Latvia’s Online Gambling Prohibition Law Facing Legal Actions

Two online operators, Enlabs and Alfor Group, have challenged in the Constitutional Court of Latvia the implications of the bill the country’s parliament passed in April, related to the legality of gambling activities.

The Emergency Bill

In the beginning of April, the emergency bill signed in March by President Egils Levits was passed through the parliament and became law, ordering all land-based casinos to close down, and initially leaving the matter with online gambling unclear. Subsequently, the parliament issued a clarification on the emergency bill, stating that all forms of online gambling were prohibited for the duration of the lockdown.

The measures, the government clarified, were designed to assist the country’s most vulnerable consumers who were susceptible to gambling and had no means away from the activity.

Affected by the decision to have its license temporarily suspended, Enlabs, operating under the Optibet brand, filed a lawsuit with the First Chamber of the Constitutional Court of Latvia, arguing that the law violated Article 105 of the Latvian Constitution. That article deals with property rights.

Property Right Violation

According to the texts in Article 105, everyone has the right to own property, where the latter is prohibited from using against public interest. The right to own property can only be restricted in accordance with the law, and only in exceptional cases expropriations of property for the public interest is permitted, requiring a separate law and an appropriate compensation.

The position of the affected gaming operator is that its right to conduct business that falls within the remits of Article 105 was violated by the imposed restrictions, quite disproportionate to the legitimate aim of the act to deter the society from wasting expenditures in gambling activities.

Freedom of Establishment as per EU Law Violated

Furthermore, the implemented ban on its gaming license, Enlab points out, is in violation of Article 49 of the Treaty on the Functioning of the European Union. That article prohibits restrictions on the freedom of establishment of nationals from one member state on the territory of another member state, including restrictions on the opening of agencies, branches and subsidiaries regarding established undertakings in one member state by nationals of member states. Freedom of establishment implies the right to set up and manage undertakings, such as companies.

Principle of Equality Violation

Enlab’s actions were followed by another operator 4 days later, when gaming hall and online operator Alfor Group, owned by Novomatic and operating Admiral Clubs, also challenged the suspension of its license. Besides objecting to the Article 105 of the Constitution of Latvia, Alfor outlined the texts in the opening article of the emergency law, stating that the bill violated legitimate expectations from Article 1, as well as the principle of equality as per Article 91, which states that all people in the country are equal before law and court.

The Constitutional Court of Latvia has invited the parliament to submit a reply to both challenges, giving it until July 8 to respond to Enlab’s case and until July 12 for the Alfor’s one. Both sides will have three months after these dates to prepare their cases.