Like many other nations, the Netherlands has also been affected by gambling's popularity. According to Statista, the gambling market could reach $5.81 billion in 2025 and grow to $6.4 billion by 2029. If the predictions come to pass, the industry will have expanded by more than 2% CAGR.
Several factors can be attributed to this growth. For instance, according to a new report by Leeuwslots.com, many operators are using bonus features like free spins to attract and retain Nederlanders. But as more people gamble, the need to regulate the industry becomes more apparent.
That's why the Netherlands recently passed a law increasing the gambling tax from 30.5% to 34.2%. This was done with the hope that the government would increase gambling tax revenues. Unfortunately, things didn't turn out as intended. 2025's first half saw a significant decline in collections, resulting in a €30 million shortfall compared to the same period in the previous year. So, why was this so?
As you've already read, the Netherlands passed a law to increase the gambling tax rate early this year (January 2025). Of course, the intentions might have been good because the government wanted to generate more revenue. And the more revenue a government collects, the more resources it has to advance its developmental needs.
However, the Dutch Gambling Authority (KSA) impact assessment found that the anticipated increase in revenue did not materialize. Can you believe that revenue in the online market decreased by 8% while land-based casinos registered a 4% decline in the same period? The new regulations have put pressure on casinos to find new ways of survival, like introducing budget cuts in advertising.
Surviving in a sector where you must submit over 34% of your gross revenues to the government is not a piece of cake. Worse still, other operators have had to lower payout ratios, forcing many players to turn to unlicensed operators. For land-based casinos, things have been even tougher. According to the findings, these establishments dropped by 9% within Q1 2025, an accelerated decline from the previous average of 6%.
At least online operators can easily adjust things like payout ratios, which allows them to manage some of the impact. Nonetheless, they also feel financial strain.
Of course, one of the primary distinguishing features of casino platforms is payout ratios. Platforms with large payout percentages tend to attract more players than those with lower. This is because a platform with a higher percentage returns more money to players than one with a lower rate. Consider casino A's 96% RTP and casino B's 97.5% RTP, for example.
For every $100 you wager, A will return $96 while B returns $97.5. Obviously, most players would want to sign up for Casino B because of the higher returns. And this is precisely what's happening in the Netherlands. Because of the increased tax rates, legal platforms are forced to reduce payout percentages, which, in turn, causes players to turn to offshore sites that have more lucrative offers.
Remember, offshore websites have already been attracting the Netherlands market because of their higher bonuses and better payout ratios. So, when the legal casinos reduce their rates, it's like rubbing salt into the wound - more and more Nederlanders will only shift to unlicensed platforms to engage. And what does that result in? Fewer players on licensed platforms, leading to less revenue collection.
Did you know that it's not only in 2025 that the Netherlands registered a reduction in gambling revenues? A recent report by Sigma shows that Q4 2024 experienced a 12.3% drop compared to the corresponding quarter of the previous year. Online casinos were most affected, with collections falling by over 18%.
And while collections from legal platforms have been reducing, the black market has been expanding. In the second half of 2024, it received over half of the country's online gambling revenue. By design, unlicensed platforms are developed to improve user experience by simplifying the onboarding process.
But these websites always have a higher chance of players being scammed. And if more players join the black market, the government's long-term goal of establishing a secure and regulated casino ecosystem could be jeopardized. Don't forget that scammers have become rampant in the gaming industry. According to Biometric Update, the sector's global fraud rate increased by 73% from 2022 to November 2024.
Therefore, the Netherlands should be concerned about this tax hike because it creates an environment conducive to the further spread of offshore sites. This is troublesome because a good number of fraudulent activities often begin with these sites.
In response to the negative consequences of the tax increase, various stakeholders have been calling for a re-evaluation. The Dutch Gambling Providers' Association (VNLOK) proposed freezing the tax while calling for further investigations into its effects. It highlighted that, instead of increasing taxes, the government should focus on ways of limiting the spread of illegal casinos.
But will the government harken? Well, illegal gambling is a problem in the Netherlands, and the government must devise policies to help curb its spread. At the same time, more resources are needed to foster national growth. Considering all these factors, you want to stay around and see how things will turn out in the near future.