The State of Israel occupies a small territory, bordering Middle Eastern countries such as Syria, Lebanon, and Egypt. The country was home to 8.6 million people in 2020 and boasted a gross domestic product (GDP) per capita of US$43,641 in 2019. Israel’s residents enjoy a high standard of living, attributable in part to well-developed economic sectors such as tourism and industrial exports.
The high-tech sector and science-based industries have also made a major contribution to the growth of the Israeli economy over the past three decades. The country has a significant output in the manufacturing of electronics, software, computer technologies, and advanced communication systems.
Given all of this, it is hardly surprising that many Israeli companies provide online gambling platforms. Israel is also the birthplace of famed entrepreneur Teddy Sagi, who founded one of the most respected gambling software companies in the world, Playtech.
Not surprisingly, one of the company’s offices is located in the heart of the country’s largest high-tech hub, Tel Aviv. The city, a major technological center, also hosts the offices of established online gambling brands such as 888.
William Hill, another major player in the gambling industry, enjoyed a successful partnership with Sagi’s Playtech and operated an office in Tel Aviv before eventually relocating to the United Kingdom in June 2017.
The country has established itself as a major supply center for interactive gaming, with a share valued at over $90 billion in this industry as of 2015. Oddly enough, not all forms of gambling have been legalized by the state. This article by SuperCasinoSites explores the legal forms of gambling in Israel, who regulates them, and how.
Israel’s Legal Forms of Gambling and the Laws Governing Them
Legal gambling is far from thriving in Israel, since most forms of gambling are expressly prohibited by local law. Casino games with fixed odds, such as slots, blackjack, casino-banked poker, and roulette, are strictly disallowed in both digital and land-based form.
Live and tournament poker are also not permitted under local legislation. Israeli law still considers it a form of casino gambling and, therefore, prohibits it, even though this type of game is not expressly defined by local legislation. However, Israeli legislators debated its status in the past, specifically toward the end of 2018.
The majority of the judges in the country’s high court opined that this type of game should not be considered a prohibited form of gambling since it involves both chance and skill, especially where tournament poker is concerned. The matter was discussed in Civil Appeal (Supreme Court) 476/17 Amit Amishvili Rafo vs. Assessing Officer Tel Aviv 4 in October 2018.
The appeal was filed by a poker player who participated in tournaments held outside the country. The case concerned the taxation of his earnings. The High Court ruled in favor of the player, and most judges expressed the opinion that tournament poker should not be treated as a chance game (page 227). Nevertheless, these remarks were made obiter dictum, so they were not legally binding as precedent.
Still, there is a silver lining for poker fans in Israel. Toward the end of 2018, one of the members of the National Liberal Movement (aka the Likud), Sharren Haskel, proposed a new piece of legislation that aims to bring legal and regulated tournament poker to Israeli soil. The bill has not yet been voted into law.
Bingo is another form of gambling the local legislation prohibits in both online and land-based form. According to Israeli law, this is a form of lottery, and as such, it cannot be offered legally, not even by the state lottery. The lottery-style game of keno was initially permitted in a brick-and-mortar form but was outlawed in 2018. There are no specific regulations on social gaming, so offering or taking part in such activities is neither legal nor illegal.
Because of these restrictions, only two forms of gambling remain legal, the first being sports betting. Legal wagers can be placed on sports both online and offline. Online and land-based wagering on the outcomes of sporting events is permissible under local law but is heavily monopolized.
The only entity that has the legal right to operate and accept sports wagers in digital or offline form is the Israeli Sports Betting Board, abbreviated as ISBB. Legal wagering on horse racing was officially launched in the country in the fall of 2013 via the ISBB Racer application. However, it lasted for a short period and was discontinued by the Ministry of Finance in both digital and land-based form in 2018. As for online sports betting, Israelis can bet on the official ISBB website Winner.co.il.
Lotteries are the second form of legal gambling in the country and enjoy huge popularity among locals. Lotteries are regulated by the Israeli Ministry of Finance, which is charged with overseeing the services provided by the National Lottery of Israel, locally known as Mifal Hapayis.
Mifal Hapayis does not currently offer its services in digital form, though. Mifal Hapayis is authorized to offer weekly lotteries, raffles, and scratchcards. Excluding the above-mentioned exemptions, all other gambling activities are disallowed under the provisions of the country’s Penal Law 5737-1977.
On a side note, trading binary options is not considered a form of gambling in Israel, as is the case in other jurisdictions. This activity falls under the scope of the local securities legislation and is not governed by the Penal Law. Nevertheless, Israeli citizens are not permitted to trade binary options with people who are based outside the country.
Penal Law 5737-1977
Sports Betting Regulation Law 5727-1967Licensing Process, Taxation, and Protection of Minors
In the State of Israel, permits for gambling activities are issued only to the state-owned National Lottery (Mifal Hapayis) and the Israeli Sports Betting Board (ISBB), allowing them to provide lottery products and sports wagering, respectively, on a legal basis. Both licensees fall under the regulatory scope of the Israeli Penal Law 5737-1977 and the Sports Betting Regulation Law 5727-1967. There are no procedures for commercial licensing under Israeli legislation.
The Mifal Hapayis license expires and must be renewed every five years. The license granted to the ISBB is perpetual, meaning it has no expiration date and does not require renewal. No other permits are granted; therefore offshore gambling operators cannot legally enter the Israeli gaming market at this time.
Internet service providers (ISPs) in the country were initially instructed by the Israeli government to block the websites of foreign-based gambling operators that targeted local players. This directive was later overturned by the country’s High Court.
The year 2017 saw the passage of the Powers to Prevent the Commission of Offences by Means of an Internet Website Act 5767-2017. This legislation allows district court judges to instruct ISPs to restrict access to offshore gaming sites at the request of local police authorities. Three websites were blocked in the following year. As for taxation, Israelis can be taxed for profits generated via legal gambling activities.
Up to 35% is deducted from their annual earnings provided they exceed ₪61,000. The rates for sums between ₪30,500 and ₪61,000 increase progressively. However, this is a concern primarily for professional sports bettors or lottery winners who generate more substantial yearly winnings.
Small-scale gamblers are exempt from paying taxes whenever their annual profits are under ₪30,500. This threshold was previously set at ₪50,000 but was lowered by the legislature at the beginning of 2019. Another point worth mentioning is that non-cash prizes are awarded to winners only after they have paid the required withholding taxes.
Following Civil Appeal 476/17, Israeli lawmakers introduced changes to the taxation procedures. They determined that the earnings of professional tournament poker players generated outside the country should be taxed as actual income rather than as gambling-related profits.
Regarding the legal gambling age, Israeli citizens must be at least 18 years old to engage in permitted gambling activities. This was not the case before 2007, when Mifal Hapayis tickets could be sold to individuals under 18. The law has since been changed to prohibit such sales.
Under Section 231A(a) of Chapter 8, Article 12 of the Israeli Penal Law (page 75), selling lottery tickets and providing sports betting services to minors are criminal offenses and are punishable. Individuals caught in this transgression are liable to imprisonment for up to six months. Additionally, people who sell or distribute such tickets or services must require customers to provide identification to confirm they are of legal gambling age.
Israel Gambling Regulators
The gambling sector in Israel is monopolized, and foreign operators have no option to apply for local licenses. Two state-owned bodies operate and oversee the permitted gambling activities in the country.
Mifal Hapayis
The Israel Sports Betting BoardResponsible Betting and Advertising Policies
Given Israel’s conservative stance on gambling, it is only natural that the country is very strict about ensuring responsible gaming. Mifal Hapayis must adhere to certain policies that aim to prevent problem gambling. In addition, the National Lottery must contribute a portion of its revenue each year toward researching and treating gambling addiction and its harmful effects on Israeli society.
As much as 3.5% of Mifal Hapayis’ yearly promotional budget is spent on campaigns focused on preventing, identifying, and treating gambling addiction. Additionally, Mifal Hapayis is expected to publish information about responsible gambling on its official website, which it does. Customers who purchase lottery tickets in terrestrial outlets are also warned about the risks of addiction.
With that in mind, lotteries and sports wagering cannot be advertised on television, in newspapers, or in similar media. Chapter 8, Article 12, Section 227 of Penal Law 5737-1977 (page 74) states that “If [a person] printed or published an announcement about a lottery or betting, then he is liable to one year imprisonment or to double the fine of [₪67,300]”.