Iceland Eyes Gambling Reform to Curb Offshore Betting

Iceland’s gambling system is facing mounting pressure for reform, as outdated legislation allows billions of krónur to flow to foreign betting platforms each year. Nearly two decades after the country last updated its gambling laws, authorities are acknowledging the urgent need to modernize the framework to reflect today’s digital reality.

A System Frozen in Time
Since 2005, Iceland’s gambling laws have permitted only a small number of licensed domestic operators ( primarily Íslensk getspá and Íslandsspil ) to offer games of chance. Their revenues fund public services, including sports, emergency response and the Red Cross. However, this state sanctioned monopoly has been steadily undermined by offshore gambling sites that operate without regulation or taxation.

It is estimated that around ISK 20 billion in wagers pass through unlicensed international websites annually, with half of that sum leaving the country altogether. The government receives no tax benefit, and domestic organizations dependent on regulated gambling revenue face dwindling resources.

Minister Signals Policy Shift
Justice Minister Þorbjörg Sigríður Gunnlaugsdóttir has indicated that Iceland must confront the issue rather than continue with outdated prohibitions. Her ministry is exploring licensing models similar to those in neighboring Nordic countries, integrating foreign operators under a supervised framework. She emphasized that effective regulation, not restriction, is key to controlling the market.

Stalled Reform and Divided Opinions
Previous reform attempts have failed amid political and social disagreement. Addiction experts advocate for stronger restrictions, while others including segments of the gaming industry favor a licensing system that would expand oversight and generate state revenue. As a result, Iceland remains one of Europe’s few nations still operating under pre-digital gambling laws.

Economic Impact on Sports and Welfare
The Icelandic Sports and Olympic Association (ÍSÍ), which owns shares in licensed operators, has urged a comprehensive review of the industry. It warns that the dominance of offshore betting drains up to ISK 4 billion annually from potential sports funding. Currently, only about 8% of betting revenue remains within the regulated system.

Calls for a Unified Gambling Framework
Íslandsspil, partly owned by the Icelandic Red Cross and Landsbjörg rescue services, has proposed a national “one-card” gambling ID system. The model would monitor all betting activity and direct proceeds to public benefit initiatives while promoting responsible gambling similar to systems already active in other Nordic countries.

Addiction and Technological Challenges
Rising online gambling activity, particularly among young men aged 18–35, has sparked concern among addiction specialists. Enforcement remains difficult as most foreign betting sites fall outside Iceland’s jurisdiction. With the rise of app-based gambling and cryptocurrency payments, the gap between technology and regulation continues to widen.

Toward a Modern Regulatory Approach
The Justice Ministry’s reform agenda reflects growing consensus that Iceland must transition from prohibition to oversight. Licensing, taxation and enhanced player protections are viewed as essential to safeguarding both consumers and the national economy.

After years of inaction, the government now faces a pivotal decision: to continue with an outdated system that fails to regulate, or adopt modern frameworks that reclaim control, generate revenue and mitigate harm.