Turbulent Yet Still Standing: Gambling In Latvia

One of the most gambling-driven Baltic countries, Latvia tightens its grip on gambling regulations as the market brings €77.4m in three months with an annual growth of 15%. While state-licensed brick and mortar slot machines continue to generate the lion’s share of the revenues, the Lotteries and Gambling Supervisory Inspection of Latvia (IAUI) aims at forbidding illegal offshore gambling venues and hardening the rules for land-based casinos, including bans on smoking an alcohol consumption.

Whereas the country is battling the ubiquitous spread of gaming halls by closing venues located in inappropriate places, the gambling revenue riches €154.5m in H1. A question arises: how is that possible that the market is booming despite the fact that the government is making its best to counteract?

Unambiguous Latvian Gambling Laws

The first casino opened its doors to Latvian gamblers back in 1991, which, though there were no clear regulations at the time, gave birth to a plethora of offline gaming institutions. But those were hard times for players, as they were often treated poorly and had no legal grounds to refer to in order to protect their rights.

The acting Lotteries and Gambling Supervision Inspection of the Republic of Latvia have been created in 1998 to pursuit three key principles:

• safe and fair gambling and bearable taxes on winnings;
• compliance of gambling operators with the acting laws and regulations;
• protection of gamblers’ rights and freedoms and preventing them from gambling addiction.

While the IAUI still follows these principles when issuing licences to offline and online gambling operators, the need of owning a brick and mortar casino to legally operate online is a fly in the ointment for most international licence seekers: only 9 online operators are granted the rights to offer betting services, poker, and casino games.

International Gambling Brings More, though Hampered

On one hand, the unfriendly-to-foreign-businesses Latvian legislation makes the niche unfavourable for international punters, on the other – it protects domestic casinos by allowing them to generate more revenues on predominantly local gamesters.

Earlier this year, the parliament approved amendments to the state gambling laws to ban players from accessing third-party online gambling websites operating within the country. But not only that! Banks can no longer process payments coming to unapproved sites. Moreover, all punters violating the law are to be blacklisted and fined of up to 350 euros if caught red-handed.

Not to say that thanks to adequate gambling regulations there are so many legit online gambling sites in Latvia – rather because of the growing demand for reputable international gambling providers. Whether local operators can compete with international giants is an open question, but the fact is that foreign operators occupy as much as two-thirds of Latvia’s online gambling market.

That said, the regulator does care of its customers, especially when it stimulates the promotion of domestic services bringing profits to the government itself. In November 2019, the IAUI has issued a warning over online fraud and fake lotteries, claiming that gamblers should do their own research before making bets online for that it’s almost impossible to identify and ban all the fake hubs. Whether the victim gets the fishy phone call or e-mail with the wrong spelling, he or she is sometimes just too impatient and greedy to recognize the fraud and therefore often left empty-pocketed and in need of the psychological support. The solution is of course licensed state-based counterparts.

Gambling to Fill the Budget

Despite the string of troubles, legal gambling in Latvia is still strong and profitable. Well, only if it hadn’t been so lucrative the Latvian Parliament wouldn’t have submitted a proposal to increase the taxed on offline gaming venues: the current tax rate for slot machines is expected to rise from EUR 4 164 to EUR 6 000, whereas the tax rate for card games, dice, and roulette – from EUR 23 400 to EUR 28 080.

The same proposal includes plans on changing the division between municipal and state budgets from the current 75/25 ratio in favour of the state to a whopping 90/10. Is greed as good as the government deems, only the time will show.