Estonia’s AI embarrassment began with a single wrong phrase.
In December, the Riigikogu, Estonia’s parliament, passed changes to the country’s Gambling Tax Act meant to lower the tax rate on remote gambling. But the wording of the law referred only to “skill games” for that year, not games of chance or remote gambling. Estonia’s entire gambling industry is worth around €300 million ($343 million), and its online gambling market is one of the fastest growing in the EU.
That single blunder meant online casinos were accidentally left outside the tax net for an entire year, losing the government €24 million ($27.4 million) a year in gambling revenues.
The error was spotted by a legal counsel for a gambling operator. But the embarrassment deepened when Luukas Ilves, former undersecretary for digital transformation, ran the legislation through Claude and Gemini. Both AI systems, Ilves said, immediately identified the inconsistency.
Within hours, Ilves had built a prototype tool—called Apsakaleidja, or “Fuckup Finder”—that could pull draft bills from the Riigikogu website and flag problems such as broken references, contradictory wording, arithmetic errors, and impossible dates. It categorizes the problems as high, medium, or low risk—of the 112 bills currently listed, 102 are rated high risk. One example highlighted on the Fuckup Finder suggests contradictory wording in draft text. Ilves even demo’d it on national TV, to the host’s amazement.
The blunder was embarrassing—but also triggered a revelation within the government. “The situation demonstrated that AI can be an incredibly useful assistant,” Kristen Michal, Estonia’s prime minister, told WIRED. “And—in the form of a vibe-coded platform to check draft legislation created in response to the incident—we saw an example of how agentic tools can empower civil society and individual citizens.”
So Estonia doubled down on the use of AI in government. In January, Michal suggested the country may well use tools like the Apsakaleidja to draft legislation to preemptively find and fix loopholes. He launched the Eesti.ai program designed to skill up Estonians in AI use, with the goal of doubling productivity within the country by 2035. Among the advisers to the Eesti.ai initiative are Bolt founder Markus Villig and Ilves, creator of the Fuckup Finder.
Then, in April, the country’s parliament received from the government a bill that gave state and local government the right to use digital solutions, including AI, to automate administrative processes. That bill is going through parliament, which is debating the changes it could introduce, with the intention of becoming law. In June, Michal told an Eesti.ai meeting that, if things go to plan, “Estonia will become the first country in the world to create official digital identities for AI agents.”
“This is a new environment for the public sector,” Michal told WIRED. “It demands agility and the ability to adapt as technology changes.” Estonia is better placed than many countries to adapt to those changes: It has led the way on integrating digital identity thanks to a digital-first state, while 99 percent of public services are already online, Michal says. Estonia is held up as an example of how to run a modern digital state—as WIRED first covered a decade ago. That laid the groundwork for easier AI adoption. “Those investments now allow us to move faster and more confidently into the AI era,” he explains.
Catherine Flick, who researches technology ethics at the University of Staffordshire, says the gambling tax error raises a more basic question: “Why are humans not doing this review process as part of the legislation drafting procedure?” she says. “At some point someone has to sit down and read through the whole thing, with the understanding of the context and all that sort of stuff, in order to make sure that this is a decent law.”
