Estonia has been open to the gambling industry since the mid-1990s. Different laws and regulations govern this industry to ensure fair play. Businesses must obtain a license to operate. This guide to Estonia gambling license explains everything you need to know.
Estonia gambling laws
The laws and regulations governing gambling in Estonia are:
- Gambling Act;
- Gambling Tax Act;
- Personal Data Protection Act (GDPR);
- Money Laundering and Terrorist Financing Prevention Act;
- General part of the Economic Activities Code Act;
- List and procedure for entry of data registered in the electronic recordkeeping and control system of gambling operators and procedure for connecting an electronic recordkeeping and control system to the information system of the Estonian Tax and Customs Board.
Types of Gambling Games
There are five main categories of games allowed in Estonian gambling.
Games of chance
The outcomes of these games depend on chance, and they are played using a mechanical or electronic device or mediated by the game’s organiser. These games can use gambling tables or gambling machines, or any other gaming platform.
Games of chance are also taxed differently:
- Games operated on a gaming machine are taxed EUR 300 + 10% of the net winnings.
- Games on a gaming table are taxed EUR 1,278.23 per table.
- Tournaments are taxed at 5% of participation fees.
These can be classical lotteries or instant lotteries, and while the outcome of these games also depends on chance, the games have regulations concerning the prize winnings and number of winners. The prize pool is determined by the price of circulation of the lottery tickets, up to 80% of the ticket price. Winners can only be chosen up to three times per 24 hours or by opening the lottery ticket field.
Lotteries are taxed at 18% of total ticket sales.
Totos are games based on events beyond the control of the player or the gambling operator, such as sport bets. The winnings depend on whether the outcome was true or false. The prize is determined before the bet is placed, or the game operator can determine the percentage of winnings based on the total number of bets placed by players. If multiple players bet correctly, then the total winnings will be divided amongst the players according to the amount they bet, also called the totaliser.
Totos are taxed at 5% of the income from the bets (net of winnings).
Games of skill
These are based on physical skills, abilities or knowledge of players, and the games are played using a mechanical or electronic device.
Games of skill played on a gaming machine are taxed at EUR 31.95 per machine.
Players can participate in remote gambling by using an electronic device for communication, and the game organiser determines the outcome using an electronic device. Suppose a game only uses electronic means to receive bets, inform players of the outcomes or transfer payments to the player: in that case, it is not defined as remote gambling because the other types of games can use electronic means as well.
Games of chance and games of skill can be offered as remote gambling and are taxed at 5% of the net winnings.
Gambling activities: licensing in Estonia
Any business looking to join the Estonian gambling industry must apply to the Estonian Tax and Customs Board (EMTA) for:
- Activity license: this is valid for five years and costs EUR 47,940 for games of chance, EUR 31,960 for totos, and EUR 3,200 for games of skill;
- Operating permit: this is valid for ten years and costs EUR 640 for lotteries and EUR 3,200 for all other types of gambling games except lotteries.
Estonia gambling license application process
The Estonian Tax and Customs Board makes a decision on the application for an activity license and for an operating permit within four months. This timeframe can be extended to up to 6 months. Nevertheless, a business will receive a preliminary response usually within three working days of the application.
The European Union does not have standardised requirements about organizing gambling. This means that an activity license acquired from another Member State within the European Union does not grant the right to offer gambling in Estonia and vice versa. Businesses must apply for gambling licenses within each Member State, including operators that are located on sea transport under the Estonian flag.
Business requirements for Estonia gambling license
A gambling operator must meet several requirements to qualify for a gambling license in Estonia:
- Gambling must be its sole business activity;
- It must be permanently established in Estonia;
- It must comply with the AML and GDPR laws;
- It must submit to mandatory auditing;
- It should have adequate organizational and technical structures.
Shareholders holding 10% and above, beneficial owners and the management team also must meet specific requirements:
- They cannot have criminal records;
- They cannot be board members of illegal gambling establishments or be associated with operators with revoked licenses;
- They cannot be responsible for the bankruptcy of any other company.
There are also minimum share capital requirements for LTD and PLC companies depending on the types of games they offer:
- For games of chance, EUR 1,000,000 is required for LTD and PLC companies;
- For lotteries, EUR 1,000,000 is required for PLC companies;
- For totos, EUR 130,000 is required for LTD and PLC companies;
- For games of skill, EUR 25,000 is required for LTD and PLC companies.
Documents for Gambling License Application
Operators need to present the following documents to the EMTA:
- License application documents;
- Identification of the management and owners of the business (passport scans and copies);
- Certificate of registration;
- Legal proof of address of the business (utility bills);
- Bank statement to show available funds;
- Gambling website and software information;
- Domain name ownership;
- Business plan.
Applying for a gambling license in Estonia is easy, but it’s a process that requires a lot of attention. If you would like to make this process easy for your business, Fintech Legal Center is based in Estonia and offers legal and compliance services to businesses across Europe. Contact us for the details.