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Online Gaming in Latvia

Authored by Njord Law

Overview

Open

Latvia Online Gaming Overview

Regulated
Remote and non-remote gambling operations in the Republic of Latvia are licensed in accordance to the Gambling and lotteries law. The controlling authorities are the Inspectorate for the Supervision of Lotteries and Gambling and the Consumer rights protection centre.

The Inspectorate for the Supervision of Lotteries and Gambling controls the Register of gambling premises licences and the Gambling service providers and organisers, as well as lotteries and raffles, that are licensed.

The Gambling and lotteries law defines “gambling” as a game in which an individual may, by paying a stake, win a prize which depends in whole or in part on a lucky chance or circumstances not previously known. A game played on a gaming machine in which the only prize is free play on that machine and a game played on a gaming machine with a prize (other than a cash prize) of a material nature of a value not exceeding EUR 15 is not regarded as a game of chance.

The Inspectorate for the Supervision of Lotteries and Gambling approves the rules drawn up by the gambling organiser within 15 days from the date of their receipt. The Gambling Supervision Inspectorate refuses to approve the rules if at least one of the following conditions are met.

  • They do not contain the information specified in the law
  • They provide for the organisation of a game of chance which does not comply with the requirements of the law
  • They provide that prizes may be won only after a certain number of participants have entered the game or after the total amount of sales has reached a certain amount
  • They provide for the organisation of a pyramid game in which the participation fee (stake) or the values invested give, over time, a prize to an unspecified number of persons

A gambling licence may be granted to a gambling organiser who meets the following criteria:

  • It is a capital company registered in the Republic of Latvia, the paid-up share capital of which is not less than EUR 1,400,000
  • The share of foreign members or shareholders in the share capital of the capital company does not exceed 49%

This requirement does not apply to investors (residents) of the Member States of the European Union, the countries of the European Economic Area and the member states of the Organisation for Economic Cooperation and Development, as well as to cases where different rules for foreign investments are provided for in international treaties approved by the Saeima (Latvian Parliament).

The sector is strictly regulated and taxed. A gambling licence is issued for an indefinite period and must be re-registered annually with the Lotteries and Gambling Supervision Inspectorate. Gambling may only be organised in casinos, gaming halls, bingo halls, betting shops or betting shops if the relevant gambling premises licence has been obtained.

Market size
In total, 19 operators organise gambling in Latvia, of which:

  • 8 operators organise live gambling in gaming halls and casinos
  • 4 operators organise gambling in betting shops
  • 17 operators organise interactive gambling

According to Central Statistics Office and Inspectorate for the Supervision of Lotteries and Gambling data, the total turnover of gambling companies in accordance to the latest data available for the year 2022 is EUR 290,534 million. The revenue from gambling itself is EUR 264,775 million, from gambling machines – EUR 131,129 million, from gaming tables (roulette, cards) – EUR 8,201 million, from Bingo halls – EUR 0,080 million from betting shops – EUR 1,377 million, from interactive gambling – 123,988 million EUR.

Interactive gambling revenue in 2022 totals EUR 123,988.

Data on blocking unlicensed interactive gambling sites – 558 decisions were taken in 2022 for 35 legal entities and 560 domain names were blocked.

Revenues from interactive gambling in 2022 amounted to EUR 123,988 million, from casino games EUR 103,698 million, from betting EUR 18,528 million and from card games EUR 1,762 million .

Revenue accruing to the state budget from lottery and gambling duty and tax, and goods levy on the organisation of lotteries in the year 2022 – EUR 39,880 million, in 2022, gaming tax EUR 31,604 million, lottery tax EUR 4,269 million, gaming, lottery stamp duty EUR 4,007 million, other taxes levied on enterprises in the sector 39,306 million EUR, and stamp duty on the organisation of commodity lotteries 0,273 million. EUR. 9,5 million EUR from gambling tax to municipal budgets in the year 2019.

The change in the number of gambling machines, gaming halls and casinos in operation for the month of December, 2022 – 4,999 gambling machines, 8 roulette tables, 21 card tables, 203 gaming halls, 1 bingo hall, 2 casinos, 70 betting shops declared.

In 2022, 425 licences were issued for the betting industry, including, 175 press lotteries, 256 in fast-track procedure, total fund of wins EUR 1,149,234.20, 250 lotteries with a fee, taxable prize fund in EUR 1,043,680.01, state fee paid 272,970.20 EUR. The gambling and lotteries sector employed a total of 2,722 people in 2022.

Compared to 2019, the turnover of gambling companies in 2022 will decrease by 11.4% and profits by 13.8%. Stamp duty revenue has increased due to new licence applications from both streaming operators and interactive gambling operators. They amounted to EUR 4,007 million – an increase of 8.9% compared to 2019.

Article 4 of the Gambling and Lotteries Law note, a natural person has the right to request in writing to be prohibited from participating in gambling in the Republic of Latvia. Since the start of the Register of Self-rejected Persons in 2020, more than 35,000 people have entered the Register.

According to forecasts of the H2 Gambling Capital, a UK-based gambling research agency, in 2022, Latvia’s illegal interactive gambling supply accounted for 26% of the total gambling supply, down 6.4 percentage points from 32.4% in 2021.

In 2020, 42 inspections were carried out at the premises of electronic communications undertakings to verify compliance with the requirements set out in the Inspectorate’s decisions. In 2022, a total of 107,038 referrals were made to the Inspectorate’s website by persons who tried to log in to unlicensed sites.

From May 2021, persons included in the Register of the Maintenance Guarantee Fund may also not participate in gambling and interactive lotteries. On average, 10% of persons on the register have wanted to gamble but have been denied access.

In addition to the Register of Self-rejected Persons, the Inspectorate also provides state-funded psychological counselling to gamblers and their relatives. 482 face-to-face and 65 remote counselling sessions were organised in 2022, as well as answers to 742 telephone questions and 66 e-mails.

Due to COVID-19 containment measures in 2022, the gaming venues in Latvia were closed until 28 February, 2022 (for 59 days).

Competitive landscape
At the moment in Latvia there are 20 licensed gambling operators. The list is available on the Lotteries and Gambling Supervisory Inspection Republic of Latvia’s website.

The change in the number of gambling machines, gaming halls and casinos in operation for the month of December 2022 – 4,999 gambling machines, 8 roulette tables, 21 card tables, 203 gaming halls, 1 bingo hall, 2 casinos, 70 betting shops declared. In 2022 425 licences were issued for the betting industry, including, 175 press lotteries, 256 in fast-track procedure, total fund of wins EUR 1,149 234.20, 250 lotteries with a fee, taxable prize fund in EUR 1,043,680.01, state fee paid EUR 272,970.20. The gambling and lotteries sector employed a total of 2,722 people in 2022.

Localisation
Gambling is not allowed to be organised:

  • In state institutions
  • In churches and cult buildings
  • In the buildings of medical and educational institutions
  • In pharmacies, postal structural units or credit institutions
  • In places where public events are held during the course of these events, with the exception of totalisator and betting
  • In territories that have been granted market status in accordance with the established procedure
  • In shops, cultural institutions, railway stations, bus stations, airports, harbours, with the exception of gaming halls, totalisators or betting places, which are established in premises enclosed by building structures with a separate entrance only from the outside
  • In bars and cafes, with the exception of totalisator and betting
  • In service hotels
  • In buildings where there are apartments and the entrance to them from the outside of the building is shared with the entrance to the place where gambling is organised
  • In the places or territories of the relevant municipality, which are determined in the binding regulations of the municipality

Gambling advertising is prohibited outside gambling venues, this prohibition includes sponsoring of events, including, sporting events by gambling institutions. Only the name of the gambling venue and the registered trademark of the gambling operator may be displayed in gambling venues. Article 41, part five of the Gambling and Lotteries Law explicitly provides where and how gambling advertising may be displayed.

Despite this, the online gambling services are often advertised online, as the regulatory institutions the Inspectorate for the Supervision of Lotteries and Gambling and the Consumer rights protection centre due to their heavy work load rarely imposes fines and other restriction and control measures in practice, as well as when requested to specify questions on legal acts interpretation in the gambling sector, avoids direct answers (either claiming that the question is within the scope of the other institution competence or that due to the work amount and being short-staffed it is impossible to answer at the given moment).

Thus, for years, the biggest private supporters of Latvian sports have been different sports betting companies. The sports federations enter into sponsorship agreements to provide material support for a specific sport. And accordingly, the federation registers the name of the gambling organisers as a trademark in its name.

For online services bank facilitated payment card payment methods are used. However, on 3 April 2019, amendments to the Law on Payment Services and Electronic Money were adopted, which oblige financial institutions to refuse card payments in cases where the payment is made to an organiser of interactive gambling and interactive lotteries that is not licensed in Latvia. These changes are aimed at restricting access to interactive gambling and lotteries that are not licensed in Latvia. The amendments also require financial institutions to provide information to the SRS on the payments refused.

Due to the AML requirements, the state authorised banks and payment institution services must be used for payments and these can only be used for state licensed gambling companies services, the institutions check the transactions and when certain conditions are met, the transaction is deemed as “suspicious”, account is frozen and proceedings are initiated for potential money laundering/crime investigation proceedings. The most popular services are the ordinary bank cards, Visa and MasterCard. However, in practice e-wallets (PayPal, Neteller and Skrill, etc.) and cryptocurrency (Bitcoin, Ethereum, etc.) are used for various online non-licensed gambling sector services, that are often used by gambling sector professionals and enthusiasts.

Top Key Attractions and Challenges
Attractions

  • The Latvian government can issue licences not only to domestic operators, but also to online gaming sites from other European countries to operate legally in the country. Moreover, the cost of obtaining a licence for an online casino site is relatively low compared to other EU Member States
  • The government has imposed strict measures and precautions to protect online gamblers from accessing illegal gambling sites, thus more income for the legal sites
  • Gambling operators were among the biggest recipients of the state paid downtime allowance under Covid-19 restriction measures

Challenges

  • Gambling in Latvia, as the placing of bets for potential reward or loss, is only allowed in casinos and sports betting shops licensed in Latvia. Persons are not allowed to participate in interactive gambling or interactive lotteries organised in the Republic of Latvia without a licence issued by the Lotteries and Gambling Supervision Inspectorate, in this case both the service provider and the individual participating as the service customer can be fined, the funds involved frozen, etc. This applies also to online (interactive) services
  • In order for the interactive (online) gambling services to be organised, the service provider needs to:
    • Apply for the (general) gambling services organiser licence
    • Then apply and receive the interactive (online) gambling services organiser licence (i.e., dual licence system)

The licence covers online services for the territory of Latvia and the organised is obliged to inform the regulatory institution on the server location and to receive the certification for the software (systems) used. The servers can be located anywhere within the EU, however, the service provider needs to conclude an agreement with the Office for Citizenship and Migration, that allows the service provider to check the identity of natural persons applying for services and to check their ID cards and passports. With Latvian licence only Latvian citizens can participate in the online services.

  • In Latvia, about 70,000 or 6% of the population has a gambling problem, including about 16,000 or 1.3% of the population with a serious gambling problem
  • However, if a player has won at an online casino, he has to pay tax on his winnings to the State
  • The draft law Amendments to the Law on Gambling and Lotteries, drafted by the Ministry of Finance in early 2023, aims not only to restrict gambling venues, but also to monitor players’ behaviour and habits more closely
  • The draft law provides that persons aged 21 or over will be allowed to visit casinos, betting shops, betting shops or interactive gambling, while persons aged 18 or over will be allowed to participate in lotteries. Gaming halls will be closed from 6.00 to 9.00 am. This restriction would also apply to interactive gambling. The Cabinet of Ministers’ regulations are expected to lay down uniform requirements for the design of the public open space of gambling venues
  • Gaming halls must have no fewer than 25 machines. Currently, the Register of Self-Rejected Persons in Latvia operates only within the national borders, but in order to prevent gambling abroad or by foreigners on the Register in Latvia, the draft law provides for the establishment of a unified Register of Self-Rejected Persons between Member States
  • The draft law is at the stage of ministerial coordination (in June, 2023). Link to the Amendments to the Law on Gambling and Lotteries website.

Licensing & Regulation

Well-regulated / Unregulated (Open)

Latvia Online Gaming Licensing & Regulation

Licence Triggers
The provision of gambling services, i.e. The creation, maintenance, provision of access or online broadcasting of the content necessary for the organisation of specified gambling games.

The gambling service provider is a merchant who creates, maintains, or provides the aforementioned services in the territory of the Republic of Latvia, for online service who provides the services for...

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Enforcement

Regular / Punitive

Latvia Online Gaming Enforcement

Regulating bodies
The controlling authority are Inspectorate for the Supervision of Lotteries and the gambling, who is responsible for the licensing, as well as the controlling of the law observing and fines:

Inspectorate for the Supervision of Lotteries and the gambling main regulatory un supervisory tasks:

To register gambling machines and equipment and provide state and local government institutions...

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Marketing

Banned

Latvia Online Gaming Marketing

Advertising of gambling and interactive gambling sites is prohibited outside gambling sites. Only the name of the gambling place and the trademark registered by the gambling organiser are allowed to be displayed in places where the gambling is organised.

Latvia is one of the few countries with a complete ban on advertising. Although gambling advertising is prohibited in Latvia outside...

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Fees

High

Latvia Online Gaming Fees

Application fees
The gambling fee is paid for the issuance or re-registration of a licence for the organisation of gambling games – the slot machine games, bingo, roulette, card games, dice games, totalisator, betting and games of chance over the phone – as well as for the issuance or re-registration of a licence for the organisation of gambling games.

...

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Taxes

Average

Latvia Online Gaming Taxes

Licence taxes
For the licence fees please see in the previous section (“Fees”).

The object subject to the gambling tax is the gambling organiser – capital company, gambling venue and gaming equipment. A is collected from each arranged or installed direct venue of gambling at the following rates for each current calendar year:

The roulette (cylindrical game) – for...

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Future Outlook

Positive

Latvia Online Gaming Future Outlook

During the Covid-19 restriction measures phase, partial on-the-spot betting services prohibition was introduced, that caused decrease of the betting industry revenue. However, in the end of the Covid-19, starting the second half of the year 2022, the profits of the Latvian betting industry have increased.

For example, one of the biggest betting companies SIA “Evolution Latvia”, the subsidiary of the Evolution...

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Legal Expert

Njord Law

Office locations Latvia

NJORD specialises in commercial law, licensing, employment law, intellectual property law and various other legal matters.

NJORD is open to assisting startups and gambling sector companies in regard to corporate, licensing, intellectual property and legal-tax advice matters.

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