The State of Israel occupies a small territory, bordering with Middle Eastern countries like Syria, Lebanon, and Egypt. The country is home to 8.6 million people as of 2020, with a gross domestic product (GDP) per capita of US$43,641 in 2019. Israel’s residents get to enjoy a high living standard, which can be partially attributed to well-developed economy sectors like the tourism sector and the industrial export sector.
The high-tech sector and science-based industries also have a major contribution to the growth of the Israeli economy over the past three decades. The country has a significant output when it comes to manufacturing electronics, software, computer technologies, and advanced systems for communication.
Considering all this, it is anything but surprising many companies that hail from Israel are engaged in the provision of online gambling platforms. Israel is the country of origin of famed entrepreneur Teddy Sagi, who founded one of the most accredited gambling software companies in the world, Playtech.
Not surprisingly, one of the offices of the renowned software giant is located in the heart of the country’s largest hi-tech hub, Tel Aviv. The latter, being a major technological center, is also home to the offices of established online gambling brands like 888.
William Hill, another major player on the gambling scene, had a very successful partnership with Sagi’s Playtech and operated an office in Tel Aviv until it eventually relocated to the United Kingdom in June 2017.
The country has established itself as a major supply-center for interactive gaming, with a substantial share of 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 expands on the legal forms of gambling in Israel, on who regulates them, and how.
Israel’s Legal Forms of Gambling and the Laws Governing Them
Legal gambling is anything but thriving in Israel since most forms of these activities are expressly prohibited by the local laws. Casino games with fixed odds, such as slots, blackjack, casino-banked poker, and roulette, are strictly disallowed in both digital and landbased form.
Live and tournament poker is also not permitted under the local legislation. Israeli law still considers it a form of casino gambling and therefore, prohibits it, although this type of game is not expressly defined by the local legislation. However, Israeli legislators have debated its status in the past, and more 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 during Civil Appeal (Supreme Court) 476/17 Amit Amishvili Rafo vs. Assessing Officer Tel Aviv 4 in October 2018.
The appeal was issued by a poker player who participated in tournaments held outside of the country. The case had to do with the taxation of his earnings. The high court ruled in favor of the player and most judges expressed the opinion tournament poker should not be treated as a chance game (page 227). Nevertheless, these remarks were expressed in obiter dictum and therefore, were not legally binding as a precedent.
Yet, there is still a silver lining for poker fans based 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 on Israeli soil. The bill has not yet been voted into law, though.
Bingo is another form of gambling the local legislation prohibits in online and landbased form. According to the Israeli laws, 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 back in 2018. There are no specific regulations on social gaming and therefore, offering and engaging in such activities is neither legal, nor illegal.
All these restrictions narrow down the list of legal gambling forms to two activities, the first one being sports betting. Legal wagers can be placed on sports both online and offline. Online and landbased 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 a 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 landbased form in 2018. As for online sports betting, Israelis can punt on the official ISBB website Winner.co.il.
Lotteries are the second form of legal gambling in the country and enjoy huge popularity among the locals. Lotteries are regulated by the Israeli Ministry of Finance. The latter is mandated with the oversight of the services provided by the National Lottery of Israel, locally known as Mifal Hapayis.
The latter presently does not offer its services in a digital form, though. Mifal Hapayis is currently authorized to offer weekly lotteries, raffles, and scratchcards. Bar 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 with 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.
Licensing Process, Taxation, and Minors Protection
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 legally provide lottery products and sports wagering, respectively. 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 has to be renewed every five years. The license granted to the ISBB is perpetual in the sense it has no expiration date and does not require renewal. No other permits are granted and therefore, offshore gambling operators cannot legally penetrate the Israeli gaming market for the time being.
ISP providers in the country were initially instructed by the Israeli government to block the websites of foreign-based gambling operators that target local players. However, this 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 piece of legislation allowed district court judges to instruct ISPs to restrict the access to offshore gaming sites when requested by the 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.
As much as 35% is deducted from their earnings annually provided they exceed the amount of ₪61,000. The rates for sums ranging from ₪30,500 and ₪61,000 are incremental. However, this should be a concern primarily to 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 amount was previously higher at ₪50,000 but was reduced by the local legislature at the beginning of 2019. Another thing worth mentioning is that non-cash prizes are granted to the winners only on condition the latter had paid the required sum in withholding taxes.
After the case with Civil Appeal 476/17, the Israeli lawmakers introduced some 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.
As for the legal gambling age in the country, Israeli citizens must be 18 years old or above to legally engage in permitted gambling activities. This was not the case before 2007 when Mifal Hapayis tickets could be sold to individuals under 18. However, the law was changed to prohibit this.
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 offences and as such, are punishable. Individuals caught in this transgression are liable to imprisonment of half a year. Additionally, people who sell or distribute such tickets or services must require customers to provide a document for personal identification to confirm they are of legal gambling age.
Israel Gambling Regulators
The gambling sector in Israel is monopolized, with foreign operators not having the option to apply for local licenses. Two state-owned bodies operate and oversee the allowed gambling activities in the country.
Responsible Betting and Advertising Policies
Given how conservative Israel’s stance on gambling is, it only makes sense the country is very strict when it comes to ensuring responsible gaming. Mifal Hapayis must adhere to certain policies that aim to prevent problem gambling. On top of that, the National Lottery must annually contribute a portion of its revenue toward researching and treating gambling addiction and its harmful effects on the Israeli society.
As much as 3.5% of Mifal Hapayis’ yearly promotional budget is spent on various campaigns that deal with prevention, finding, and treating gambling addicts. 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, and so on. 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]”.