This writing is based on things heard/read/learned/spoken and is purely my own opinion about the situation which is occurring after going through laws and other aspects and after consults from specialists.
Lets write some more about the new law, but this time let’s look at the law itself. How it is/can be in conflict with European Unions laws, what could we use to strike back etc.
Lets start with tbe obvious and pick out important parts from the law(following text is translated because Estonian government hasn’t bothered to translate laws into English or French). Tax of 5% off companies MGR/Rake/Sales. Enterpreneurs who want to arrange games based on luck, have to be created as a Partnership or Limited Company and their part- or whole share capital has to be worts at least 1,000,000 euros. Like every other casino, online-casinos have to exclude minors from gambling on their site and assure every players registration by identifying the person, their age and residence. Gambling operator cannot give credit at the gambling site nor allow someone else to do it. Starting from 1st January 2011, gambling operators elektronical accounting- and control system has to be intergrated with Estonian Tax and Customs Board(ETC) IT system. Actions of these enterprises are considered under European Unions FTA(Free Trade Agreement) which includes EFTA. Gambling operators can give rights for their actions partly or fully to someone if ETC gives them an agreement in writing. Foreign gambling operators who already offer their services in Estonia can legalize their activities by creating a contract with a local company who has the necessary license. Internet Service Providers(ISP) are forced to block access to all illegal remote gambling(online casinos) sites who do not obey Estonian laws. In addition to that, financial institutions are forced to block all transfers if they find out that the remote gambling company does not have a license in Estonia. In addition to Gambling Law, operators with games of luck and chance also have to obey Stopping Money Laundering and Terrorism law. This law forces online-casino enterprises with some obligations and they have to be extra careful when allowing clients play with big bets or when they have suspicions about Money Laundering.
So, some of the important points have been written, lets start discussing. 5% Tax – This is obvious stupidity already when you look at the number and this was explained in my previous post but obviously not therally enough. ETC claims that the main goal is to protect clients/citizens. You do not need to create taxes or license fees in order to protect clients – Why not lower those numbers or remove them? Every 10 year old understands the fact that creating taxes for various markets does not protect citizens more effectively. Pedophiles, thiefs and other criminals – Shall we force high taxes on them? Maybe then they won’t committ much crimes? The other aspect in taxing, share capital needed to apply for a license – 1,000,000 euros! I am not familiar with poker rooms share capitals (except that PokerStars is worth 2 billion USD), but this number seems very high. I don’t believe that Poker Heaven is worth 1,000,000 eurs but maybe i’m just dumb as a stool and all the poker rooms in the world are worth a lot more then million euros! Thirdly, enterprise has to be registered in Estonia(this is needed so they would follow Estonian laws without any excuses!!!!). First two points are more or less in violation with the Free Trade Agreement(FTA). Part 4, 1st Chapter, 53rd Articles 1st (b) point which states the following:
The following shall be prohibited as incompatible with the functioning of this Agreement: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Contracting Parties and which have as their object or effect the prevention, restriction or distortion of competition within the territory covered by this Agreement, and in particular those which: (b) limit or control production, markets, technical development, or investment;(goes for governments also).
Conclusion would be that a government cannot accept a law with points which effectively nullifies a lot of companies chances to compete in this market. The points for this law are insanely high taxes, license fees and share capital needed in order to apply for a license. Estonian government is forcing companies to pay taxes twice in Europa, to European Union and to Estonian government. Lets take some random market, banks. If a bank is based in Sweden, they have a client from Afghanistan, but they do not have a branch there. Do they have pay taxes to Afghanistan? European Union? Sweden? Do they have to stop offering services to him? I was told that imposing new taxes is a bit heavy if it is being applied to revenues. If you pay 5% of MGR off of Estonian traffic and you are a foreign operator then it seems to be against the FTA. In court it wouldn’t be considered as a fact but as an argument, as a very strong argument and some lawyers say that it would be possible to win this point. Do you understand why companies can’t or wont come here? Do you understand why this smells like creating a comfortable situation for a certain company based in Estonia? No? Take a deep breath and keep reading because i have few more arguments/facts!
Like every other casino, online-casinos have to exclude minors from gambling on their site and assure every players registration by identifying the person, their age and residence. No resistance to this one but how would they accomplish this effectively? Regular process looks like this, if they have suspicion then the client has to send a photo ID, scanned and sent by e-mail or a paper copy by using land based mail. We all know that things like that are easy to change(birthdates etc). Only option would be to give the company access to citizens database and this is against constitutional law. If the government wouldn’t do that and a minor starts playing then the company can say „But you haven’t given us effective methods how to check peoples data!“. This is not a very effective argument and may not be completely correct because i am not aware of every single way how companies can confirm who is who without checking from a larger database. Unfortunately i haven’t discussed this point with anyone.
Gambling operator cannot give credit at the gambling site nor allow someone else to do it. I added this because it’s just funny. I personally do not know any online casinos, poker rooms, sportsbooks, who give credit. If someone knows one then please, contact me and share the info!
Starting from 1st Januar 2011, gambling operators elektronical accounting- and control system has to be intergrated with Estonian Tax and Customs Board(ETC) IT system. Okay, advanced Estonian country. Is this another way where the government can offer it’s IT specialists to provide their services by completing the integration? Another point where you can make dications to companies about specific details.
Actions of these enterprises are considered under European Unions FTA(Free Trade Agreement) which includes EFTA. If the government claims this then why are their own actions in conflict with FTA? They have definitely thought it through nicely and taken into account already concluded court cases on analogous subjects, like Bwin vs Portugal and Ladbrokes vs Holland, but juridically these were different cases. I will discuss Bwin vs Portugal case later. I found two points in FTA which do not comply with the law created by our geniuses. I am pretty sure that in the future i will find more points which do not comply with our law.
Gambling operators can give rights for their actions partly or fully to someone if ETC gives them an agreement in writing. Is a poker room supposed to look for a local random Aleksander who would run errands for them and register a company? Which room would bother doing that for our market? I presume that applying for the hand written agreement takes about 1239981299 days(+- 2 days). If our government does something well then it is dealing with issues longer then they are supposed to and this issue would be one of them. They need to provide a certain local company with enough time to claim the market.
Foreign gambling operators who already offer their services in Estonia can legalize their activities by creating a contract with a local company who has the necessary license. WOW! Isn’t this another point that prefers a certain local company? Let me think a little bit who has the local gambling and remote gambling license, there’s just too many! Hmm...Olympic Casino...then Olympic Casino...and Olympic Casino! Am i the only one who thinks this is a LITTLE BIT suspicious? Have i not discussed enough points in my two posts which show that Olympic is being preferred and others are being distorted? I am 100% sure that Olympic would demand a certain sum or a percentage or whatever for facilitation. In any case, they wouldn’t do this for free. Another perfect situation for Olympic Casino where they can earn a little extra. I’ll note here that Olympic was forced to close 18 casinos in Estonia during 2009. Year 2009 loss for them in Estonia was 126,8 million EEK, which is approximately 8.2 million euros. The whole group(Ukraine, Latvia, Lithuania etc) suffered a loss of 518 million EEK in 2009, which is approcimately 33.6 million euros.
Internet Service Providers(ISP) are forced to block access to all illegal remote gambling(online casinos) sites who do not obey Estonian laws. Another point in the law which is in conflict with the FTA. Government cannot force ISP-s to block chosen sites aka censoring the internet. FTA 3rd Part, 3rd Chapter, 36th Articles 1st Point states the following:
Within the framework of the provisions of this Agreement, there shall be no restrictions on freedom to provide services within the territory of the Contracting Parties in respect of nationals of EC Member States and EFTA States who are established in an EC Member State or an EFTA State other than that of the person for whom the services are intended.
This says in conclusion that Estonian government cannot restrict companies based in other EU countries from offering services in this country. Some can say that not all companies are based in EFTA or EU. True, but still Estonian government shouldn’t block most of the online poker rooms and casinos. You can look up yourself which company is based where, I’m not going to note them all here. Smart lawyer said that if Estonia government would want to push the fact that it is done in order to combat fraud then you could make an argument that this can be done without taxes, because creating taxes does not protect citizens. You can prevent and combat fraud by checking the company and the server. So it would be possible to win this point in order to “soften” the Remote Gambling Law. There shouldn’t be any blocking of the sites because it is in straight conflict with FTA principles. There’s no point to say that other court cases have been lost with the same statements. No, because there hasn’t been this kind of a case. Keep reading until you reach the part where I talk about Bwin vs Portugal case.
In addition to that, financial institutions are forced to block all transfers if they find out that the remote gambling company does not have a license in Estonia. Estonia has taken example from Bwin vs Portugal and Ladbrokes vs Holland court cases and taken it a step further. I would personally be very interested what the European Court would have to say about moronic things like this. This point would require us to take a look at FTA-s 3rd Part, 4th Chapter, 41st Article which states the following:
Current payments connected with the movement of goods, persons, services or capital between Contracting Parties within the framework of the provisions of this Agreement shall be free of all restrictions
Meaning that it is illegal to restrict movement of funds which is associated with providing a service aka illegal to block bank accounts which are associated with a company listed in EU or EFTA. In order to present this point to the court you have to win the previous points i wrote about. Yes, it is hard to win all points against a country but it is possible and a possibility is all that we need in order to try(except deep pockets). If there would be a 50-50 chance to win this kind of a case and if i would be a billionaire i would sue Estonian government in a flash and try to fight for my rights. It seems to me that www.mariabingo.com has to start using off-shore bank accounts!
In addition to Gambling Law, operators with games of luck and chance also have to obey Stopping Money Laundering and Terrorism law. This law forces online-casino enterprises with some obligations and they have to be extra careful when allowing clients play with big bets or when they have suspicions about Money Laundering. It’s completely clear now! This has taken it a bit too far in my opinion. How can you logically explain this? Is Osama going to move his funds through Unibet? As far as i know, people always get checked if they are dealing with big sums and then they do not limit theirselfes only to the usual document copies but use some other hardcore option. This point also means that Estonian government can confiscate the money and use it if they have the slightest suspicion about money laundering or terrorism.
For this time, discussing points from the law is over. Lets start with the promised Bwin vs Portugal court case. Portugal restricted foreign online casinos and sportsbooks to advertise on Portugals territory, media etc. Bwin advertised betting on some world cup and got fined by Portugals government, Portugal had restricted that with a law and the only company who could do that was state controlled monopoly called Santa Casa de Misericórdia de Lisboa. They explained it with a reason to prevent and combat fraud. Bwin – who had sponsored Portugals football league for quite some time and done other advertisement – sued Portugal because according to Bwin they broke EU rules on the free movement of services. Since they were fighting a state controlled monopoly, Portugal got an easy win, because the government could check all of their actions etc with ease. European court said that Portugal’s objective — to restrict internet gambling to combat fraud and other crimes — outweighed free trade concerns. It is an obvious loss because the government is controlling the monopoly. But Portugal wasn’t limiting foreign companies in an extreme way(except license and advertisement ban). No blocking sites, closing bank accounts and other trash. These are exactly the points why it would be possible to win Estonian government in European Court because Estonia has issued these restrictions. Seems like Estonian Tax and Customs Board did not finish their research.
Some fresh news in the end – Rumors have been heard that Olympic Online isn’t doing so well and that bankruptcy is at the door. This due to the fact that noone is playing there. My respect to the people who haven’t and won’t play there!
Today, on 11th March, we received news that Triobet is planning to sue ETC due to the fact that Triobet was in the blacklist(sites which have to be blocked) which leaked out to the public. Triobet said that they had an agreement with ETC that Triobet will not be blacklisted if they apply for a license before 1st March, but what do you know! Company pays 750,000 EEK state fee(about 60,000 euros) in order to get a license and ETC then backs down from the agreement because Triobet allegedly changed their representative. Triobet completed all demands which ETC had set. Even if the law is moronic and full of holes and someone tries to obey it, they still get smacked on the fingers with a ruler! What kind of a reason is „representative changed“ to back down from a long term contract? That’s a small problem which can be resolved even by just calling! Besides everything else, ETC didn’t bother to notify Triobet of this issue, they found out through the media. Nordic Gaming Group(Triobets mother company) CEO Per Hellberg said that the company has made significant investments in order to get a license, 750,000 EEK for the license(60,000 euros approx.) and million euros for restructuring! There’s our democracy! Hellberg said that Triobet will sue ETC if on Monday Triobet.com site is blocked.
This text was written on 11th March but today, 12th March, i would like to add a statement made by the ETC. Now they have said in a public statement that getting benefit from taxes is not the most important thing. I quote ETC vice-chancellor Veiko Tali: "Collecting taxes is one of the last things if we list the most important things". Isn't that interesting?
Over 2800 words and 16,500 characters, enough for this time. But i’ll be back because there’s a lot to discuss. Thank you all who bothered to read even if this text seems unlogical or completely wrong! |
