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Online gambling revenues in Montenegro are apparently soaring, but this rapid ascent does not tell the full story and could soon be curtailed by a controversial winnings tax that came into effect this year.
A report from the Montenegrin government last week revealed that budget revenues from online gambling had climbed exponentially in just one year.
Officials said they had received tax income of €12.5m from the gambling sector in 2024, which amounted to a 687 percent increase over the previous year.
The government credited a new gambling law that came into effect on January 1, 2024, for the sudden increase, as well as its “effective implementation”.
Montenegro had been attempting to reform its gambling laws since at least early 2021, when a bill was proposed to regulate foreign online operators and, in the process, shut out the country’s grey market.
Progress stalled under the previous government and was not reignited until a new administration took power following elections in Summer 2023.
In its tax revenue announcement, the Montenegrin government took a swipe at its predecessor over what it called “short-sightedness” by stalling the online gambling bill.
“Had this law been enacted earlier in 2023, it would have generated at least €7 million in additional budget revenue,” it said.
“Despite public appeals at the time, emphasizing the projected benefits for the state, no action was taken.”
Behind the budget
However, this apparently massive growth is not a completely true picture of online gambling in Montenegro, says a local legal expert, and there remains one potentially massive roadblock that will challenge the ability to deliver another bumper year of tax income.
The more than six-fold increase in budget revenue is down, in part, to good economic headwinds in the sector, but owes just as much to a new government system to avoid tax dodging.
“The increase in gambling revenue is partly due to the strong business results of the operators, and partly it is likely due to the new IT control system that the gambling authority implemented last year,” explained Luka Popovic, a senior partner at BDK Advokati, a law firm in Podgorica.
A repeat performance in 2025 is also threatened by a new player winnings tax, which came into effect on January 1 this year, but has not actually been applied, due to what Popovic described as “significant confusion”.
Under the new rules, players are subject to a 15 percent levy on income earned from games of chance, which should be withheld by operators when paying out winnings.
However, the drafting of the law means that each single gambling event requires the 15 percent deduction to be applied. Meaning that every spin of a roulette wheel, for example, is taxed individually.
“This was probably not the idea of the lawmakers, but the law is poorly drafted,” said Popovic.
“The legislation requires providers to calculate the tax for each individual game and withhold and pay the tax at the same time as the winnings, which is very difficult,” he said.
“Industry representatives have met with the relevant ministry and tax authorities to find a solution, but for now, the tax is not being implemented effectively.”
A date for when the tax will be fully implemented, or amendments are made to its drafting, remains elusive.
