CIS and Baltic states market focus: Latvia

When expanding into new and emerging markets, a good understanding of local gambling regulations can give operators that vital jump start which can turn a new market entrant into the market leader. But with European markets becoming a more regulated and hostile environment for egaming and sports betting operators, eyes and ears will turn to markets further afield.

The Commonwealth of Independent States (CIS) region, which is made up former Soviet Union states comprises a multitude of diverse markets over eight million square miles and a population of 240 million citizens. These states, so long cut off from the west, are now beginning to open their markets to international businesses including gambling.

The neighbouring Baltic states (Latvia, Lithuania, Estonia) have also begun to travel the path of gambling regulation, with varying success.

This emerging macro market could be the next area of expansion for the industry and remains relatively untouched by big firms due to the patchwork of regulation and local laws which crisscross it.

In the first of this five-part series, EGR Compliance, in partnership with international law firm Dentons solicitors, will focus on providing clarity to those looking to make the CIS and Baltic states their next big operating market. Today we look at Latvia.

Population: 1.92 million

GDP per capita: $18,033

Internet penetration: 83.3%

President: Egils Levits

Principal regulatory body: The Lotteries and Gambling Supervision Inspection[/box] [box title=”What types of licences are available to operators?” box_color=”#EC6408″ title_color=”#333333″]

There are four types of licences:

1) licence for casino, slot machines, sports betting, bingo, including online gambling (the “Gambling licence”);

2) licence for gambling premises (the “Premises licence”) which may be of the following type:

-casino

-bingo room

-slot machine hall

-sports betting shop

Gambling licence should be obtained together with the Premises licence for the respective type of activity.

3) licence only for online gambling (the “Online licence”).

4) licence for provision of gambling services (e.g. provision of access or online broadcasting of the content necessary for the organisation of gambling) (the “Service licence”).

Lotteries are not considered as a type of gambling. [/box] [box title=”What taxes are payable by operators?” box_color=”#EC6408″ title_color=”#333333″]

Term

All types of licences do not have expiry date. However, operators must re-register the licence each year.

Licence fee

Gambling licence (payable once upon application for a licence): €427,000 (£374,000)

Premises licence (payable once upon application for a licence or re-registration of the licence):

-casino: €30,000 (£26,000)

-bingo room: €4,500 (£3,900)

-slot machine halls: €4,500 (£3,900)

-betting shop: €2,000 (£1,700)

Online gambling licence (payable once upon application for a licence): €200,000 (£175,000)

Service licence (payable once upon application for a licence or re-registration of the licence):

-more than 25 gambling items: €400,000 (£350,000)

-less than 25 gambling items: €120,000 (£105,000)

Re-registration fee (payable each year): €37,000 (£32,00)

Costs

For any type of licence applicant should have at least €1,400,000 (£1.2m) of share capital. [/box] [box title=”What restrictions are placed on operator marketing to players?” box_color=”#EC6408″ title_color=”#333333″]

It is prohibited to advertise gambling outside of the gambling premises.

On the gambling premises, it is permitted to exhibit only the name of the gambling premises and the registered trademark of the gambling operator.

However, it should be noted that the existing prohibition does not affect the actual state of things as Latvian operators are freely advertising themselves on the internet. [/box] [box title=”Where are the big opportunities for operators looking to expand into the market?” box_color=”#EC6408″ title_color=”#333333″]

Considering Latvia’s population, hefty licence fees and various localisation requirements, it is hard to place this market among the most popular markets around the world. However, on the bright side, this market could be used as a starting point within Europe because of its size.

There is a strict requirement for a composition of operator’s management – not less than a half of an operator’s management must be citizens of Latvia.

Latvia’s online gambling revenue rose by nearly one-third last year, setting a new market record in the process.

Latvia’s online gambling revenue is unlikely to undergo further growth this year due to new payment processing restrictions that were announced last May, and which took effect on 1 January 2020 and, of course, Covid-19 shutdown of online gambling.

The restrictions also apply to individual gamblers, who could face fines of €350 (£300) for patronising unauthorised sites as well as penalties for not paying tax on any illicit winnings.

Ilya Machavariani is a gambling and gaming lawyer for Europe, Russia and the CIS heading Russian and the CIS gambling practice group at Dentons. He has extensive experience advising on gambling issues and advises clients on operating in the Russian Federation and the CIS, on the full range of regulations relating to the activities of gambling operators, as well as drafting the necessary contracts and internal documents. He also handles licensing processes for gambling operators that are entering new markets throughout the world.

Ivan Kurochkin being an associate at CIS gambling practice group at Dentons has broad experience on gambling issues, especially in regulatory matters. Ivan’s work involves advising clients doing business in the Russian Federation on various activities of gambling operators (including bookmakers), focusing on issues related to compliance with gaming license requirements, applicable AML requirements, and issues relating to advertising of gambling operators.