The Gambling Law Review: Lithuania

Overview

iDefinitions 1

The definitions pertaining to gambling are provided in the Gaming Law (the Law).

Gaming is defined as the playing of a game or mutual betting in accordance with established regulations where the participants seek to win money by voluntarily risking the amount they bet and where winnings or losses depend on chance, an occurrence of any event or the outcome of a sporting event.

These gambling activities are permitted in Lithuania: category A machine and category B machine games, bingo, table games (roulette, card and dice games), totalisator, betting and remote gambling.

Regarding machine gaming:

  1. a game by category A machine means a game played when tokens are inserted into, and the winnings are paid out in tokens by, a machine. The result of the game and the winnings are determined by a machine; and
  2. a game by category B machine means a game played when coins or tokens are inserted into a machine and the winnings are paid out in money or tokens. The result of the game and the winnings are determined by a machine.2

Bingo is a game that is played with cards bearing numbers and a scoreboard; the amount of winnings depends on the total amount of stakes and the combination of numbers selected at random. The total bingo winnings fund shall comprise at least 50 per cent of the total stakes.

Regarding table games:

  1. roulette is a game that is played by guessing in which slot a ball dropped on a spinning wheel will stop; the amount of winnings depends on the total amount of stakes and the winning ratio fixed in advance; and
  2. card or dice games are played when the winner, and the amount of winnings is determined on the basis of symbols of the cards dealt or the score of dice.3

Totalisator is a game that is played by guessing the result of a sports event where the amount of winnings depends on the ratio of the totalisator player's stake (fixed by the totalisator operators in advance) and the totalisator winnings fund. The total totalisator winnings fund shall comprise at least 50 per cent of the total amount of the stakes.

Betting means mutual betting on the outcome of an event based on guessing, where the amount of winnings depends on the stake of the player and the betting ratio coefficient fixed by the bookmaker in advance.

Live remote gaming (i.e., remote table games or in other words – live dealer) is gaming with a remote gaming device, where the event that determines the result of the gambling is created in real time by the croupier and transmitted directly to the gamblers using remote gaming communication means.

According to their nature, lotteries are subdivided into:

  1. numeric lotteries where a correct choice of numbers or other symbols, or both, leads to winning a prize, while the prize and its amount are predetermined by the sum paid for the lottery ticket and the selection of numbers or other symbols, or both, chosen by the player matches the winning selection in a lottery. The price of a numeric lottery ticket shall be fixed or the player may choose the ticket price;
  2. instant lotteries where prizes and their amount become known immediately after the player purchases a lottery ticket and checks it in accordance with the procedure set out in the lottery rules. The price of an instant lottery ticket shall be fixed;
  3. classic lotteries where prizes are won by choosing a lottery ticket with printed numbers and/or symbols unknown to the player, while the prize and its amount is predetermined by the number of numbers or other symbols, or both, printed on the lottery ticket that matches those drawn in a lottery. The price of a classic lottery ticket shall be fixed; and
  4. sports lotteries where a correct choice of numbers or other symbols, or both, that specify the result of a sporting event leads to winnings a prize, while the prize and its amount are predetermined by the number of correct numbers or symbols, or both, chosen by the player. The price of a sports lottery ticket shall be fixed.4

iiGambling policy

Gambling and lotteries may be organised in Lithuania; however, this may happen only after receipt of the relevant gambling or lottery licences. Gambling or lottery licences are issued by the Gaming Control Authority under the Ministry of Finance (the Gaming Authority).

iiiState control and private enterprise

Gambling is supervised by the Gaming Authority.

Only a public or private limited liability company established as per the procedure of the Law on Companies or a branch of legal entity or organisation established in another member state under that state's legislation and that has a registered office in Lithuania can offer gambling services.

ivTerritorial issues

In Lithuania, gambling is regulated and licensed nationally by the Gaming Authority with some exceptions. In order to receive the permit for opening a casino and organise the relevant gambling in specific premises, the gambling organiser shall submit an application to the city administrative division.

vOffshore gambling

After having identified the fact of illegal remote gambling activity Lithuania, the Gaming Authority is authorised to take measures established in the Law (i.e., payment blocking and DNS blocking).

Illegal gambling operators are also listed in the blacklisthttp://lpt.lrv.lt/en/illegal-online-gambling-operators"> of illegal online gambling operators (the Blacklist), which is published on the website of the institution and regularly updated adding new blacklisted entities and domains.

Furthermore, the provisions of national legal acts do not provide for the possibility of removing the reference to the subject (gambling operator) from the Blacklist, if the subject was identified as an illegal gambling operator in Lithuania, or the domain was blocked and blacklisted. The only possibility of being removed from the Blacklist is to receive a licence and permit to organise remote gambling in Lithuania, as is established in the Law.5

Legal and regulatory framework

iLegislation and jurisprudence

The Law and the Law on Lotteries of the Republic of Lithuania are the primary legislation that came into force accordingly on the 17 May 2001 and the 1 July 2003. These Laws set out the main objectives of gambling and lotteries regulation.

Prevention of money laundering and terrorist financing is regulated by Prevention of Money Laundering and Terrorist Financing Act.

A series of orders that supplement the primary legislations provided below:

  1. the Requirements for Remote Gambling Devices;
  2. the Decree on Approving Rules on Licensing National and Local Lotteries;
  3. the Decree on Approving Rules on Gambling Licensing;
  4. the Lotteries and Gambling Tax Law;
  5. the Gambling Licensing Rules; and
  6. the National and Local Lotteries Licensing Rules.

iiThe regulator

Gambling in Lithuania is regulated by the Gaming Authority. The Gaming Authority is an institution set up under the Ministry of Finance. In accordance with the procedure laid down in legal Acts, it participates with other state and municipal institutions in the implementation of state policy in the area of gambling and carrying out the control or gaming in order to ensure fair and transparent operation of gaming and the protection of the rights and legitimate interests of players.

When implementing the provisions of the Law, the Gaming Authority shall:

  1. examine documents necessary for issuing gaming licences;
  2. examine documents necessary for issuing permits to open machine halls, bingo halls and gaming establishments (casinos) or to organise remote gaming;
  3. issue and cancel gaming licences;
  4. issue permits to open machine halls, bingo halls and gaming establishments (casinos), to organise remote gaming and to supplement, amend and cancel these permits;
  5. control compliance of gaming operators with requirements of laws and other legal acts regulating the organisation of gaming;
  6. draft legal acts regulating the organisation of gaming; and
  7. maintain the Register of Gaming Devices of Lithuania.6

iiiRemote and land-based gambling

The legal system distinguishes between remote and premises-based gambling. Remote gaming means gaming when bets are accepted and winnings are paid out by means of communication.

ivLand-based gambling

Machine games, bingo and games of gaming establishments (casinos) may be organised only in the premises that are indicated in the permit for opening gaming machine halls, bingo halls and gaming establishments (casinos).

Machine-based gaming can be organised only in:

  1. gaming machine halls: games on gaming machines of category B (at least 10 gaming machines should be installed);
  2. bingo halls (only bingo should be organised in a bingo hall); and
  3. gaming establishments (casinos): table games and games on gaming machines of category A (at least three gaming tables, including at least one roulette table and 30 gaming machines of category A must be installed).7

The Gaming Authority has set technical requirements for gambling electronic data management systems.

vRemote gambling

Remote gaming may be organised according to the regulation for organising remote gaming, when a licence or a permit to organise remote gaming issued by the Gaming Authority has been received in the procedure prescribed herein, and when the Gaming Authority approves the regulation for organising remote gaming prepared by the gaming operator.

In order for the gambling operator to be eligible for the remote gambling permit, it must hold at least one of the following types of gambling licences (and satisfy other requirements):

  1. a licence to operate table games and category A slot machines;
  2. a licence to operate category B slot machines;
  3. a licence to operate bingo;
  4. a licence to operate totalisator; and
  5. a betting licence.

A remote gambling permit allows the operator to provide every type of gambling online, irrespective of the gambling licence that it holds.

A gaming operator organising remote gaming must ensure by technical and organisational means that:

  1. minor persons and persons who are prohibited from gaming according to the requirements laid down in the Law cannot participate in remote gaming;
  2. persons taking part in remote gaming are identified and registered; and
  3. transparent accounting of stakes of players and winnings paid out to players was ensured.8

viAncillary matters

Only new and unused gaming devices shall be permitted for operation in Lithuania, provided that they have been manufactured by a properly-licensed (certified) manufacturer and provided that their types have been approved by a supervisory authority authorised by the government and entered in the Lithuanian Register of Gaming Devices in accordance with the procedure laid down by the government.

The winnings fund of category A machines shall comprise at least 90 per cent of the total amount of stakes, and the winnings fund of category B machines shall comprise at least 80 per cent of the total amount of stakes. All gaming devices shall be owned by the gaming company or may be acquired by lease. Moreover, each gaming device shall have a certificate issued by accredited agencies (laboratories) attesting that gaming devices meet the requirements prescribed by the Law and set by the Gaming Authority. Only accredited agencies shall conduct assessments of the compliance of gaming devices, and remote gaming devices with the requirements prescribed by the Law and set the Gaming Authority and shall issue certificates of conformity.9

Agencies accredited in a non-member state and their issued certificates may be recognised by a decision of an institution authorised by the government. The procedure of recognition of agencies accredited in a non-member sate and their issued certificates shall be established by the Gaming Authority.

Remote gaming devices and software processing information provided by means of communication shall be installed in Lithuania or another Member State. When inspecting activities of a gaming operator, it shall ensure a possibility for the Gaming Authority to connect to remote gaming equipment.

viiFinancial payment mechanisms

It is prohibited to pay by (debit and credit) cards and build ATMs in halls where gambling is organised. This rule is not applied at locations where remote gambling is organised.

The Gaming Authority may submit a mandatory request to bank, payment service provider or another finance company to stop and cancel within five days all financial operations from and to an illegal gambling organiser. The request to the bank institution will be sent within the two working days that follow the day the court order was received.10

The mandatory request may be cancelled by the order from the Head of Gaming Authority when an illegal gambling organiser applies for both land-based and remote gambling licence and receives it.

At present, the use of virtual currencies for gambling is prohibited.

The licensing process

iApplication and renewal

Licences for organising games are issued by the Gaming Authority.

Only public or private limited liability companies established under the Law on Companies or a branch of a legal entity or organisation established in another Member State and that has a registered office in Lithuania can offer relevant products.

An entity supplying equipment to the operators must have a certificate for its equipment from an accredited body (laboratory) that confirms that the gaming device type conforms with the Gaming Law and authority requirements.

The Law states that the right to organise remote gaming shall be given to those companies granted a gaming licence under the statutory procedure, and that operate at least one gaming establishment (casino) or at least five totalisator stations for organising horse-racing totalisator, or at least 10 machine halls, or at least 20 totalisator stations and provide gaming services therein, that have been granted a remote-gaming permit and when the Gaming Authority approves the regulations of appropriate remote gaming. The authorised capital of the companies that want to organise all types of remote gaming must be at least €1.158 million. Remote gaming may be organised by a foreign branch in Lithuania granted the appropriate licence and permit, and if the entity that established this branch complies with the statutory authorised capital requirements.

A company seeking a gambling or lotteries licence must submit:

  1. a request in the prescribed form (including company name, company address, postal code, phone number, email address, name, surname, occupation of company director or his or her authorised person who filled out the request, his or her signature and a list of attached documents);
  2. documents that confirm the formation, payment and disposal of the capital;
  3. data on the members of the company's supervisory board, board of directors, chief executive officer, his or her deputy, chief financial officer (names, surnames, identification numbers) and their participation in the management of other companies; and
  4. documents and information on the origin funds of the company founders and shareholders used to acquire the registered shares of the company.

A company applying for the licence to organise gambling can lodge documents directly with the Gaming Authority, sending them by registered mail and sending digital copies remotely.

The Gaming Authority then decides whether to issue the licence within 30 days of receiving all the documents and information.

State fees for a licence to organise remote and land-based gambling, lotteries are as follows:

  1. €1,404 for issuance of a licence to organise national lottery;
  2. €1,279 for issuance of licence to organise gambling on category B machines, bingo, table games such as roulette and dice gambling, and also gambling on category A machines, totalisators and bets;
  3. €1,404 for issuance of a licence to organise local lottery; and
  4. €1,305 for issuance of permit to open totalisator, betting shop, slot-machine, bingo and casino showroom.

iiSanctions for non-compliance

A gaming licence is issued for an unlimited period, but it may be cancelled if:

  1. the licence holder submits a request to cancel the licence;
  2. a company in liquidation or reorganisation ceases to operate;
  3. false data were submitted to obtain a licence; or
  4. a company that was warned about a possible cancellation of the licence has failed to eliminate violations of the conditions of licensed activity.

Wrongdoing

Prevention of money laundering and terrorist financing is regulated by the Prevention of Money Laundering and Terrorist Financing Act.

Due to the prevention of money laundering and terrorist financing, the gambling operator must ensure the identification of the player prior to allowing the player to gamble. This information includes name, surname, personal code or date.

If a company has got any suspicions that a client is laundering money or supporting terrorists, it must immediately and no later than one working day report it to the Financial Crime Investigation Service under the Ministry of the Interior of the Republic of Lithuania.

Moreover, the identity of the player must be additionally verified when making bets or payouts and the amount of money exceeds €1,000 irrespective whether the transaction is being performed during one or several operations.

The Gaming Authority makes requirements to gambling or lotteries organisers for preventing money laundering and terrorist financing. The Gaming Authority advises companies on the implementation of the requirements.

Taxation

When organising lotteries, the tax base of lotteries and gambling shall be subject to a rate of 5 per cent.

When organising bingo, totalisator and betting, the tax base of lotteries and gambling is subject to a rate of 18 per cent.

When organising remote gambling, a rate of 13 per cent shall apply to the lottery and gambling tax base.11

When organising games with slot machines and table games, a fixed amount of the lottery and gambling fee shall be established for each gambling device specified in the gambling activity permit:

  1. for a category A gaming machine – €260 per calendar month;
  2. for a category B slot machine – €130 per calendar month; and
  3. for a roulette, card or dice table – €2,300 per calendar month.12

All players gambling winnings are subject to income tax. Only the difference between the bet and the payout is taxable.

Advertising and marketing

Advertising of gambling is prohibited in Lithuania, except for the games, trademarks and types of the gambling organised by the companies. It is forbidden to publish any information related to gambling on websites intended for persons under 18. A website intended for persons under 18 is one where at least 80 per cent of the content is dedicated to the description of events for children and adolescents, their professional evaluation, information about them and the dissemination of children's and adolescents' artistic and technical creations.13

Gambling advertisements must include warning labels. The Gambling Authority has released specific requirements concerning warnings in the advertisement of gambling.

The year in review

The covid-19 outbreak of 2020 has been detrimental to Lithuania's gambling market. Assessing the total gambling revenue in the first half of this year with the same period last year, it decreased by 15.86 per cent.

This decrease in gross income is due to covid-19 (a coronavirus disease) from 2020 onwards. From 16 March 2020 until 17 May 2020, activities in gambling houses (casinos), betting outlets and slot machine parlours were suspended. Even after opening the doors of gambling venues to gamblers on 18 May 2020, gambling organisers were obliged to follow the instructions of the government and limit their working hours: gamblers were allowed to gamble from 8 am until 10 pm.

Due to the above reasons, the total revenue of gambling operations operating in physical gambling venues decreased by as much as 40.97 per cent, while the total revenue of remote gambling increased by 33.88 per cent compared to the same period last year.

Moreover, the government released an amendment of the Law by which the publication of permitted gambling advertising must include a warning stating that participation in gambling may lead to gambling addiction or pathological gambling.14

Outlook

There are no other intended changes planned in the gambling law in Lithuania at the moment.

Footnotes

1 Andrius Gabnys is the founding attorney-at-law at Gabnys Law Firm.

2 Gaming Law of the Republic of Lithuania, 2001.

3 ibid.

4 Gaming Law of the Republic of Lithuania, 2001.

5 Gaming Control Authority under the Ministry of Finance of the Republic of Lithuania, Gambling regulators' warning message, 2020.

6 Gaming Law of the Republic of Lithuania, 2001.

7 ibid.

8 Gaming Law of the Republic of Lithuania, 2001.

9 ibid.

10 Gaming Law of the Republic of Lithuania, 2001.

11 Gambling Tax Act of the Republic of Lithuania, 2001.

12 ibid.

13 Gaming Law of the Republic of Lithuania, 2001.

14 Gaming Control Authority under the Ministry of Finance of the Republic of Lithuania, Remote gambling has mitigated the fall in organisers' incomes, 2020.

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