ISRAEL Law and Practice Contributed by: Liran Barak, Herzog Fox & Neeman
1. Introduction 1.1 Current Outlook and Recent Changes Israel has consistently maintained a highly conserva- tive stance toward gambling. This stems from a com- bination of religious and socialist values, resulting in a comprehensive prohibition on both land-based and online gambling services within the country. Legislation pertaining to gambling in Israel has remained largely unchanged in recent years. The Israeli Penal Law 5737-1977 (the “Penal Law”) sets a fairly broad prohibition in this regard – criminalising the organisation of most gambling activities, as well as participation in certain forms of gambling. The only gambling services allowed in Israel are those offered by the National Lottery ( Mifal HaPais ), as well as sports-betting services offered by a state-owned body – the Israel Sports Betting Board (ISBB) (Toto Winner). An additional, very narrow exemption from the general ban on gambling provides for gambling activities that are purely social in nature. The Israeli courts have also had a role in shaping the gambling-related regulatory regime in Israel. One prime example is the way the courts have broadened the scope of the prohibitions set out in the Penal Law by ruling that online gambling and betting being made available to Israeli consumers would violate Israeli law (notwithstanding the fact that the Penal Law pre-dates the internet). The Bank of Israel has placed a prohibition on Israeli financial institutions transmitting funds related to gambling activities. Israel’s State Comptroller has made calls in the past on Israeli authorities to take action to restrict the avail- ability of internet gambling in Israel. The Israeli police have also taken enforcement action against online gaming (focusing primarily, but not exclusively, on operations with an Israeli nexus), including by way of website blocking.
To summarise, the authorities in Israel are proactively working to uphold the overall gambling ban, both in the offline and online realms. In December 2022, a private member’s bill was intro- duced to the Israeli Parliament aimed at regulating real-money poker tournaments. Under the proposed bill, certain types of games, under certain circum- stances and subject to a permit issued by the Minis- try of Finance, would be excluded from the definition of a “prohibited game”. The bill is currently awaiting a decision by Parliament as to whether it should be removed from the legislative agenda or sent to the relevant House Committee for preparation for a first reading. Expected Developments in the Gaming Sector in Israel When it comes to expected sector developments, Isra- el’s notably conservative approach towards gambling makes it unlikely that a liberalisation of the market will be witnessed soon. Further restriction of the market remains a more plausible scenario; for example, by way of the introduction of new bills aimed to further curtail the availability of online gambling. Another likely development would be increasing enforcement action taken against illegal gambling by the police and the Attorney General’s office, by use of ISP blocking orders or otherwise. Further restrictions on the activities of the National Lottery and the ISBB by Israeli authorities can also probably be expected, as well as restrictions being placed on promotional draws in general. Positive Steps Being Taken There have been positive developments for the gam- bling sector in Israel, albeit few in number and limited in scope. One such development was the introduction of a private member’s bill to the Israeli Parliament (the Knesset) in November 2021, aimed at regulating real- money poker tournaments. Another, more significant, development, also relat- ed to the legal classification of the game of poker, came from the side of the courts. In late 2018, the Supreme Court of Israel handed down a decision in a case regarding tax liability over winnings generated
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