Gambling in Latvia: benefit or harm for state?

Gambling in Latvia is one of business areas, showing a steady growth. According to the results of 2016, the industry is ready to enter a pre-crisis level; however, changed government policy towards the gambling sector challenges not only its development but also its existence within legal environment. Market analysts are trying to find out whether the gambling business provides Latvia with benefits or whether its development is indeed related with harmful consequences for the country.

Gambling in Latvia in figures

Here is a brief information on the gambling business in Latvia as of June 2017:

• 315 gambling halls;
• 8826 registered slot machines;
• 6 land-based casinos;
• 183 gambling tables.

The majority of venues are located in Riga.

Gambling business owners make significant investments in the industry. Over the past 5 years, investments have reached around €102 million and been used for safety control, real property purchase, acquisition of new games and slot machines and reconstruction of gambling halls.

2016 was an especially successful year for the Latvian gambling sector, completing with the turnover of €264 million (a little less than the pre-crisis record: €264 million in 2007). €29.1 million of that sum went to the state treasury and €7.9 million to local self-governments.

Taxation

Latvia was attractive for gambling organizations until 2017 due to the fixed tax rate and absence of double taxation. But now, the government is starting a tax overhaul, supposing the increase of gambling taxation. In 2017, one also adopted a prohibition on locating gambling halls in the historic city center, save for territories of major hotels.

The Ministry of Finance has the following plans:

• income tax on lottery winnings;
• 20% dividend tax;
• increase of gambling business taxation up to 30%.

If the amendments are approved, they will be accepted this fall. Industry experts believes that it will lead to the decrease of the amount of gambling halls, reduction of staff and cutting of wages. According to some forecasts, the legal industry will be destroyed and this sector will become shadow. Meantime, research shows that the gambling development not only has a disastrous influence on the economy and social aspect but also provides significant benefits.

Who visit’s gambling halls?

In 2016, SKDS surveyed gambling lovers in order to assemble a psychological profile on a common player and find out how much Latvian citizens are affected by problem gambling.

The survey has revealed the following facts:

• More than two-thirds of Latvian citizens aged 18-74 years have never gambled.
• Primarily, casinos and slot machine halls are attended by working men aged 25-34 years.
• A majority of gamblers aim to go out, in other words to have a time out of home among like-minded people.
• A share of Latvian playing in online casinos increased by 11% in five years.
• Two-thirds of gamblers spend up to €10 per month.
• One-fifth of respondents win around €10 per month.
• Another 13% of players win from €11 to €50.
• Only 11% of respondents believe that they are addicted to gambling. Besides, more than 30% of them say that they are affected by serials and social media, while 46% admit their computer dependency.

These data proves that the problem gambling issue in Latvia is not quite critical. On the contrary, a majority of citizens refer casino visits to a part of their social life.

Gambling industry benefits

Not only does legal gambling play an entertainment role, but it also brings a huge sum to the budget in terms of tax liabilities.
Adopting laws on gambling restrictions, authorities were going to compensate expected state treasury losses by increasing the excise tax on fuel, cigarettes and spirits. However, €29.1 million (and €7.9 million for municipal governments) is quite a significant sum for the country with the budget of €8.066 billion for 2018.
This gambling situation is still disputable. The Latvian Association of Gaming Business (noncommercial association) and government are engaged in a tough talk. Thus, the main topic of Riga Gaming Congress international conference is gambling business prospects in Latvia. Is there a future for Latvian gambling? Experts from various countries and industries will answer this question.