complaint), information provided by another institution, or on its own initiative. That is, they are not bound by this obligation and are able to remit the whole winning to the person without any withholdings. Licensing-Special
The Gambling Law only provides the general restriction on “gambling advertising.” It does not elaborate on the meaning of the term “advertising.” In those circumstances the general definition of advertising from the Advertising law (28) has to be applied to understand how extensive the restriction on gambling advertising is. Although the Inspection publishes statistics on the betting market, given that there is only one licensed operator in Latvia, these figures basically reflect the revenues of this company. Introduction
As in most jurisdictions worldwide, sports’ betting in Latvia is regarded as a gambling activity. Some of these websites are still carrying banners with sports betting sites and promotional activities can still be noticed during sports events. However, if the league cannot ensure that its sponsors’ logo is displayed, it risks losing the sponsor and may not consider Latvia as a one of the possible locations for the venue. 113, Rules on Independent and Internationally Recognized Laboratories to Issue Opinions on Software Used in Organisation of Interactive Gambling, adopted on 07.02.2006, only two institutions are allowed to issue such opinions: the Gaming Laboratories International Europe BV (Netherlands) and SMI Software Messtechnik Institut GmbH (Austria).
Another interesting aspect in a similar case against one of the largest Internet news portals “Delfi” indicates that the same offense may lead to a double penalty. (40) The tax rate for sports betting has been raised to 15% from the organizers income, instead of the 10% rate that was applicable before. (7) The amount of the paid up share capital has to be at least 1 million LVL. It also allows targeting much wider client auditory in a more cost efficient way for the organizer. The market
The advertising restriction is in fact a two-fold issue. Given that these websites operate according to the laws of their registration countries and are not controlled by the Inspection, the Latvian consumers using these services do so at their own risk. There is an explicit regulation, which shows that Latvia considers it to be a legitimate business activity. Amount of 1 million LVL constitutes approximately 1.42 million EUR.
(37) SIA Tele Toto, Br v bas iela 99, R ga LV1001, Latvia, www.optibet.lv;
Since the time Latvia regained its independence from the Soviet Union in 1991, the gambling industry has witnessed a significant growth. There are no prohibitions for online gambling, nor are the activities restricted to state monopolies. On the con trary, it could be the licensing and regulatory environment that makes sports betting organizers consider operating from abroad. On the one hand, the government tries to protect the general public from the potential harms of gambling; on the other hand, the restriction leads to complications that make Latvia less attractive as a potential venue for international sporting events. (29) Given the broad wording, the definition could apply to anything the organizer does outside its registered gambling site, as long as it can be shown that the actual purpose of the particular activity is to promote the gambling services rendered by the gambling organizer. The regulation of betting has evolved slowly over time, including in relation to the licensing requirements, the supervision mechanism, the regulated forms of gambling (traditional, interactive), and the rules on protection of gamblers’ rights and public interests.
In order to obtain the general licence, certain information and documents must be filed with the Inspection. On the other hand, even when the economy is in a decent shape, the tax rates are still increased to implement the defined Latvia’s policy – i.e. 17.10.10;
(20) Supra note 6, Annual Public Report 2008, page 18;
The application is examined and a decision regarding the interactive licence, if it concerns only sports betting, is taken within thirty days from the receipt of full information at the Inspection, whereas if other gambling services are rendered as well (i.e. There is no information as to the total market share the foreign operators have managed to obtain. E03-RIG-372 (01 September 2008); and No. The attitude may vary from municipality to municipality, but as regards the Riga city municipality (approx. The sports betting organizers tend to be frequent sponsors of international sporting leagues and they reasonably expect that their logo will at least be displayed during the events the league organizes. The growth in the industry brought light to different types of wagering and bookmaking, but sports betting became the most popular of them. The fact that there is only one company licensed should not lead to false assumptions that the market is unattractive for other companies. It would be incorrect to assume that the company has a 100% market share, but on the other hand, it is also difficult to tell what the actual market share might be. They argued that the company could also be rendering non-gambling services that are not subject to advertising restrictions. However with amendments adopted on September 19, 2003, the tax on the organization and operation of totalizator and betting was set as a percentage of the income from the activity.
(30) CPRC Decisions No 2-r (11 May 2007); No 5-r (16 May 2007); No 15-r (20 July 2007); No. The number of such companies seems to be only increasing over the years. However, even without specific regulation, sports betting did not become very popular. (23)
(12) Ibid., article 14, and Law on Lotteries and Gambling Tax and Fee, adopted on 16 June 1994, article 2, (~ 430’000 EUR);
Latvia’s case shows that despite the restriction, sports betting sites are still being promoted on Internet portals and during sporting events either directly or through “alibi sites.” The competent authorities, despite viewing this as violation, have not managed to make these advertisements disappear. Four cases deal with Internet portals containing sports betting banners and one case was against the operator of the largest sports arena in Latvia. Under Latvian law betting is defined as depositing a stake on the possibility or impossibility of any event and the amount of the gain depends on the accuracy of the player’s forecast, deposited stake, as well as on the index for calculation of the gain, which is fixed by the rules of game. Hence, the current inability to effectively enforce the restriction, which puts the local companies in a disadvantageous position, calls at least for a debate as to whether the restriction should not be reassessed. In addition to the gambling tax the companies also pay corporate income tax, social contributions, VAT and other taxes which in the first quarter of 2009 amounted to 2,8 [PA7]million LVL. In 1994, when the first gambling regulation was introduced, (3) sports betting as a service almost ceased to exist due to its low popularity and the newly adopted regulation, which made the service more complicated to provide. Sports betting and bookmaking, which constitutes a certain part of the industry, has also developed significantly. Furthermore, given that they are not providing sports betting services themselves, these sites cannot be restricted from advertising in Latvia. In year 2008 the total turnover from games of chance was 154 million LVL, of which betting accounted for 10 million LVL. (18) Yet again, even if the intended location does not fall within the predefined restricted areas, the municipality is still entitled to refuse its permission if it finds that gambling in the particular location would be “detrimental to public interests.” (19) There are no objective criteria laid out under which the assessment for “detriment to public interests” should be made, thus the municipalities have rather wide discretion to implement the gambling policy they stand for. The intentional nature of these events allows for significant attention, revenues from ticket sales, increased tourism and publicity. (31) The CRPC is entitled to initiate a case either on the basis of a third party application (i.e. The same tendency is visible comparing the turnovers in the first quarter of 2008 (2,3 [PA3]million LVL) to the first quarter of 2009 (2,7 [PA4]million LVL). There are at least two requests for preliminary rulings to the European Court of Justice seeking a response whether Member States shall recognize each other’s licensing regime. A reasonable balance must be found. In all the publicly available violation cases (30) so far, it has always been a sports betting site registered abroad that is advertised. 30.000 LVL are payable annually.
Currently the rivalry from foreign online betting organizers, usually operating in more favorable regulatory environments, has lead to a situation where there is only a single enterprise licensed in Latvia to provide the traditional and interactive sports betting services. Licensing – General
For a company to be able to render sports betting services, general and special licences must be obtained in accordance with the Gambling law. Loosing these events also would not be in best interest of the general public.
Usually the sports betting organizers would place a banner in the most popular Latvian online sports portals, in the sports federation web page or in the sports halls/arenas during sporting events. (27) Consequently, there should be no public activities related to promotion of sports betting in Latvia. However, in the late nineties, along with economic growth, the emergence of casinos, and the increasing popularity of slot machines, sports betting also became more popular. Such turnover makes it the third largest gambling company by turnover in the whole industry. Interpreting the restriction in the most extensive way after all may not be in the best interests of the general public.
(38) Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’), Official Journal L 178, 17/07/2000 P. (44) Cabinet of Ministers Regulations No 233, adopted 01 July 1997, Procedures how personal income tax is levied on persons’ income from lotteries and gambling”, article 3.2;
In order to obtain the interactive gambling licence, which, among others, allows engaging in sports betting, information regarding rules of the games/services has to be provided, in addition to notice on a Latvian bank account for dealings with customers, description of the software and software test results, (24) location in Latvia where the hardware used for sports betting will be placed, a description of the planned security measures to prevent third party interference, information on measures to be implemented for customer personal data protection, webpage to be used if the sports betting is organized via the Internet, and information about the person in charge of the operations. In the early nineties, due to the lack of gambling regulations, the growth of the gambling industry was spontaneous and uncoordinated. Conclusion
1. Brick and mortar betting halls
The documents that are required for a totalizator and betting hall licence include documents regarding the building of the intended premises and description of the intended activities and development plan, but the most burdensome to obtain might turn out to be the local municipality permission. Electronic communication means have proven to be a much more convenient way for people to wager their stakes. However, the reality is that promotion of sports betting in Latvia still exists. article 33 and the Law on Lotteries and Gambling Tax and Fee, adopted on 16 June 1994, article 2;
2.2.2 Interactive (online) licence
(29) Ibid., article 1;
(42) Supra note 6, Annual Public Report 2008;
The European Parliament recently adopted a non-legislative resolution on the Integrity of Online Gambling. (25)
(39) Supra note 6, Annual Public Report 2008;
The last taxation aspect to be mentioned is that any winnings from a gambling activity are taxable personal income (23% rate). Depending on how successful this battle will be, the results will tell whether the restriction does not need to be reassessed in general. In fact, judging from the available decisions of the competent authorities, among all the possible gambling types, usually sports’ betting organizers are the ones that are involved in the violations of the said restriction. In the case of a totalizator, the prize is determined according to the total amount of pre-paid stakes. From the latest annual reports of the Inspection, one of Latvia’s policies in the field continues to be the limitation of the organization of gambling in the interests of the general public. (14) The organizer may also apply for an interactive gambling (i.e. The banner on a popular Latvian portal (.lv) advertises a “.com” or “.net” site which itself does not contain any games of chance, however its main purpose is to bring the person to a site that does. Consequently, not only sports betting organizers from other EU Member States, but also from third countries, are able to render and target their services to the Latvian public. (9) The Inspection is also entitled to request additional information if it finds that the filed documents do not provide a complete and clear picture of the sources of financing, plans of activity, etc. As noted before, the CPRC is the competent authority with regard to enforcement of the Advertising law, whereas the Inspection is the competent authority with regard to the Gambling law. A case against the largest sports hall “Arena Riga” illustrates the common argument that advertising of the brand or trademark of the sports betting organiser itself does not amount to “gambling advertising.” (33) “Arena Riga” claimed that no particular gambling activity was being advertised and a restriction on advertising the logo of the company would be too broad. The industry has also developed certain practices to deal with the restrictions and enforcement authorities are facing certain issues to strike them down effectively.
The supervision authority over gambling organizers is the Lotteries and Gambling Supervisory Inspection (hereinafter the Inspection), however, the State Revenue Service and the State Police also exercise control, for example with respect to taxation, underage gambling, etc. Considering the present economical downturn, Saeima has adopted yet another amendment to the Law on Gambling Tax, which came in force on July 1, 2009. The CRPC did not uphold this argument, instead it explained that the trademark “betway COM” indicates a link to a certain Internet domain and such practice falls within the advertising definition. . The current greatest challenge for the Inspection and the CRCP is to achieve effective enforcement of the advertising restriction. Among these are state and municipality institutions, churches, health care and educational institutions, pharmacies, post departments, credit institutions, public markets, and others. The Inspection cannot ensure that consumer interests are fully protected and possible tax revenues flow out of the country. (44) Although the average winnings from sports betting might not reach 500 LVL, if they do, the foreign online sports betting organizers are once again in an advantageous situation if compared to the local organizer. (26) Although the law does not refer to any fees or re-registration obligations for interactive licences, the Inspection treats it the same as a regular betting hall licence – i.e. (5) The Inspection also ensures the protection of gamblers’ rights and aims to reduce the eventual social risks related to gambling. (17) Please note though that the restrictions also vary depending on the gaming activity in question and with respect to betting halls the restrictions are the least severe. (20)
(2) Ibid., article 1.18;
(13) Ibid., article 16;
5. In such case, and also in cases where the winnings do not reach LVL 500, the Latvian resident itself is expected to declare such income and make the tax payments.
(34) See CPRC Decision No. The existing gambling organizers, licensed under the previous system, are the ones that have managed to maintain their business in the same location and their leases to the premises have not expired. (16)
by Sarmis Spilbergs and Reinis Pavars *
(46) Reference for a preliminary ruling from the Hoge Raad der Nederlanden, lodged on 18 June 2008 – Ladbrokes Betting Gaming Ltd and Ladbrokes International Ltd v Stichting de Nationale Sporttotalisator, (Case C- 258/08),(2008/C 223/41); and BETFAIR STARTS LEGAL ACTION AGAINST DUTCH GOVERNMENT”, available at corporate.betfair.com/powerscourt- pr-betfair-and-dutch-government- 6-5-09.pdf, last accessed on 17 July 2009
2.1. The CRCP rebutted the argumentation in the same manner. (13)
(25) Supra note 1, article 47;
Under the Gambling Law there are certain locations where gambling cannot be organized. The results of the third quarter of 2009 should indicate whether the new tax rates in force as of July 1, 2009, will increase the tax revenues or will slow down the industry even more.
(32) Ibid., article 14;
(35) Code of Administrative offenses of Republic of Latvia, adopted 07 December 1984, articles 166.13 and 204.5;
In addition to the general gambling organizers’ licence described above, a separate special licence is needed with respect to each gambling site the organizer wishes to open. (10) The decision to issue the licence is adopted within ninety days from the day of submission or from the day additional information was submitted to the Inspection upon its request. 0001 – 0016, article 1.5.c;
(21) Approximately 43`000 EUR;
6. (11) The licence is granted to the company subject to payment of the state duty of LVL 300000 (12) (three hundred thousand Latvian lats). There have only been rumors of match-fixing, but no real court cases. For the detriment of the organizers, the competent authorities tend to look at the restriction in its broadest way.
(36) Supra note 28, article 12.4;
(41) Latvian Law on Lotteries and Gambling Tax and Fee, adopted on 16 June 1994, articles 13 and 14;
(27) Supra note 1, art 41.5;
(43) Law on Personal Income tax of Republic of Latvia, adopted 11 May 1993, article 3.16 and art. (43) In accordance with Latvian tax law, the gambling organizers are obliged to withhold personal income tax and make respective contributions into the state budget on behalf of that person for any winnings above 500 LVL. Furthermore, despite that the E-Commerce directive (38) allows restricting online gambling services originating from other EU Member States, Latvia has neither restricted its residents from gambling on foreign websites, nor has it restricted access to such sites. Hence, the locally licensed operator is keeping an eye on the activities of competitors. Taking into account that these are “.com” or “.net” sites, the Latvian authorities cannot control their advertising content. Advertising is defined as any form or any mode of announcement or endeavour associated with economic or professional activity, intended to promote the popularity of or demand for goods or services. 750,000 residents out of 2,3 million total in Latvia), since the adoption of the Gambling law, which introduced the requirement of municipality permissions, it has not issued any permissions for new gambling locations. (15)
In all cases the parties who were accused of violating the advertising prohibition used similar defense arguments. Given that the local municipality permission is not required, the licensing regime is also more favorable.
Copyright 2009 Gale, Cengage Learning. online) licence or licence for games of chance over the phone if a “brick and mortar” site is not planned. Altogether in 2008 the industry paid 23,8 [PA8]million LVL as a gambling tax in the state budget, 6,9 [PA9]million in municipality budget and the other taxes amounted to 18,2 [PA10]million LVL. Taxation
(17) Ibid., article 41.2;
(28) Advertising law of Republic of Latvia, adopted 20 December 1999;
(1) Gambling and Lotteries Law of Republic of Latvia, adopted on 17 November 2005. In fact there has not been much public turmoil regarding any fraudulent cases by these foreign operators and, although the Inspection might have received some complaints from consumers, as of today it has not published any “black lists” or warnings regarding particular sites which should be avoided. So far there has been no domestic case law regarding the interpretation of the Gambling law in relation to sports betting. (8)
(33) See CRPC Decision No. article 1,5;
(6) Annual Public Report 2008 of the Lotteries and Gambling Supervisory Inspection, approved by the decree No 7 of June 29, 2009, page 20, available at www.iaui.gov.lv/Gada_Parskati/default.h tm last accessed on 20 July 2009;
(19) Ibid., article 42.1.3;
Currently in Latvia the gambling tax and its payment order is regulated by the law “On Lotteries and Gambling Tax and Fee” (hereinafter the Law on Gambling Tax), adopted on June 16, 1994. in the period from May 2007 until November 2008. (6) The Inspection constantly gathers and analyses market data and based on its conclusions as to whether the state policy is being implemented successfully it decides whether additional legislative initiatives are necessary.
COPYRIGHT 2009 ASSER International Sports Law Centre
No portion of this article can be reproduced without the express written permission from the copyright holder.
* Law Offices of Klavins Slaidins LAWIN, Riga, Latvia.
Despite the economic downturn, the results of the sole sports betting organizer show that the market is still reasonably active. E03-RIG-372, 01 September 2008;
(24) In accordance with the rules of Cabinet of Ministers, No. As a result, foreign online gambling organizers gain competitive advantage over the ones that are locally licensed. The Law on Gambling Tax has had thirteen amendments, which together determine the tax and duties rates to be paid by enterprises that have received gambling licenses. Clearly, Delfi was not satisfied with such a resolution and the CRPC has informally confirmed that not only Delfi, but all other decisions with respect to sports betting advertising, have been appealed in the administrative courts.
(40) Amendments to the Law On Lotteries and Gambling Tax and Fee”; adopted 16 June 2009;
3. In all the cases CPRC established a violation, in two instances a monetary fine of LVL 2000 was imposed, and in the remaining three an order was issued to terminate the violation.
Another trend, which shows at least some respect to the advertising ban by the betting organizers, is the practice of “alibi sites.” To avoid the advertising prohibition, a double link advert is created. (1) Sports’ betting is where a person wagers on the results of a sports event and the amount of the possible winning is determined by the stake-winnings ratio set by the betting service provider. While the rulings are pending, the conclusion is that the CPRC decisions have not resulted in the desired effect. (34) The CPRC imposed a penalty of LVL 2000, despite the fact that the Inspection had already imposed a penalty in of LVL 100. These include the annual report, the report for past quarters of the current year, information about credit liabilities, information about the sources of capital financing, a development plan for the next year activities, indication of the planned kinds of gambling activities, the expected amount and allocation of income and expenditure, the foreseeable profit and its application, information about the shareholders of the applicant, confirmation that at least one half of the members of the supervisory board and the board of directors of the company are domestic taxpayers of Latvia and have an unimpeachable reputation. Nevertheless, according to the most recent data published by the Inspection, (39) in the first quarter of 2009 (January-March), the turnover of the one betting organizer in Latvia was 2,7 [PA1]million LVL. Companies wishing to provide only sports betting services might see this as quite harsh compared to regimes in some other jurisdictions. In the case if the tax amount is indicated incorrectly or the tax payment is delayed the State Revenue Service is empowered to impose strict sanctions, e.g., including disputeless tax recovery, legal penalties up to 250% from the payable tax amount and the annulment of gambling organizers’ licence. Thus, the only sports betting organizer in Latvia, in addition to the 17 fixed locations it runs, has also taken out the interactive gambling licence.
(45) “Integrity of online gambling”, reference INI/2008/2215; available at www.europarl.europa.eu/oeil/ FindByProcnum.do?lang=en procnum=INI/2008/2215 last accessed 20 July 2009;
(26) Ibid.,article 48;
In addition to the Gambling law, which lays down the general requirements that the interactive gambling organizer must comply with (player registration, dealings only with Latvian banks, personal data protection, warnings regarding addictive nature, reporting, bookkeeping, etc.), there are several Cabinet of Ministers Regulations that specify these requirements in more detail.
(3) Law on Lotteries and Gambling of Republic of Latvia, adopted on 16 June 1994;
(14) Ibid., article 20;
(22) Supra note 1, article 28 and the Law on Lotteries and Gambling Tax and Fee, adopted on 16 June 1994, article 2;
(5) Ibid., art 82;. Hence, not only the sports industry, but also municipalities and the State itself are interested in encouraging major international sports events to be hosted in Latvia. Depending on the type of intended operations, the organizer can apply either for a casino, gaming hall, bingo hall, or totalizator and betting hall licence. Licences may only be received by capital companies (a Limited Liability Company or a Joint Stock Company) established in Latvia with no less than 51% local shareholding (EU investors are regarded as local). All rights reserved.
(23) Ibid. (45) The European Parliament has recognized many of the issues that the Member States face with online gambling and calls for closer cooperation not only between Member States, but also EU institutions to deal with them and form a “common position.” The uniqueness of the industry has also been recognized, which makes the pure internal market approach inappropriate in this area, recognizing the rights of each Member State to regulate the area according to its traditions and culture, including the right to legitimately restrict the freedom to provide the online gambling services. In fact, given the economic downturn, out of all games of chance only the betting sector has demonstrated an increase if compared to results of 2007 (8,2 [PA2]million LVL). The Law on Gambling Tax prescribes that the tax payment is made on a monthly basis as 1/12 of the total yearly tax rate. (37) The general trend in the sports betting market is that betting is done interactively, i.e., via Internet, telephone, television, radio, or by any other type of electronic communications means. For example, unlike any other gambling activity, betting can be organized in public events locations, in shops, cultural institutions, railroad and bus stations, ports and airports (with separate entrance from outside), as well as in bars and cafeterias. Nevertheless, judging from the frequency of the advertisements these foreign gambling sites place in the Latvian portals, it must be concluded that consumers do not find the lack of Inspection back-up as a major factor and are using these services at least to the extent that it makes economic sense for the operators to be present on the market. The Latvian licensing regime imposes the same capital, establishment and other requirements on the sports betting organizers that a “brick and mortar” casino operator is faced with. The Code of Administrative offenses allows the Inspection to impose a penalty up to LVL 1000 for violations of the Gambling law, whereas the CPRC is entitled to impose a penalty of up to LVL 10`000 for breach of the Advertising law. (32) Of the five sports betting advertising cases, three were initiated by third party applications, and two of these by the only Latvian sports betting organizer. size of the market) of Latvia, it comes as no surprise that there is only one operator of sports betting licensed in Latvia. card games, roulette, etc.), the decision is taken within sixty days. The court rulings are keenly awaited to cast certainty on this issue.
In these circumstances it is hard to tell the actual value and size of the market. The main economic activity of the Internet site is gambling services, which are prohibited from being advertised.
(10) Ibid., article 12;
None of the cases have yet been examined. (46) These decisions will once again show where the balance of competence to regulate in the gambling sector is to be found, or whether it is the absolute competence of each Member State.
If the required documents have been gathered and filed with the Inspection, the Inspection adopts the decision within thirty days and issues the licence to the organizer subject to payment of state duty in amount of LVL 30`000 (21) (thirty thousand lats). (4) The Inspection is the competent authority in key matters of compliance with the law and regulations, licensing, control and supervision, development of legal acts and surveillance of the market. Recent trends indicate that foreign operators are capable of adapting to local markets not only by offering to bet on sports events, but also on a range of different Latvian social, cultural and political events.
2. (35) Although the gambling advertising restriction is stipulated in the Gambling law, the Advertising law contains a more general prohibition – to disseminate legally prohibited advertising. The Internet and the evolution of other technologies has allowed many operators to establish and get licensed elsewhere, but still enter the Latvian market via electronic communication means. Although the license is perpetual, it is subject to re-registration at the Inspection on an annual basis. So far there have been no cases where the legality of this practice would be analyzed and the view of the Inspection and the only Latvian sports betting organizer regarding this practice is also unknown.
2.2. The quantity of the amendments is interrelated with the growth of the gambling industry and its turnover. It was the fourth largest turnover by companies in the gambling sector. The possibilities of electronic communication means allows them to shop for the most beneficial jurisdiction to establish and licence themselves (if at all) and then serve the Latvian clients online. Regulation of and supervision of sports betting in Latvia
2.2.1. The “alibi site” may contain some games of skill or similar entertainment, but not sports betting, only its advertisements. to control the growth of the industry. Promotion prohibition
Given the comparatively “heavy” regulation of the industry and taking into account the overall population (i.e. These decisions are relatively recent, i.e. Hence, either the Internet portals and the sports betting organizers are simply buying time with the appeals, hoping that the penalties would outweigh the gains during the litigation period, or they are strongly convinced that the practice indeed does not amount to gambling advertising. (2)
(16) Ibid., article 27;
Unfortunately there are no statistics available as to the taxes collected in particular from betting activities, however, in the first quarter of 2009 the collected gambling tax from the whole gambling industry amounted to 5,2 [PA5]million LVL in the state budget and additional 1,5 [PA6]million LVL in the municipality budgets. Hence, on the one hand the European Parliament calls for cooperation to deal with the current concerns, but on the other it is not trying to impose certain level of harmonization among Member States. The organizers are constantly looking for ways to bypass the restriction. (36) Hence, each authority qualified the same event as a violation of the law that was in its competence to enforce. Hence, it would be fair to say that the Latvian sports betting market consists of two parts – the locally licensed and the foreign online operators.
The gambling tax, along with the excise tax for tobacco and alcohol, is usually the first to be reviewed when the government needs to raise revenue for the state budget. The current market data shows that despite the economic downturn, the betting sector is still holding up and demonstrating a slight growth.
(15) Ibid., article 46;
(9) Supra note 1, article 11;
The ” Law on Lotteries and Gambling” was adopted by Saeima (the Latvian Parliament) on June 16, 1994, and during the next decade it was amended nine times before being replaced on November 17, 2005, with the current Gambling and Lotteries Law (hereinafter the Gambling Law). Consequently betting reception centers were opened throughout the largest cities of Latvia.
Unlike in several other countries, Latvia imposes no prohibitions in relation to online gambling. Given the involvement of foreign online operators, which brings up jurisdictional and enforcement issues, none of the cases have been initiated against the actual gambling organizer, instead they are all against the advertising channel. Initially the gambling tax was levied as a fixed rate on particular type of gambling. (42) Comparing the 2008 results to 2007 results there is a slight drop and the same is true if comparing the first quarter of 2009 and the first quarter of 2008. Thus, the general licence merely gives the company a status of “gambling organizer,” but each type of gambling activity has to be licensed further. The trend that the whole gambling industry is moving more to the online environment has also been recognized at the EU level.
(4) Supra note 1;, art.81;
(31) Supra note 28, article 13;
Returning to the case of Latvia, although the regulations might seem to be quite strict, at least the sports betting sector and online betting remains a relatively open market. (41)
Since January 1, 2006, along with entry into force of the current Gambling Law, all forms of gambling promotion (advertisements) outside the gambling locations are prohibited. 2-r on advertisement, 11 May 2007;
Given the ample restrictions on locations where betting halls can be operated and the uncertainty with municipality permissions, the potential sports betting organizers might have lost their interest to run a fixed location. (22) The special licence is also perpetual, but subject to annual re-registration (fee LVL 30`000 (thirty thousand lats)). Given the ~ 10 million LVL annual turnover for a single company, and the number of foreign online sites actively advertising on the market (bwin.com, betway.com, triobet.com, expekt.com, betsafe.com, etc), the actual size must be at least double of that.
(11) Ibid., article 13;
(7) Supra note 1, art 1.3 and article 8;
(8) 1 EUR = 0.702804 LVL. The compliance with the Advertising law is enforced by the Consumer Rights Protection Centre (hereinafter the CRPC). The question whether the Latvian legal environment is attractive for potential operators is a different debate. Harmonization, however, seems to be something that the industry might be willing to see