The recognition of online gambling by the government of the Baltic state of Estonia (see previous InfoPowa reports) was the subject of a review in the publication Baltic Reports over the weekend.
The review describes the situation prior to January 1st 2010 as "...a free-for-all in Estonia for many years, but now regulated since the state has applied a law that requires Internet casinos to be hosted on Estonian-based servers."
"Previously, online gambling sites were not allowed to be hosted on Estonian servers, but were not barred from being used by Estonian gaming enthusiasts," the publication explains. "The Gambling Act, which came into force on January 1st reverses this; now, online gambling sites must be hosted on an Estonian server [which will] not be [ISP] blocked.
To set up an online casino in Estonia, companies must apply for a licence/permit and pay a 5 percent sales tax that excludes player winnings.
Annika Vilu, a spokesperson for the Ministry of Finance, told the Baltic Report that online gambling taxation in Europe is nothing new, and has been applied in most of countries. “Estonia’s tax rate is still one of the lowest in Europe,” she claimed.
Tõnis Rüütel, executive director of the Estonian Association of Gambling Operators told the Report that he had a long discussion with Jürgen Ligi, the Minister of Finance, on a suitable tax rate for Internet casinos.
“There are countries with smaller tax rates, such as Malta and Gibraltar with 3 percent, but we don’t want to have a reputation of a tax paradise,” Rüütel told Baltic Reports, adding that in his opinion the pre-legalisation system was "absurd" because it left Estonia with the problems associated with some gamblers, whilst the profits from the pastime went outside the country.
The Report notes that provisions exist in the new law for any online casino serving Estonians to be blocked if it does not meet the government requirements on licensing, taxation, problem and underaged gambling measures. However, it notes that ISP blocking in other countries has been less than successful.
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