or adhering to responsible gambling rules.

Concerns raised by Arjan Blok

In his recent statement, Nederlandse Loterij CEO Arjan Blok outlined the organisation’s concerns regarding the latest tax proposal. He stated:

“The umpteenth increase in the gambling tax drives players to the illegal market. Due to the high gambling tax in the Netherlands, our responsible offer is becoming less attractive. Players look for a more financially interesting, illegal alternative, where they play without any protection.”

Blok’s comments reflect a fear widely shared within the regulated gambling industry: that increasing taxes reduces the competitiveness of licensed operators. When legal operators are forced to allocate more of their revenue to taxation, they often have fewer resources to dedicate to marketing, product development, promotions, or player incentives. This in turn makes unlicensed platforms more appealing, as they can offer better odds, higher bonuses, and fewer restrictions.

The challenge of protecting players

A central argument presented by Nederlandse Loterij is that gambling regulation is designed to ensure consumer safety. Licensed operators are bound by strict rules regarding age verification, responsible gambling tools, limits on marketing, and anti-money laundering controls. These safeguards are absent in the illegal market, where players risk exposure to unverified operators with no accountability.

Blok underlined this point when he explained:

“Almost half of the market is now illegal. We offer games of chance, which means we have the task of protecting players. Moreover, more tax means less structural financial support for Dutch sports and charities, to which the proceeds of the Dutch Lottery go.”

This statement suggests that illegal operators already account for a significant portion of the Dutch gambling market, and that further taxation risks exacerbating the problem. If licensed operators lose customers to unregulated platforms, not only do consumers face greater risks, but the government also loses out on tax revenues.

Financial contributions to Dutch society

One of the most significant aspects of Nederlandse Loterij’s operations is its contribution to sports and charitable organisations. The operator channels a substantial portion of its profits into funding initiatives that promote health, wellbeing, and community development.

In 2024 alone, Nederlandse Loterij donated €203.6 million to 18 charities, covering areas such as sports, health, and social welfare. These contributions represent a vital source of funding for organisations that rely on external financial support to deliver their services.

Blok warned that if higher taxation reduces the operator’s net income, the scale of these contributions could decline. The prospect of reduced funding for charities and sports federations adds another layer of concern for policymakers, as the gambling industry has long been promoted as a mechanism for channeling private spending into public benefit.

Government revenue and budgetary pressures

Ironically, the government’s decision to raise taxes may not even deliver the anticipated increase in revenue. According to the Budget Memorandum, despite higher rates, the gambling tax is projected to generate €263 million less than expected.

Blok highlighted this issue in his concluding remarks:

“Now that the Budget Memorandum also shows that the revenue from the gambling tax – despite increases – will decrease by no less than €263m, there is only one sensible choice: freeze the gambling tax and protect players against illegal offers.”

This paradox demonstrates the potential limitations of tax policy when applied without regard for market dynamics. If higher taxation reduces the overall size of the legal gambling market, then total tax receipts may fall, undermining the fiscal objectives of the reform.

International comparisons

The Netherlands is not alone in grappling with the issue of gambling taxation. Across Europe, governments are considering how best to balance consumer protection, industry sustainability, and fiscal needs.

In the United Kingdom, for example, operators have criticised the government’s decision to raise the gambling tax on gross profits from 15% to 25%. Some companies have already introduced measures to offset the increased cost, such as reducing player promotions or implementing surcharges. FanDuel’s experience in Illinois illustrates how additional charges can directly impact the customer experience.

These international parallels suggest that the Dutch case is part of a broader trend in which governments are increasingly relying on gambling as a source of public revenue, even at the risk of undermining regulated markets.

Research by the Netherlands Gambling Authority

The Netherlands Gambling Authority (Kansspelautoriteit, or KSA) has recently published studies examining the impact of the first tax increase from 30.5% to 34.2%. Early findings suggest that the higher rate has already led to lower revenues and a decline in channelisation – the proportion of players choosing licensed operators over unlicensed alternatives.

If these trends continue under a 37.8% tax regime, there is a risk that the legal market could shrink further, leaving unregulated operators in a stronger position. This would directly contradict the objectives of Dutch gambling policy, which emphasises the importance of maintaining high channelisation rates as a means of ensuring consumer protection.

Balancing fiscal policy and consumer protection

The debate over gambling taxation highlights a fundamental challenge for governments: how to generate revenue without undermining the regulated market. While higher tax rates may seem attractive as a way to increase fiscal income, they can have counterproductive effects if they make legal gambling less competitive.

Industry representatives such as Nederlandse Loterij argue that maintaining a stable and predictable tax environment is essential for both consumer protection and long-term financial planning. By freezing or moderating the rate, policymakers could preserve the attractiveness of licensed operators, safeguard contributions to charities, and ensure that the state continues to benefit from steady tax revenue.

Conclusion

The warnings issued by Nederlandse Loterij reflect a broader concern across Europe about the sustainability of gambling taxation policies. With the Dutch government planning to increase the gambling tax to 37.8% in 2026, the risks of reduced channelisation, diminished consumer protection, and falling contributions to public welfare are significant.

Whether policymakers heed these warnings remains to be seen. However, the evidence from both domestic studies and international comparisons suggests that balancing taxation with market sustainability will be crucial if the Netherlands wishes to preserve the integrity and social benefits of its gambling sector.

FAQs

What is the current gambling tax rate in the Netherlands?
As of January 2025, the gambling tax rate is 34.2% of gross gaming revenue, up from the previous 30.5%.

When is the next gambling tax increase planned?
The government has announced that the gambling tax will rise again to 37.8% in January 2026.

Why is Nederlandse Loterij concerned about the tax hike?
The organisation argues that higher taxes reduce the competitiveness of licensed operators, pushing players to unlicensed markets and threatening consumer protection.

How could the tax increase affect Dutch charities?
Nederlandse Loterij donates a portion of its profits to charities and sports organisations. Higher taxes could reduce net income, leading to lower contributions.

What is channelisation in the gambling industry?
Channelisation refers to the proportion of players who choose licensed operators over unlicensed alternatives. A higher rate indicates stronger consumer protection.

How much did Nederlandse Loterij donate in 2024?
In 2024, the operator donated €203.6 million to 18 charities focused on sports, health, and wellbeing.

What evidence suggests higher taxes may lower revenue?
The Dutch Budget Memorandum indicates that despite tax increases, gambling tax revenues are expected to fall by €263 million.

What role does the Netherlands Gambling Authority play?
The KSA regulates the gambling market, monitors compliance, and conducts studies on the impact of taxation and channelisation.

How do tax rates in the Netherlands compare internationally?
The Netherlands has one of the highest rates in Europe. For comparison, the UK recently raised its gambling tax from 15% to 25% of gross profits.

What is Nederlandse Loterij’s proposed solution?
The CEO has called for freezing the gambling tax to protect players and maintain financial contributions to charities and sports.