Estonia’s AI embarrassment started with a single incorrect sentence.
In December, the Riigikogu, Estonia’s parliament, passed changes to the country’s gambling tax law that will reduce the tax rate for remote gambling. However, the wording of the law for this year only referred to “games of skill,” not games of chance or remote gambling. Estonia’s entire gambling industry is worth around 300 million euros (US$343 million) and the online gambling market is one of the fastest growing in the EU.
This single error resulted in online casinos being inadvertently excluded from the tax for an entire year, causing the state to lose 24 million euros ($27.4 million) in gambling revenue annually.
The error was discovered by a legal advisor for a gambling operator. But the embarrassment deepened when Luukas Ilves, former undersecretary of state for digital transformation, pushed through the legislation through Claude and Gemini. Both AI systems recognized the inconsistency immediately, said Ilves.
Within hours, Ilves had developed a prototype of a tool called Apsakaleidja, or “Fuckup Finder,” that could retrieve draft laws from the Riigikogu website and flag problems such as incorrect references, contradictory wording, calculation errors and impossible dates. The problems are classified as high, medium or low risk – of the 112 invoices currently listed, 102 are classified as high risk. An example highlighted in Fuckup Finder suggests contradictory wording in the draft text. To the presenter’s surprise, Ilves even demonstrated it on national television.
The mistake was embarrassing, but also sparked revelations within the government. “The situation has shown that AI can be an incredibly useful assistant,” Kristen Michal, Estonia’s prime minister, told WIRED. “And – in the form of a Vibe-encoded platform to review draft legislation created in response to the incident – we saw an example of how agent tools can empower civil society and individual citizens.”
That’s why Estonia has doubled the use of AI in government. In January, Michal suggested that the country could certainly use tools like the Apsakaleidja to draft laws to preemptively find and close loopholes. He launched the Eesti.ai program, designed to train Estonians in AI use, with the aim of doubling productivity in the country by 2035. The Eesti.ai initiative’s advisors include Bolt founder Markus Villig and Ilves, inventor of the Fuckup Finder.
Then, in April, the country’s parliament received a bill from the government that gave states and municipalities the right to use digital solutions, including AI, to automate administrative processes. This bill will be submitted to Parliament, which will debate possible changes, with the intention of coming into force. In June, Michal said at an Eesti.ai meeting: “If everything goes according to plan, Estonia will be 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 requires agility and the ability to adapt to technological changes.” Estonia is better positioned than many other countries to adapt to these changes: it is at the forefront of integrating digital identity thanks to a digital-first state, while 99 percent of public services are already online, says Michal. Estonia is seen as an example of how to lead a modern digital state – as WIRED first reported a decade ago. This laid the foundation for an easier introduction of AI. “These investments now enable us to advance into the AI age more quickly and safely,” he explains.
Catherine Flick, who researches technology ethics at the University of Staffordshire, says the gambling tax error raises a more fundamental question: “Why don’t people go through this review process as part of the bill-drafting process?” she says. “At some point someone has to sit down and read the whole thing, with an understanding of the context and all of those things, to make sure it’s a decent piece of legislation.”
https://www.wired.com/story/the-28-million-dollar-mistake-that-inspired-estonias-ai-fuckup-finder/
