Feeling the effects of Lithuania’s ad ban

The Parliament of Lithuania announced its ban on various gambling advertisements, including all promotional bonuses, from 1 July 2021. However, considering the effects it has on the Lithuanian gambling market, these non-negotiable restrictions on business is excessive and can distort the competition.

From 1 July, the new amendment to the country’s law on gambling prohibits the promotion of gambling through activities such as special events, test games, promotions, discounts, gifts and other incentives. The ban applies to both the land-based and online gambling markets in Lithuania. Meanwhile, the new regulation will have a strong impact on existing operators due to its ambiguity and extremely fast entry into force, as the speed of decision-making is surprising. The project of law was registered in parliament at the end of April, adopted in June and entered into force on 1 July.

Prior to the adoption of the law, we presented our arguments with parliament on how this law will affect not only the gambling sector, but also how it will accelerate the black market.

We can remember when Lithuania updated its gambling advertising laws and regulations in November 2019. The regulator allowed brands to show trademarks, names and types of games offered. Any other visual, audio or written content was banned. Moreover, in July 2020, these regulations were further expanded with a bill amendment. This change required that gambling ads must include warnings about possible gambling-related harms. This law left all gambling operators in Lithuania “faceless” to publish only very limited information. However, this only further distinguished gambling ads from all other media ads.

Such restrictions have encouraged consumers to migrate to the black market. It is estimated that the annual income from Lithuanian consumers on illegal gambling websites could have reached as much as €15.5m in 2020. This means that not a single euro of taxes had been paid to the budget and was more than €4m was lost.

With the onset of the first Covid-19 wave, gambling companies did not use any advertising. However, the gaming sector continued to grow. This was seen as a steady growth of the market, which began a few years ago with the legalisation of remote gambling in Lithuania. Despite the pandemic and the resulting bans on gambling activities, gambling companies paid €11.8m as a “special gambling fee” to the Lithuanian budget in 2020.

Unanswered questions

After the 1 July law was passed, there is a great deal of uncertainty for operators as to how such a ban will apply in practice. What information operators will and will not be able to provide their customers. What will be considered as mere information and promotions? And what will be “advertising”? In this case, operators are confused and also that such a ban prevents entry of new operators into the market and would act as an incentive for illegal businesses.

The main regulator in the gambling sector is the Gaming Control Authority under the Ministry of Finance of the Republic of Lithuania. However, there is no strong and effective dialogue between the regulator and the gambling sector. The regulator does not pay a lot of attention on the education and training of gamblers.

In June 2021, a new project on gambling online licences was proposed. The cost of these new licences would be noticeably higher than that of those currently available. Online-only licences would command a €500,000 fee, while combined ones would be available for €1m. It would also be possible to acquire licences to operate table and slot machines (€300,000) or betting operations (€100,000). If the proposal was to go through, all existing licences would be made to expire on 1 January 2027.  The proposal will be debated in the autumn session of parliament.

Mantas Zakarka has been a lobbyist and public affairs consultant. He is currently partner at public affairs firm Vento Nuovo in Lithuania and is a representative of Lithuania’s Gambling Business Association.