Lithuania pushes for local land-based requirement

Lithuanian authorities have notified the European Commission (EC) of proposed amendments to its gambling law that would require online operators to establish a land-based presence in the country.

In its notification to the EC, Lithuanian authorities said that current gambling law failed to establish whether licensed land-based operators could offer their services online.

Despite being a grey market, the report also noted that online gaming had “become widespread practice” in Lithuania, particularly among operators who did not hold a land-based licence.

It said these companies were “acting illegally under Lithuania gaming law” and putting licensed operators in a “disadvantageous competitive position”.

The EC now has three months to respond to the outlined changes, and while not likely to oppose the proposed amendments will remind Lithuania of its obligations under European Law.

But Stephen Ketteley, partner at DLA Piper, said requiring operators to have a local presence “is clearly in breach of the freedom of establishment principals” under EU law.

“A member state should not be able to require a licence holder or an applicant to have a company or branch within their jurisdiction,” Ketteley added.

Regardless of the EC’s response, Lithuanian authorities may push ahead with the proposed amendments and Ketteley said the EC had previously failed to prevent other jurisdictions from adopting similar requirements.

“The Commission has taken little action really against Member States who ignore what are generally accepted legal principles; they have recently taken action against Sweden but little has been done, at least publicly, against others who clearly ignore these principles,” Ketteley said.

“There are other member states that have similar requirements of local establishment in their laws, so it will be interesting to see what the Commission is going to do about the Lithuanian proposals,” he added.