Islj 2009 3-4 - TMC Asser Instituut

as local). 7 The amount of the paid up share capital has to be at least 1
million LVL. 8
In order to obtain the general licence, certain information and documents
must be filed with the Inspection. 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. 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. . 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. 11 The licence is granted to the company subject to
payment of the state duty of LVL 300`000 12 (three hundred thousand
Latvian lats). Although the license is perpetual, it is subject to re-registration
at the Inspection on an annual basis. 13
2.2. Licensing-Special
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. Thus, the general licence
merely gives the company a status of “gambling organizer,” but each
type of gambling activity has to be licensed further. 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. 14
The organizer may also apply for an interactive gambling (i.e. online)
licence or licence for games of chance over the phone if a “brick and
mortar” site is not planned. 15
2.2.1. 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. 16
Under the Gambling Law there are certain locations where gambling
cannot be organized. Among these are state and municipality
institutions, churches, health care and educational institutions, pharmacies,
post departments, credit institutions, public markets, and
others. 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. 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. 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 attitude
may vary from municipality to municipality, but as regards the
Riga city municipality (approx. 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. 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. 20
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). 22 The special licence
is also perpetual, but subject to annual re-registration (fee LVL
30`000 (thirty thousand lats)). 23
2.2.2 Interactive (online) licence
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. Electronic communication means have proven to be
a much more convenient way for people to wager their stakes. It also
allows targeting much wider client auditory in a more cost efficient
way for the organizer. Given that the local municipality permission is
not required, the licensing regime is also more favorable.
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.
25
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. card games, roulette,
etc.), the decision is taken within sixty days. 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. 30.000 LVL are payable annually.
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. Promotion prohibition
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. 27 Consequently, there
should be no public activities related to promotion of sports betting
in Latvia. However, the reality is that promotion of sports betting in
Latvia still exists. The organizers are constantly looking for ways to
bypass the restriction. In fact, judging from the available decisions of
7 Supra note 1, art 1.3 and article 8;
8 1 EUR = 0.702804 LVL. Amount of 1
million LVL constitutes approximately
1.42 million EUR.
9 Supra note 1, article 11;
10 Ibid., article 12;
11 Ibid., article 13;
12 Ibid., article 14, and Law on Lotteries
and Gambling Tax and Fee, adopted on
16 June 1994, article 2, (~ 430’000
EUR);
13 Ibid., article 16;
14 Ibid., article 20;
15 Ibid., article 46;
16 Ibid., article 27;
17 Ibid., article 41.2;
18 Ibid.;
19 Ibid., article 42.1.3;
20 Supra note 6, Annual Public Report
2008, page 18;
21 Approximately 43`000 EUR;
22 Supra note 1, article 28 and the Law on
Lotteries and Gambling Tax and Fee,
adopted on 16 June 1994, article 2;
23 Ibid. article 33 and the Law on Lotteries
and Gambling Tax and Fee, adopted on
16 June 1994, article 2;
24 In accordance with the rules of Cabinet
of Ministers, No. 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).
25 Supra note 1, article 47;
26 Ibid. ,article 48;
27 Supra note 1, art 41.5;
A RT I C L E S
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