Estonia regulates its gambling industry

Estonia, located in Eastern Europe, has legalized the gambling industry. Article 2 of Estonia’s Law on Gambling authorizes only the state to offer gambling services in Estonia, though the state can delegate this right by issuing licenses. Currently, there are 72 gambling facilities, strictly consisting of casinos, which are distributed among Estonia’s 12 cities. Gambling and lottery matters are under the regulatory jurisdiction of Estonian Federal law. For the time being, interactive gambling is not legally regulated in Estonia and no licenses are granted for this industry.

Estonia’s Federal Law on Gambling, State Gazette I, 95, 58, 1005, is one of the regulatory gambling laws in Estonia. It defines games of chance, games of skill, totalizators (electronic machines showing racetrack results) and betting services. It also prohibits advertisement of gambling games except in locations where gambling has been authorized.

Estonia’s legal gambling options also include online wagering. Sport betting on the Internet, for example, is very popular. Casinos gambling in Estonia provide an additional sports betting feature to attract players. Casinos have even developed a way to identify each player, and to ascertain that the player is at least 21 years of age; otherwise, the gaming account may be seized by the state.

What are the types of lotteries recognized in Estonia and who can operate those lotteries?
Section 21 of Estonia’s Law on Lottery, State Gazette I 1994, 50, 845, categorizes lotteries into three types -- classical lottery, instant lottery and numerical lottery. Classical lottery is a lottery using lottery tickets with unique codes; the winner is determined after raffling the winning codes. In an instant lottery the winner is determined immediately upon opening the game field of the lottery ticket. In numerical lottery, players are allowed to put stakes on a combination of numbers, and the winner is determined after raffling the winning figures.

Section 2, sub-section 2 of the Estonian Law on Lottery (State Gazette I 1994, 50, 845) also permits organization of lotteries for charitable purposes. Pursuant to this section of the law, charitable purposes lottery can only be organized for providing grants to Estonian culture, sports, sciences, education, medicine, social care, or environmental protection.

For the purpose of issuing licenses to operate lotteries, the lotteries are classified into two groups depending upon the prize fund. Under the provisions Article 5, sub-section 1 of the Law on Lottery, a lottery license for a prize fund not exceeding 250.000 EEK (approximately $15.974 Euro) may be granted to non-profit associations and foundations registered in Estonia. The provision does not require that the legal entity in question be located in Estonia. A lottery with a prize fund exceeding 250.000 EEK (approximately $15.974 Euro) can only be operated by public law entities -- state-owned enterprises designated by the Estonian Government and non-profit associations designated by the Government under Art 5, sub-section 2 of the Law on Lottery.

For purposes of lottery operation, a legal entity is considered to be located in Estonia when its management board or substituting body therefore is located within the republic of Estonia. Foreign legal entities are recognized in Estonia under Civil Code § 40 and §135. Regulation of passive legal capacity and active legal capacity of foreign legal entities is similar to those regulations for the Estonian legal entities, unless otherwise provided by law or agreement.

What types of lotteries do not require an operating license?
Article 8, section 3 of Estonia’s Law on Lottery specifies the conditions under which lotteries can be operated without holding an operating license. Lotteries conducted in the course of entertainment or charity events, operated by the organizers of such events, fall under this criterion. There is a ceiling on the selling price of such lottery tickets, of 5000 EEK (approximately $319 Euro). Under such lotteries, prizes may not be distributed in cash, and the same organizer cannot organize such lotteries more than three times during a calendar year.

Other types of lotteries which fall under this criterion are lotteries conducted in stores or other places of sale for the purpose of promoting sales. In such lotteries, the prizes should be the goods sold at the same store or place of sale. The prize fund should at least equal the selling price of the whole issue of lottery tickets to be sold.

These lotteries that do not require operation licenses may only be organized by permanent residents of the Republic of Estonia or a legal entity registered in Estonia.

What are the legal provisions prohibiting gambling advertising in Estonia?
Estonia’s Law on Gambling, Article 5, section 6, prohibits advertising of gambling services and gambling locations, other than advertising within legal gambling facilities.

Similar provisions are set forth in Article 19 of Estonia’s Advertising Act. This law delineates the permitted contents of gambling advertising in Section 2, Article 19. Pursuant to this section, the advertising of gambling shall be understandable and unambiguous, and shall not contain a direct appeal to participate in gambling. Art. 2 of the Advertising Act also creates a deeming provision for advertising, in that the information disseminated by the advertiser can be for the purpose of increasing sales of products or services, or for promoting an event or idea. According to the deeming provision, the object of advertising can also be to achieve other desired results in other areas.