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Sports betting in Lithuania.

Historical perspective

In 1990, when the independence of Lithuania was restored, the law legalising gambling games in Lithuania was adopted. However, already in 1994 total ban on all forms of gambling was introduced. It was only in 2001, when the new Law on Gambling (the "Gambling Law") came into force and reset the legal framework for gambling, including sports betting activities. The main reason to repeatedly legalize gambling, including sports betting, was the need for additional income in the state budget in the form of various fees and taxes related to gambling activities. The first sports betting companies started their activities as soon as the new Gambling Law was established. As of 2009, four companies engaged in sports betting activities are established in Lithuania.

Applicable legislation

No special legislation regulating sports betting has been adopted in Lithuania. However, sports betting is organized within the general framework of gambling and the particular framework of betting. The Gambling Law is the main legal act regulating gambling in Lithuania, setting forth the main requirements for gambling companies, restrictions and prohibitions related to the organization of gambling and supervision of gambling activities. Civil relationships, i.e. the basic rights and obligations of an organizer of gambling and a gambler, are also briefly regulated by the Civil Code of 2001. The Civil Code sets forth that betting has to be organized under the established procedure in order to have any legal effect for the parties involved. Pursuant to the Civil Code, the ticket, check, or other document specified in the rules of the game, is regarded as the contract between the organizer of gambling and a gambler. The Law on Lottery and Gambling Tax of 2001 applies to taxation matters related tosports betting. The Rules on Licensing of Gambling, adopted by the Government of Lithuania establish the procedure for granting licenses to organise gambling activities. Totalisator and betting centres are established according to the Procedure on Establishment of Totalisator and Betting Centres, adopted by the State Gaming Control Commission (the "Commission"). It should also be noted that the draft of the Gambling Law (the "Draft Gambling Law") has been under preparation since 2006 and is to be adopted in the foreseeable future.

Concept of gambling and betting

The Gambling Law defines gambling as a game or mutual betting that is organized under the established regulation, where the participants seek to win money by voluntarily risking a stake, and where wins or losses depend on chance or the outcome of any event or sports match. Betting is regarded as one of five forms of gambling, and is understood as mutual betting on the outcome of an event based on guessing, where the amount of the win depends on the amount of the bet made and the odds fixed in advance by the betting intermediary. It should be noted that the Draft Gambling Law introduces the parties of betting with the additional possibility of agreeing on the odds on a case by case basis. The other four forms of gambling are machine gaming, bingo, table games, and totalisator. The organisation of any of the aforementioned gambling games requires a separate license. All five licenses can be obtained by a single company. Lithuanian legislation does not provide any other particular definitions or features of sports betting.

Conditions for organizing sports betting

In Lithuania sports betting can be organized by any company acting in accordance with the Law on Companies, possessing a betting license granted by the Commission, and betting regulations approved by the Commission. The authorized and paid capital of the company specified in its articles of association cannot be less than LTL 1 million (approx. EUR 286 000). All shares of the company have to be registered. In order to obtain a license the company has to provide the Commission with a number of documents related to its authorized capital, financial status, shareholders, managing persons, nature of funds used to pay for the company's shares, etc. In order to grant a license the Commission has to receive reports from the State Security Department, the Financial Crime Investigation Service, the Special Investigation Service, and the Police Department. The license to organize betting is granted for an indefinite period of time. The company possessing a license to organize betting is entitled to start betting activities only after the Commission approves the company's betting regulation, which includes main betting rules, procedures for setting up and winning the cumulative fund, paying out wins, submission and settlement of claims, etc. The prior permission of the Commission is necessary to establish any sports betting centre. The licence to organize betting is cancelled under the request of the holder, in instances when the company ceases its activities due to reorganization or liquidation, when the company fails to eliminate identified infringements of rules governing licensed betting activities, etc

Main restrictions and prohibitions

Companies organizing sports betting activities are not allowed to perform other commercial activities except rental of its premises for restaurants, bars, musical performances, or currency exchange. Sports betting licence holders cannot be incorporators or shareholders of other companies as well. It is forbidden to organize sports betting activities in residential buildings (with certain exceptions), educational, health care, cultural, financial, post, state or municipal institutions, supermarkets (with certain exceptions), railway or bus stations, airports and seaports. Certain requirements for premises to execute sports betting activities were introduced aiming to limit the access of underaged persons and other sensitive social groups to sports betting activities. Advertising of sports betting is forbidden in Lithuania, except for the names and addresses of betting licence holders and betting centres.

Main obligations

The shareholders of the company have to notify the Commission of every transfer of the shares, and the Commission in such a case has to decide on re-registration of the company's licence. Sports betting companies are responsible for ensuring that persons under 18 years of age would be precluded from betting. Sports betting companies have an obligation to register every person who makes bets or wins amounts equal to LTL 3 500 (approx. EUR 1 000). Companies organizing sports betting are also obliged to annually provide the Commission with their annual financial statement and auditors report. Financial statements of sports betting licence holders are made publicly available.

Supervision and liability

In Lithuania, the Commission is entitled to execute supervision of gambling companies, including sports betting companies. The Commission is granted the rightto obtain necessary information, to examine financial activities of sports betting companies, to inspect the premises where sports betting is organized, to request explanations on the organization of sports betting activities from the companies, to impose sanctions, etc. Under the Lithuanian legislation the infringement of gambling organization procedure or betting regulations is regarded as an administrative offense and incurs a fine in the amount of LTL 5,000 (approx. EUR 1 429) to LTL 25,000 (approx. EUR 7 250).

Future legislative developments

According to applicable legislation the organization of any gambling activities (including sports betting or totalisator) via the internet, telephone or other mobile devices, is prohibited. However, it is likely that in the foreseeable future this restriction will be eliminated since the main provisions to be introduced by the Draft Gambling Law relate to the possibility of operating online gambling (as well as sports betting and totalisator) activities. The proposed model for online sports betting and totalisator is highly related to the physical establishment of such operators and is only allowed for subjects meeting special licensing requirements. Moreover, strict requirements are proposed for the identification of persons betting online. The Draft Gambling Law requires that written contracts be entered into with persons willing to bet online. Only after the conclusion of such contracts, and after issuing the password, can the person become eligible to bet online. As mentioned, the Draft Gambling Law is under preparation as of 2006 and is still in the process of constant changes and negotiations. Although provisions concerning online gambling are likely to be adopted in the near future, tight restrictions are likely to apply for organizing online sports betting and totalisator activities since Lithuanian authorities are quite conservative on gambling issues.

* Respectively, Doctor-in-Law and Partner, Law firm Lideika, Petrauskas, Vali nas ir partneriai LAWIN and Lawyer, Law firm Lideika, Petrauskas, Vali nas ir partneriai LAWIN, Vilnius, Lithuania.

Lawyer, Law firm Lideika, Petrauskas, Vali nas ir partneriai LAWIN. E-mail: liudas.karnickas@lawin.lt

by Jaunius Gumbis and Liudas Karnickas *
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Title Annotation:ARTICLES
Author:Gumbis, Jaunius; Karnickas, Liudas
Publication:The International Sports Law Journal
Geographic Code:4EXLT
Date:Jul 1, 2009
Words:1399
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