Operator News
Latvia – Tax on player winnings driving VIP players out of Latvia
By Phil - 29 October 2019
Latvia’s decision to increase gaming tax by taking a slice of customer winnings has prompted players to go elsewhere according to international operator Storm International, who opened its Shangri La Casino in Riga in November 2017.
According to officials at SL Casino Riga, Latvia is now less attractive to wealthy casino visitors from abroad. But as well as losing its international VIPs, the casino has lost regular customers to casinos in Belarus, Lithuania, Estonia, Russia and Georgia where customer winnings aren’t taxed.
SL Casino Riga opened its doors at the end of last year at the Grand Hotel Kempinski. Casino Director Andrei Ivankin said that in 2018, 130 employees worked at SL Casino. It paid about €2m to the state budget through licensing fees, gambling tax and income tax on individuals. Its business model was based on attracting around 50, mostly foreign guests, per day.
Mr. Ivankin said: “Our strategic advantage, the experience we have in attracting respectable players by providing them with the necessary services, has been undermined by changes in the tax on winnings. In some developed countries, such as the USA, a similar tax does exist, but, firstly, it applies only to US residents, and secondly, the tax is not imposed on every win, it is calculated for a specific reporting period, for example a whole year. Guests at the casino not only win, but also lose. Therefore, it is logical to withhold tax from individuals not from any specific winnings, but from the net income from gambling over a certain period of time.”
As soon as the new tax system was introduced in Latvia, the casino management at SL Casino Riga noticed the negative affect on the number of foreign players visiting Latvia for recreation and entertainment. This then has a knock-on effect on other fields of tourism, recreation and entertainment with less money being spent on transport, hotels, restaurants, clubs, retail stores and other travel-related companies. Perhaps most pertinently to the government there is also less tax revenue.
Founded by Michael Bottcher in 1992, the Storm International Group has gained experience managing numerous entertainment companies around the world, including Germany, Armenia, Mexico, Romania, Georgia, Belarus, Ukraine and Russia.
