Lithuania

Version: 14042004

Editor: Franka Pals

Authors: Jochem de Ru, Franka Pals

Publisher: Novamedia / Paul Robert

Disclaimer: Novamedia disclaims all liability for information provided within the ”Novamedia European Gaming and Lottery Files”.The information is supplied by independent journalistic sources. No parts of these files may be reproduced in any form by print, photo print, microfilm or otherwise, or re-distributed electronically in any form without written permission from the publisher.

Contents

  1. GENERAL INFORMATION
  2. KEY FIGURES
    Population, Age structure, GDP, Currency, Telecom, Lottery sales per capita
  3. LEGISLATION
    1. Authorized Gaming
    2. New Legislation
  4. OPERATORS
    1. Olifeja
    2. Tete-a-Tete
    3. Lithuania First Bingo Hall
    4. Lithuanian lottery revenue overview
    5. Casino and bookmaking revenues
    6. Hard times for Lithuanian gambling

1. General Information

Map of Europe, Lithuania

Lithuania is the largest of the Baltic States and lies south of Latvia and Estonia. Despite relatively meager natural resources, Lithuania has had one of the more successful transitional economies of the former USSR.

Today, Lithuania is an independent democratic republic. It has an elected President as the head of state and an elected parliament called the Seimas. Both the government and the Supreme Court are appointed. The division of power is guaranteed by the Constitution, which was adopted by national referendum in 1992.

Lithuania declared its independence in 1990 and in 1995 became an associate member of the European Union (EU). It got a full EU membership in may 2004.

On 5 January 2003, Rolandas Paksas was elected President of Lithuania, and started his 5-year term. Before his election Rolandas Paksas had been chairman of the newly founded Liberal Democratic Party, which was founded in 2002.

In the presidential runoff, Rolandas Paksas defeated President Valdas Adamkus 54.9% to 45.1%. Paksas said foreign policy would not change and that he fully supported joining the EU in 2004.

But not all is good for Lithuania's president as in 2004 its parliament starts impeachment proceedings against him. He is charged with violating the constitution by leaking state secrets, rewarding a financial supporter with citizenship and illegally influencing companies.

In December 1997 Lithuania and Latvia were invited among five other Eastern European

In December 1997 Lithuania and Latvia were invited among five other Eastern European countries to join the EU as part of its second round of expansion. In May 2003 the people of Lithuania voted in favor of joining the EU and the country joined in May 2004.

Lithuania's major assets include a highly skilled and well-educated workforce, a good geographic location on the Baltic, a Western orientation and support. While the Lithuanian economy contracted in 1999 because of the economic crisis in Russia, its demonstrated fiscal and monetary discipline has attracted the support of Western financial institutions.

Growing domestic consumption and increased investment have furthered recovery.

The economy has improved over the last few years despite growing political instability. Lithuania's dependence on oil transit revenues and its refinery feedstock requirements have led to a renewed emphasis on economic relations with Russia and Kazakhstan.

Privatization of Lithuania's large, state-owned utilities, particularly in the energy sector, is nearing completion. Overall, more than 80% of enterprises have been privatized. Foreign government and business support have helped in the transition from the old command economy to a market economy.

2. Key Figures

Key Figures
Population:

3,592,561 (July 2003 est.)

Age Structure

0-14 years: 17.6% (male 323,776; female 310,087)
15-64 years: 68.4% (male 1,188,171; female 1,268,035)
65 years and over: 14% (male 169,513; female 332,979)
(2003 est.)
Total median age: 36.6 years

Currency:

The in 1993 introduced Litas (LTS) is Lithuania's currency.
The Litasis now pegged to the Euro at 1.34528 after having been previouslyaligned to the US dollar.

1 Euro = 1 3.45 LTL
1 USD = 2.73 LTL
1LTL = 0.37 USD
1 LTL = 0.29 Euro(March, 2004)

GPD

Purchasing power parity $30.08 billion
real growth rate 6.7%
per capita purchasing power parity - $8,400 (2002 est.)
Source: CIA

Internet: 695.000 users in January 2004
Telephones 1.142 million fixed lines (2001)
Mobile 1.931 million mobile subscripers in 2004
This means a mobilea penetration of little over 50%
Lottery Sales: Total lottery sales per capita in Lithuania - 7 US dollar in 2000

3.Legislation

One of the last countries to legalize and accept the casino gaming industry was Lithuania.

On the 1st of July 2001, the gaming act was introduced in Lithuania. A long and serious debate led to enforcement of the gaming law. This overcame the popular belief that gaming ventures in former soviet countries as being high risk due to minimal legislation.

The law governing gaming in Lithuania is to be found in the Gaming Act 2001 and the regulations made under that Act.

Broadly speaking, the Act's primary function is to regulate the commercial provision of casino gaming opportunities, which primarily include table games and slot machines, slot machines arcades including category A and B, bingo, lotto and wagering.

Here follow the requirements for the organization of gaming in Lithuania:

3.1 Authorized Gaming

The gaming industry in Lithuania is supervised by the State Gaming Control Commission."

Website: http://www.vlpk.lt

The State Gaming Control Commission is an institution, independent of supervision and control by the state that carries out its work under the supervision of the Government. It's financed from state funds.

The aim of the Control Commission is to ensure abidance and execution of the provisions of laws and other legislative acts that regulate the sphere of lotteries and gambling. The Control Commission has the following main functions:

Entities Organizing Games

The following entities can organize games in Lithuania: Public and private companies, established and organized accordingly to the Lithuanian Company Law. They must have obtained a license for these kind of activities and permits to open slot arcade, bingo halls, casino or when the Control Commission approves lotto or bookmaking game regulations.

Own capital a company must have when operating a:

Other limitations a company has to heed are;

Types of Licenses

Licenses may be issued for the organization of the following games:

A company may obtain all types of licenses.

Any of these licenses shall be issued for an unlimited period of time and must be re registered on an annual basis by paying state levies.

In 2004 the gaming commission oversees nine casinos, 15 slot-machine salons, 50 betting shops and one bingo hall. Lithuania presently has 94 gaming tables, 450 "A" category slot machines and 200 "B" category in the country.

Location of gaming facilities

The local government council approves a location for gaming facilities. The govern ment does have the right to prohibit if it deems a location unfit. The following list is locations excluded from serving as a gambling facility:

Operation requirements

Gaming Equipment Requirements

Gaming tax

Gaming tax is calculated based on the number of games in the casino in an amount of:

Corporations pay 12,000 litas each fiscal quarter for every single card and roulette table. "A" category slot machines (those with no maximum payout) cost 1,800 litas per quarter, and "B" category ones (those with a 200 litas maximum) cost less at 600 litas.

Gaming tax is payable beforehand for a period of three months.

In Lithuania, state revenue takes the form of a fixed gaming device tax. This means i get revenue for each table or machine that is in operation.

In the first nine months of 2003 the government took in 5.7 million litas from equipment taxes and 575,000 litas in paperwork fees.

3.2 New Legislation

There have been many new important amendments to the Lithuanian legislation on Gambling and lotteries in the last few years.

On new years day 2004, a new Law on lotteries came into force; Law on lotteries, No IX-1611, July 1 2003, Official Gazette "Valstybes zinios" No 73-3341, 2003.

Lotteries

The purpose of the adaptation of the law on Lotteries was to legalize and regulate by law the organization of lotteries in the Republic of Lithuania and to provide security for the players. It ensures that obligations of the lottery organizer will be carried out as well as to protect the rights of lottery organizers.

According to the amount of prize money that can be won in the lottery there were two new kinds of lotteries established in the Law on Lotteries.

  1. A grand lottery; a lottery where the nominal value of all lottery tickets is not limited;
  2. A small lottery is a lottery organized during various events and the nominal value of all tickets shall not be bigger than 100000 LTL.

Correspondently two kinds of licenses will be issued:

The licenses that allows to organize grand lotteries will be issued by State commission for gambling supervision. In order to organize a small lottery one can receive a license by the executive authority of municipality where a lottery will be organized.

Licenses are issued for an unlimited period of time.

According to their nature the lotteries are classified into: digital, instantaneous, classical and sports lotteries. According to the technology of tickets' distribution, data processing and payout of the winnings lotteries may be organized using direct computer connection, indirect connections, telephone connection and Internet connection.

Only national enterprises or foreign enterprises, which have established subsidiaries and perform their activities in conformity with Lithuanian laws, fulfill the requirements determined in the law on Lotteries and have a license are entitled to organize grand lotteries. However other legal persons as well as the aforementioned enterprises that fulfill the requirements of the law and have the licenses are allowed to organize small lotteries.

By law, organizers of lotteries are required to contribute to charity or support 8 percent nominal value of sold tickets in conformity with the Law on Charity and Support.

The requirements for lottery tickets, prohibitions and restrictions applicable to lottery organizing are also determined in the law.

The authorized capital of an organizer of grand lotteries shall not be less than 500.000 LTL, and the own capital of small lottery organizers cannot be less than 50.000 LTL.

The purpose of the Law on the amendment of the Law on Gambling Tax

The Law on the amendment of the Law on Gambling of the republic of Lithuania, No. IX-1622, July 1, 2003. Enters into force on January 1, 004. Oficial Gazette "Valstybes zinios" No.73-3342, 2003 is to regulate taxation of gambling and lotteries is to supplement the current Law on Gambling Tax by provisions regarding taxation of lotteries.

Lotteries and gambling taxes will be paid by enterprises, activities that are regulated by the Law on Lotteries and Law on Gambling Games.

Organizers of lotteries shall pay to the budget 5% (tax rate) of the nominal value of distributed tickets.

Lotteries and gambling taxes paid by enterprises, which organize grand lotteries will be included into budget of the state, and taxes paid by enterprises organizing small lotteries into budget of a municipality.

Enterprises organizing lotteries and gambling games will also have to pay other taxes, set in the Law on Tax administration.

The law will enter force on January 1, 2004.

You can find the following laws on the Novamedia Gaming and Lottery Files website:

4. Operators

Lithuania currently has 3 lottery operators; Olifeja, Zalgirio loto and Fortuna baltica.

Olifeja

Website: http: //www.loterija.lt

Olifeja, Lithuania's largest lottery organizer, currently offers these games; Jega, Keno loto, Tele loto and split level. Tele-loto is by the far largest game of Olifeja, it makes up 75% of the sales of Olifeja. The Keno loto and split-level follow with each 9 percent. The remainder is divided among the smaller games.

The total sales in 1999 were 99,500,000 LTL or about 36.815.000 US Dollar.

More information on Olifeja can be found in chapter 4.1.

Zalgirio Loto

Website: http://www.lotoz.lt

A lottery organizer that isn't that well known, more by the games they organize. It also reported a loss in the first half of 2003 of 52.000 LTL.

Fortuna Baltica

Fortuna Baltica is the smallest of the three. Fortuna too had a huge cut in profits. It went down with 37% to 70.900 LTL in 2002

4.1 Olifeja

The Ministry of Finance regulates the Olifeja lottery. All profits from Olifeja are distributed between the Olympic Committee and the Olympic Foundation of Lithuania.

The revenue from the Olifeja Lottery is used to help the Lithuanian Olympic Committee participating in the Olympic Games. It also provides funding for sport clubs and sport programs in Lithuania.

The present law in Lithuania does not provide for the creation of a gaming monopoly. Any correctly registered Lithuanian company may apply for a license to operate a lottery. There are currently four organizations that market instant games in Lithuania.

A special note about Olifeja is that it is the only organization with a license to operate an online lottery.

Olifeja was established in 1992. In that year it started distributing lottery ticket sales a type envelope.

Early in 1993, Olifeja initiated instant tickets sales sold in the typical Western style. This single instant game sold approximately 1 million tickets in a 12-month period. Unfortunately, the game variant was not successful in Lithuania for many reasons. The major reason was that the tickets were sold for a hard currency at too high a price for the Lithuanian economy. In addition, Lithuania had several currency changes during this period.

During the period 1993 to 1995, Olifeja extended its activities to a multiple game strategy. It also reorganized its marketing department and sales division by dividing the country into 11 regions. Offices were established and regional managers were hired.

Previously, instant tickets were only sold from automobiles. The majority of the new points of sale are now the more traditional Western-style retailers. Such as kiosk, banks, post offices and retail stores.

In June 1995, Olifeja launched a computerized online network in cooperation with GTECH Corporation. (www.gtech.com) The lottery currently has 820 retailers equipped with online terminals.

4.2 Tete-a-Tete

According to local news sources Lithuanian-owned gaming operator Tete-a-Tete is set to open three gaming machine halls with unlimited jackpots.

The Lithuanian State Gaming Control Commission said it issued permission for the opening of the three halls with a total of 82 gaming machines offering unlimited winnings in November 2003.

Tete-a-Tete has plans to set up another six to eight gaming machine halls with unlimited jackpots in 2004. A new casino is to open its doors in Kaunas, Lithuania's second-biggest city, February 2004.

Source: Baltic News Service.

4.3 Lithuania First Bingo Hall

Lithuania's bookmaking company Orakulas has pledged to open the first bingo hall in the country in Lithuania's capital Vilnius by the end of August 2003.

The company had already approached the State Gambling Supervisory Authority over the opening of the bingo hall, Vytautas Mieliauskas, Orakulas Director, said. The hall opened its doors on August 30 2003.

Orakulas operates 12 betting centers in several Lithuanian cities and towns.

Source: Baltic News Service.

4.4 Lithuanian lottery revenue overview

In 1999 total lottery sales spending was 25 million US Dollar, while the spending per capita was around 7 US Dollars.

Lithuanian lottery operators boosted their net earnings by 29.7% in the first six months of 2003 as reported by the country's Finance Ministry.

Olifeja, the country's leading lottery operator, raised its first-half net profit by 18.3%, year-on-year, to 970,000 litas, but revenues for the six-month period dropped by 2.2% to 43.02 million litas.

Zalgirio Loto posted a loss of 52,000 litas for the January-through-June period, although revenues increased almost threefold to 5.847 million litas.

Fortuna Baltica had a first-half profit of 70,900 litas, a 37.2% decline year-onyear.

The lottery operators paid out 24.7 million litas in prizes during the six months, down by 1.3% on the same time last year.

Aggregate revenues of Lithuania's lottery operators fell by 3% to 96.312 million litas in 2002 compared to 2001. Olifeja posted a net profit of 2.22 million litas for the year. Fortuna Baltica made a profit of 117,000 litas, while Zalgirio Loto suffered a loss of 718,000 litas.

The lottery organizers paid out a total of 48.051 million litas in cash and non-cash prizes last year.

4.5 Casino and bookmaking revenues

Lithuania's residents have lost 16.053 million litas (EUR 4.6 million) in their domestic casinos and gaming venues in the first half of 2003.

The Lithuanian State Gaming Control Commission reported that government revenue derived from gambling for the period January-to-June period of 2003, amounted to 64.421 million litas.

Winnings paid out during the reporting period came in at 48.368 million litas.

Baltic News Service reported that of that amount 7.19 million litas was lost in the casinos and gaming machine establishments operated by Olympic Casino Group Baltija.

Revenues on gaming by Olympic Casino Group Baltija totaled 24.651 million litas with winnings standing at 17.461 million litas in the first six months of 2003.

Casino Planet, the operator of two gambling venues, raised 16.054 million litas in revenues and paid out 12.301 million litas in winnings.

Revenues of Nese, Klaipeda operator of a casino and a gaming machine hall, reached 7.02 million litas, whereas winnings paid out by the operator totaled 4.9 million litas.

Top Sport, the leading book-making company, raised 2.221 million litas in revenues and paid out 1.397 million litas in winnings. Revenues of the rivaling bookmaker Orakulas came in at 39,551 litas, while winnings paid out by the company reached 31,997 litas.

Lydia Ludic, the gambling organizer, operating gaming machines of unlimited jackpot, raised 1.462 million litas in revenues and paid out winning in the amount of 1.285 million litas. The rivaling Jokey Club generated 474,450 litas in revenues and paid out 355,450 litas in winnings.

Source: Baltic News Service

4.6 Hard times for Lithuanian gambling

Olympic Casino Group Baltija, the Estonian-owned company that opened Lithuania's first legal gambling establishment in early 2002, closed down two unlimited pay-out slot-machine halls in Vilnius on Monday.

The halls were closed as the amendments to Lithuania's Gaming Law, which allow operating slot machines with unlimited jackpots only in casinos, took effect on September 1 2003.

"The one-year period that was given for re-organization of gaming machine halls was too short for us. The company's plans to invest in Lithuania's gambling industry were based on the original version of thegaming law, and it did not expect that thelaw, which has now been amended 11times, would wreck its business plans,"Giedrius Sakalauskas, CEO of OlympicCasino Group Baltija, was quoted as saying in a statement.

Olympic Casino Group Baltija invested 5.8million litas (EUR 1.681 million) in the twoslot machine halls with unlimited jackpots, which it opened in early 2002.

Olympic Casino Group Baltija also owns two casinos with a total of 26 gambling tables and 155 unlimited payout machines in Vilnius. The company made a profit of 602,000 litas on revenues of 6.373 million litas from its Lithuanian opera-tions last year.

Source: Baltic News Service.