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 rather short gambling history as it was not legalized until 1994.
While Estonia was a part of the USSR, most gambling activities were banned. This, however, did not mean that there were no casinos that were operating illegally. After Estonia gained its independence, gambling was still unregulated for several years. The country took its first steps towards the legalization of the industry in 1994 with the introduction of the first Lottery Act. The following year, Estonia also implemented the first Gambling Act.
The gambling laws that govern the gambling sector in Estonia have gone through several amendments over the years. The latest change of the Gambling Act was introduced in 2008, providing the legal framework for the regulation of online gambling in Estonia. Following the latest amendments in the law, operators should apply for a license whenever they wish to conduct offline or online gambling services in Estonia.
Under the Gambling Act, the authority responsible for the regulation of gambling businesses in Estonia as well as licensing operators is the Estonian Tax and Customs Board. In addition to the local laws enacted by the Estonian government, the country also abides by the directives imposed by the EU as Estonia is a member of the union. As the country is regulating and has legalized almost all forms of gambling, the industry grew significantly in the last few 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 gained its sovereignty, with the new law introducing the national lottery of Estonia. While the lottery was the first gambling activity that was legalized in the country, other forms were soon also legalized with the introduction of the Gambling Act in 1995.
The piece of legislation that was 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 a permit for operations. Operators had to acquire individual activity licenses for all four types of gambling, with licenses having an expiration period of 10 years back then. Operation permits used to be valid for five years and were indicating the place where the gambling facilities were located.
In 2008, a new Gambling Act replaced both the Lotteries Act of 1994 and the Gambling Act of 1995. While the new piece of legislation replaced the two older ones, most of the regulations remained the same. The new Gambling Act also covers the four types of gambling activities that used to be defined by the old Gambling Act. The requirement for operators to obtain both an activity license and an operation permit also remained the same. The Estonian Tax and Customs Board was also 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 be compliant with the gambling directives of the EU. 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 couple of years, there were no licenses 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 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 online gambling market of the country, with the proviso that they obtain a license from the Estonian licensing authority.
Gambling Regulations in Estonia
For a few years after Estonia gained its independence, the gambling sector in the country was not properly regulated. That changed in 1994, with the introduction of the Lotteries Act, making the lottery the first gambling activity legalized in the country. One year later, other gambling activities were also legalized through the enactment of the Gambling Act of 1995.
The national lottery was introduced thanks to the Lotteries Act, while the piece of legislation implemented the following year legalized four types of gambling – betting, games of chance, games of luck, and totalizators. Operators who wished to offer any of the four types of gambling had to obtain an activity license as well as an operating permit.
While the aforementioned two pieces of legislation were governing gambling in Estonia for several years, in 2008, the country passed a new Gambling Act. The new law replaced both the old Gambling Act of 1995 and the Lotteries Act of 1994. Despite having a new law governing gambling, Estonia did not replace many things about the way gambling is regulated in the country. The main gambling activities that are regulated by the new remain the same four categories established in the old Gambling Act of 1995.
Under the Gambling Act of 2008, operators that wish to conduct any of the four gambling activities legalized by the law, have to apply for the respective activity license and also receive an operating permit. The regulatory body that according to the law is responsible for governing gambling in Estonia and issuing gambling licenses to operators is the Estonian Tax and Customs Board.
Online gambling was also legalized in 2008 but it was not until 2010 that the industry really started evolving. Under the Act, remote (online) gambling is the provision of gambling activities where the outcome of a game is determined by an electronic device, with players participating via electronic communication options such as phones, the internet, or media services.
Online Gambling in Estonia
To be compliant with the gambling directives of the EU, Estonia also legalized and started regulating online gambling in 2008. To be able 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 were contributing to the country’s economy in no way. 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 casinos in Estonia but the largest online gambling operator in the country is the state-owned Eesti Loto. The lottery company’s website offers games like 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 a part of the OEG, which as mentioned earlier, is the company that 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 bigger 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 is the piece of legislation that is currently regulating gambling in Estonia, operators need to obtain an activity license and operation permit from the Estonian Tax and Customs Board to be able to conduct gambling activities. This is also the authority that is responsible for the regulation of the gambling industry in the country.
The Tax and Customs Board issues the licenses for both online and land-based gambling in Estonia, with both activity licenses and operating permits being issued by this authority. In order to be allowed to apply for an operating permit, operators must obtain an activity license. This type of 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 offer another participation in the same game as a prize do not require an activity license.
Public or private companies that have been registered in Estonia or another EU country can apply for an activity license. One of the requirements they need to meet is having a 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 activity 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. A shareholder, beneficial owners as well as members of the management body who are also significant shareholders must not have criminal records. They must also not be involved with gambling operations without an activity license or operating permit or have had their license revoked. A company person should not be involved or be the reason for bankruptcy due to mismanagement.
Applicants must submit an application form along with the documents required by the licensing authority. Prior to submitting the application, operators must pay a state fee, the amount of which depends on the type of activity license the company applies for. 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 between four and six months to evaluate the application request of an operator.
After operators have obtained an activity license, they must also apply for an operating permit. This type of authorization allows the operator to launch a gambling venue at the address provided for the permit issuance. The operating permit also allows conducting remote gambling or offering 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 that will be provided by the operator as well as every location games will be conducted require separate operating permits. Lottery operating permits are exclusively available to a company with a share capital of at least €1 million, with all of the company’s shares being 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 on a specific physical address or abroad 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 with 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 remorse gambling operating permit
- This type of permit is issued only to operators whose control system as well s electronic recordkeeping is linked to the regulator’s information system
- Remote gambling operating permit is given only to companies that have tested their connection to the list with persons excluded from games of chance
- A single remote gambling permit may apply to multiple domains
- 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 differ but you can always check the most recent tax 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 are paid per every gambling table at a land-based gambling venue
- €300 are paid per every gaming machine plus another 10% of the total of the bets, excluding the winnings paid to players
- €31.95 are paid per 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 the winnings paid to players
- A 5% tax is applied in the case of 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 levied on the total amount of bets, excluding the winnings paid to players
Estonian players are not required to pay any taxes on the winnings they have collected from participating in offline or online gambling activities.
While gambling was not regulated in Estonia before 1994, nowadays, the most popular gambling forms 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 offer a unified piece of legislation that would govern the gambling industry in Estonia, the Gambling Act of 2008 replaced the two old pieces of legislation.
Under the Gambling Act, operators are required to obtain an activity license and an operating permit if they want to conduct gambling services in Estonia. The activity licenses and the 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.