Estonia, officially known as the Republic of Estonia, is a Northern European country that consists of the mainland, the two larger islands of Saaremaa and Hiiumaa, and more than 2,200 smaller islands. The former USSR republic has a relatively short gambling history because gambling was not legalized until 1994.
While Estonia was part of the USSR, most gambling activities were banned. This, however, did not mean that no casinos were operating illegally. After Estonia gained its independence, gambling was still unregulated for several years. The country took its first steps toward legalization in 1994 with the introduction of the first Lottery Act. The following year, Estonia also implemented the first Gambling Act.
The laws that govern the gambling sector in Estonia have been amended several times over the years. The latest change to the Gambling Act was introduced in 2008, providing the legal framework for the regulation of online gambling in Estonia. Following the latest amendments, operators must apply for a license to provide offline or online gambling services in Estonia.
Under the Gambling Act, the Estonian Tax and Customs Board is responsible for regulating gambling businesses and licensing operators in Estonia. In addition to local laws enacted by the Estonian government, the country also abides by EU directives because it is a member of the union. Because Estonia regulates and has legalized almost all forms of gambling, the industry has grown significantly in recent years, with more Estonians participating in at least one gambling activity.
History of Gambling in Estonia
Regulated gambling in Estonia was launched with the enactment of the first Lotteries Act in 1994. This was just a few years after the country regained its sovereignty, with the new law introducing Estonia’s national lottery. While the lottery was the first gambling activity legalized in the country, other forms were soon legalized as well with the introduction of the Gambling Act in 1995.
The piece of legislation passed in 1995 legally allowed four types of gambling. These included betting, games of chance, games of skill, and totalizators. Under the Gaming Act of 1995, gambling operators were required to obtain an activity license as well as an operation permit. Operators had to acquire individual activity licenses for all four types of gambling, with licenses valid for 10 years at that time. Operating permits were valid for five years and specified the location of the gambling facilities.
In 2008, a new Gambling Act replaced both the Lotteries Act of 1994 and the Gambling Act of 1995. While the new legislation replaced the two older acts, most of the regulations remained the same. The new Gambling Act also covered the four types of gambling activities defined by the old act. The requirement for operators to obtain both an activity license and an operation permit also remained unchanged. The Estonian Tax and Customs Board was introduced as the licensing authority in the country with the enactment of the new Gaming Act.
In 2004, Estonia joined the EU, and as a member state it was required to comply with EU gambling directives. That being said, foreign operators licensed in other EU countries are also required to apply for an activity license and operation permit if they wish to offer gambling services in Estonia.
Online gambling was legalized in Estonia in 2008, but for a few years no licenses were issued to online casino operators. By introducing legal online gambling, the country hoped that the regulated sector would help the recovery of Estonia’s economy following the world financial crisis of 2008-2009. At first, only local operators were allowed to apply for online gambling licenses. In 2011, however, Estonia allowed foreign operators to also join the country’s online gambling market, provided they obtained a license from the Estonian licensing authority.
Gambling Regulations in Estonia
For a few years after Estonia gained independence, the country’s gambling sector remained largely unregulated. That changed in 1994 with the introduction of the Lotteries Act, which made the lottery the first legalized form of gambling in Estonia. One year later, other gambling activities were also legalized through the enactment of the Gambling Act of 1995.
The Lotteries Act established the national lottery, while the 1995 legislation legalized four additional categories of gambling: betting, games of chance, games of luck, and totalizators. Operators that wished to offer any of these forms of gambling had to obtain both an activity license and an operating permit.
These two pieces of legislation governed gambling in Estonia for several years. In 2008, however, the country adopted a new Gambling Act. The new law replaced both the Gambling Act of 1995 and the Lotteries Act of 1994. Despite the overhaul, many regulatory principles remained unchanged, and the same four gambling categories continued to be recognized.
Under the 2008 Act, operators that wish to conduct any of the four authorized gambling activities must apply for the relevant activity license and obtain an operating permit. The Estonian Tax and Customs Board serves as the regulatory body responsible for overseeing the industry and issuing licenses.
Online gambling was also legalized in 2008, but the industry did not truly begin to expand until 2010. The Act defines remote (online) gambling as any gambling activity whose outcome is determined by an electronic device, with players participating through electronic communications such as phones, the internet, or media services.
Penalties for Not Abiding the Gambling Act
Land-Based Casinos and Slot Halls in Estonia
Other Gmabling Activities Legal in EstoniaOnline Gambling in Estonia
To comply with EU gambling directives, Estonia legalized and started regulating online gambling in 2008. To offer online gambling activities, operators have to apply for a license from the Estonian Tax and Customs Board. At first, the online gambling market of Estonia was open only to local operators. It took a few years, but in 2011, foreign operators were also allowed to apply for online gambling licenses that enabled operations in Estonia.
The biggest reason for the decision to legalize online gambling was the Estonian government’s attempt to recover from the devastating 2008-2009 financial crisis. Prior to legalizing the online gambling sector, numerous Estonians were playing on unlicensed casino sites, which contributed nothing to the country’s economy. With more operators acquiring online casino licenses in Estonia, there have definitely been benefits for the country’s economy.
Currently, many private companies have obtained online gambling licenses in Estonia, but the largest online gambling operator in the country is the state-owned Eesti Loto. The lottery company’s website offers games such as Bingo, Keno, Vikinglotto, and Eurojackpot. The second biggest online gambling operator in the country is OlyBet, offering Estonians online casino games and sports betting. OlyBet is part of OEG, which, as mentioned earlier, runs most of the land-based casino venues in Estonia.
While Estonia allowed both local and foreign operators to apply for online gambling licenses, in 2011, the country also decided to block unlicensed offshore casino operators. Currently, numerous foreign online casinos have been blocked by Estonian ISPs, but it seems that they have been targeting only larger foreign companies. If Estonian players try to access any of the blocked websites, they are redirected to the official webpage of the Estonian Tax and Customs Board.
Even though the Estonian government has taken measures to restrict access to unlicensed gambling sites, players who attempt to play on unregulated online casinos and betting sites are not prosecuted or penalized.
Gambling Regulator and Licensing Process in Estonia
Under the Gambling Act of 2008, which currently regulates gambling in Estonia, operators need to obtain an activity license and an operation permit from the Estonian Tax and Customs Board to conduct gambling activities. This is also the authority responsible for regulating the gambling industry in the country.
The Tax and Customs Board issues licenses for both online and land-based gambling in Estonia, with both activity licenses and operating permits being issued by this authority. To be allowed to apply for an operating permit, operators must first obtain an activity license. This license is required for conducting games of chance, games of skill, or toto. Each type of game requires a separate activity license. However, lottery games and games of skill that award another participation in the same game as a prize do not require an activity license.
Public or private companies registered in Estonia or another EU country can apply for an activity license. One requirement is having share capital of at least €1 million for games of chance, €25,000 for games of skill, and €130,000 for toto. The organization of gambling activities must be the only business run by the gambling operator.
Prior to applying for an activity license, foreign companies must register as non-resident taxpayers with the Estonian Tax and Customs Board. Shareholders, beneficial owners, and members of the management body who are significant shareholders must not have criminal records. They must also not be involved with gambling operations without an activity license or operating permit, nor have had a license revoked. No person associated with the company should have caused bankruptcy through mismanagement.
Applicants must submit an application form along with the documents required by the licensing authority. Before submitting the application, operators must pay a state fee, the amount of which depends on the type of activity license for which the company applies. The fee for conducting games of chance is €47,940, while games of skill require a state fee of €3,200. Companies applying for a toto activity license must pay a state fee of €31,960. The Estonian Tax and Customs Board may take four to six months to evaluate an operator’s application.
After operators obtain an activity license, they must also apply for an operating permit. This authorization allows the operator to launch a gambling venue at the address provided for the permit. The operating permit also allows the operator to conduct remote gambling or offer gambling activities on a ship.
The operating permit can be requested for the organization of games of chance, a supplementary game of chance, games of skill, toto, or lottery games with a prize pool of over €1,000. Each type of game provided by the operator, as well as every location where games will be conducted, requires a separate operating permit. Lottery operating permits are available only to a company with a share capital of at least €1 million, with all of the company’s shares held by the state of Estonia.
The specifics of applying for a land-based gambling operating permit are as follows:
- A land-based gambling operating permit is issued for operations at a specific physical address or aboard a ship
- The operator must hold a permit to open a gambling venue issued by the respective municipality or city where the address in the application is located
- The validity of the permit is also determined by the permission granted by the municipality or the city government
- The land-based gambling operating permit for the provision of games of chance or toto is issued only to operators that have linked their electronic accounting and control system to the regulator’s information system
- The land-based gambling operating permit is given only to companies that have tested their connection to the list of persons excluded from gambling
The specifics of acquiring a remote gambling operating permit include:
- This type of permit is issued for the organization of games where the outcome depends on an electronic device, with players also participating in the games via electronic devices for communication
- This type of permit is required for the organization of a toto where the participation of players and the awarding of winnings happen through electronic devices for communication
- Each sub-type of remote gambling activity requires a separate remote gambling operating permit
- This type of permit is issued only to operators whose control system, as well as electronic recordkeeping, is linked to the regulator’s information system
- A remote gambling operating permit is given only to companies that have tested their connection to the list of persons excluded from games of chance
- A single remote gambling permit may apply to multiple domains
- A remote gambling operating permit for games of chance, games of skill, and lotteries is valid for five years, while a toto remote gambling permit is valid for 20 years
Gambling Related Taxes in Estonia
Gambling operators in Estonia are required to pay gambling tax, the rates of which are determined by the Gambling Tax Act of 2009. The gambling tax rates for different types of gambling activities vary, but you can always check the most recent rates on the official website of the Estonian Tax and Customs Board.
At the moment of writing this article, the gambling taxes that apply to operators conducting gambling in Estonia are as follows:
- €1,278.23 is paid for every gambling table at a land-based gambling venue
- €300 is paid for each gaming machine, plus another 10% of the total bets, excluding winnings paid to players
- €31.95 is paid for each machine that falls under the category of games of skill
- An 18% lottery tax is levied on the amount earned from the sale of lottery tickets
- A 5% totalizator tax is levied on the total amount of bets, excluding winnings paid to players
- A 5% tax is applied when conducting games of chance as a tournament, with the tax rate levied on the amount earned from the fees collected from players participating in the tournament
- A 5% online gambling tax is levied on the total amount of bets, excluding winnings paid to players
Estonian players are not required to pay any taxes on the winnings they collect from participating in offline or online gambling activities.
Closing Thoughts
While gambling was not regulated in Estonia before 1994, nowadays the most popular forms of gambling have all been legalized in the European country. The process of regulating gambling in Estonia started with the enactment of the Lotteries Act of 1994 and the Gambling Act of 1995. Later, to provide a unified piece of legislation governing the gambling industry in Estonia, the Gambling Act of 2008 replaced the two older acts.
Under the Gambling Act, operators are required to obtain an activity license and an operating permit if they wish to provide gambling services in Estonia. The activity licenses and operating permits are issued by the Estonian Tax and Customs Board, which is also the authority that regulates the way gambling is conducted by licensed operators.
In 2008, Estonia legalized online gambling to further expand its regulated gambling market. While the permission for online gambling initially applied only to local companies, in a few years foreign operators were also allowed to apply for remote gambling licenses from the Estonian licensing authority. While licensed companies can legally offer a variety of gambling activities online, the Estonian government has taken measures to block access to unlicensed operators and prevent illegal online gambling.