Islj 2009 3-4 - TMC Asser Instituut

The subcategories of games of chance are: 1) games organized on gambling
tables and gambling machines to determine the outcome of
which an electronic, mechanical or electromechanical device made for
organizing gambling or the assistance of the game organizer is used,
and 2) additional games of chance - which upon compliance with the
conditions provided in the rules of the game afford the player at the
gambling machine or gambling table the opportunity for a prize collected
from the stakes from gambling machines or gambling tables, or
otherwise predetermined prize.
The subcategories of lotteries are: 1) classical lotteries - lotteries
where the results depend completely on chance and where the results
of the lottery are revealed after the lottery organizer ceases to allow
participation in the lottery; and 2) instant lottery - lotteries whose
results are randomly determined on tickets before the lottery tickets
are acquired by a player and whose result becomes known to the player
upon uncovering the playing field after they acquire the lottery
ticket.
Promotional lottery, which is not within a state monopoly and is
not a category of gambling as long as it does not exceed EUR 10.000,
and is a classical or instant lottery organized by a trader for the purposes
of advancing the sales of goods or services, or for promoting
goods, services or their providers. 18 Most importantly, the new Act
thoroughly regulates remote gambling. Article 5 defines it as “the
organisation of gambling in such a manner where the result of gambling
is ascertained using electronic appliances and in which the player
can take part via electronic device, including telephone, Internet
and broadcasting.” The court practice has confirmed that remote
gambling is not an independent category or subcategory of gambling.
19 Instead, it is a manner in which organizers provide gambling
services.
5. Share and Reserve Capital Requirements for Gambling Organisers
5.1. Share capital
According to Article 9 of the Act, games of chance may be organized
by a public or private limited company whose share capital is at least
EUR 1 million. Lotteries, except for promotional lotteries, may be
organized by a completely state-owned public limited company
founded for that purpose by the Government of the Republic whose
share capital is at least EUR 1 million and whose shares are completely
state-owned. Games of skill may be organized by a public or private
limited company whose share capital is at least EUR 25.000. Totos
may be organized by a public or private limited company whose share
capital amounts to at least EUR 130.000.
However, more important than the share capital requirement is the
requirement as to the specific legal form of company that can organize
gambling. Public or private limited companies are not the only
forms of company, and therefore, it would appear expressis verbis that
the license would be refused to any undertaking that is not complying
with the condition related to legal form. If a company from
another Member State would be refused the license on the basis of
lacking the required legal form it could possibly create the problems
of compatibility with the EU internal market rules.
5.2. Reserve capital
The new Gambling Act obliges gambling organizers to create the supplementary
reserve capital from annual net profit transfers or other
transfers to reserve on the basis of legislation or articles of association.
18 Definition under Article 6 of the Act.
This type of lottery can go unregulated
as long as its prize fund does not exceed
EUR 10.000. See Article 2(5).
19 Decision of Tallinna Halduskohus
(Administrative Court) of 28 June 2007
in the case 3-06-1582.
20 This follows from the Articles 9(7) and
10(1) of the Act.
21 Articles 19-32 of the Act.
22 Decision of Halduskohus
(Administrative Court) in case 3-06-1582.
23 ‘Non-profit organisations specified by
the Government of the Republic the
only statutory purpose of which are
equestrian and equine related activities.’
24 Article 22(2) of the Act.
25 State Gazette RT I 2006, 58, 439.
Available at
https://www.riigiteataja.ee/ert/act.jsp?id=
13160293.
26 1 EUR is equal to 15.64 EEK (Estonian
krooni). Official exchange rates by Bank
of Estonia.
The minimal size of the reserve capital is set to one third of share capital.
The lawmakers have released from this obligation organizers of
totos in relation to the events in which the players place the stakes on
the outcome of a horse race, and who are non-profit organizations
specified by the Government of the Republic, the only statutory purpose
of which are equestrian and equine related activities. Instead of
requirements to create additional reserve capital, the net capital
reflected in such non-profit organization’s balance sheets has to constitute
at least 2/5 of the value of their assets. 20
6. Licensing Requirements
According to Article 2 of the old Gambling Act, the right to organize
gambling belonged to the State, and it could then transfer this right
in accordance with the conditions set forth in the old Act, including
the issuance of the licenses. The new Act has deleted this article but
the state licensing requirements as means of control have remained. In
order to legally provide gambling services in Estonia, a person has to
first obtain an activity license, and after that an operating license. 21
The decision of Administrative Court confirms that activity and operating
licenses are interconnected and that without the operating
license it is not possible to legally provide gambling services at a specific
location. 22
6.1. Activity license for organizing gambling
Applications for activity licenses are addressed to the Tax and
Customs Board who decide within four months whether to issue or
deny the license. According to Article 16 of the Act, an activity license
entitles a person to apply for an operating license for organizing of the
gambling. The activity license is issued for an unspecified term and is
not transferable. A separate activity license is issued for games of
chance, totos, and games of skill. This means that if one attempts to
organize different types of gambling each one will be required to be
licensed separately. It should be noted that there is no requirement to
obtain an activity license for the organization of lotteries.
6.2. Gambling operating license
Article 22 of the Act provides that a separate operating license is issued
for the period of 20 years: 1) for organizing one category of a game of
chance at the address or ship of a gambling venue to be opened, to be
marked in the decision on granting operating license; 2) for organizing
toto, or at the address or ship of a gambling venue to be opened, to be
marked in the decision on granting operating license; 3) for organizing
games of skill at the address or ship of a gambling venue to be opened,
to be marked in the decision on granting operating license; 4) for
organizing a category or subcategory of gambling as online gambling;
5) for organizing a lottery, except a promotional lottery.
The operating license, except for the operating license granted for
organizing lotteries and totos for non-profit associations specified in
Article 9 (7), 23 shall be granted solely to the holder of an activity
license. 24 An operating license for online gambling is granted for five
years and instead of the requirement to provide an address for the
venue in the application form, the online service providers have to
supply the address of the server containing the software used for
organizing gambling. The decision to grant or deny an operating
license is made by the Tax and Customs Board, normally within two
months.
6.3. State fees
The new Gambling Act has amended the State Fees Act. 25 Hence,
Article 219 of the State Fees Act sets the amount to be paid at EEK
750.000 for organizing a game of chance, EEK 500.000 for organizing
pari-mutuel betting, and EEK 50.000 for organizing a game of
skill. 26 Article 220 of the State Fees Act provides that for reviewing an
application for a gambling operating license, except in the case of a
lottery, a state fee of EEK 50.000 shall be paid. In addition, for
reviewing an application for operating license for lottery, a state fee of
EEK 10.000 shall be paid. The fees have not changed significantly
except for in the case of organization of totos where it has decreased
by 33%.
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