ISRAEL Law and Practice Contributed by: Liran Barak, Herzog Fox & Neeman
where such gambling activity takes place. Chapter 12 of the Penal Law defines the different types of activi- ties that constitute gambling and betting in Israel, divided into three categories: • prohibited game – a game at which a person may win money, money’s worth or a benefit accord- ing to the results of the game, with those results depending more on chance than on understanding or ability; • lottery – any arrangement under which it is pos- sible, by drawing lots or otherwise, to win money, money’s worth or a benefit, with winning depend- ing more on chance than on understanding or ability; and • betting – any arrangement under which it is possi- ble to win money, money’s worth or a benefit, with winning depending on the guessing of something (this includes a lottery connected with the results of sports matches and contests). The three definitions were made intentionally broad and, as a result, overlap somewhat in their implemen- tation. When looking at the Israeli legislature’s under- lying rationale in choosing the current wording, the main purpose was to differentiate between two types of activities: those that are defined by their underlying game’s predetermined rules (eg, prohibited games) and those that are based on arrangements agreed upon between parties (eg, lotteries and betting). While the Penal Law does not use the terms “games of chance” and “games of skill”, the legal definitions underlying the law’s three categories of gambling are based on the “predominance test” (as illustrated by the wording “depending more on chance than on understanding or ability”). This means that activities in which skill or knowledge outweigh the elements of chance or randomness in determining the final out- come will be excluded from the definition of “prohib- ited game” and “lottery” under Israeli law. The same predominance test is also consistently used by the courts when assessing the application of the prohibi- tions set out in the Penal Law. Adaptation of the Predominance Test The Israeli courts have also contributed to the adap- tation of the predominance test. In 2011, the district
court of Tel Aviv determined that, where a particu- lar betting game consisted of both skill and chance, the court must also take into account the “social interest and utility” of the game in determining the game’s legal standing – see Class Action (Tel Aviv) 30284-01-10 Simon Davush v Connective Group Ltd . In this specific case, the court rejected an expert opin- ion supporting the predominance of skill in determin- ing the outcome, and nonetheless concluded that the activity was a form of prohibited gaming. A further adaptation to the predominance test by a court took place in a 2017 ruling by the Tel Aviv mag- istrate’s court – see Criminal Case (Tel Aviv) 34939-07- 15 The State of Israel v Nir Lashowitz et al . In its ruling, the court expressed its view that in assessing whether the outcome of a game is predominated by chance or skill, the assessment has to be made in relation to an amateur playing only a single hand. While this ruling did not constitute a binding legal precedent, it served to demonstrate the restrictive view of Israeli courts towards gambling. Nonetheless, as mentioned in 1.1 Current Outlook and Recent Changes , the Supreme Court of Israel expressed its dissenting view on the issue in 2018, in obiter dictum. Prohibitions and Exemptions for Specific Gambling-Related Activities Given the foregoing, and while the matter has not yet been addressed by the Israeli courts, it appears likely that fantasy sports will be viewed as a form of prohib- ited gambling in Israel. Even though regulation allows true competitions of skill to be played for prizes, an activity that involves monetary prizes that is predi- cated on the outcome of an external sporting event (or events) is likely to be considered as betting by the courts, thus falling under the remit of the ISBB monopoly. Promotional draws and sweepstakes are under a blanket permit issued by the Ministry of Finance, conditional on these being free to enter. Promotional draws by commercial businesses are restricted to two draws per calendar year, and must be at least 120 days apart. Several other conditions (eg, over- sight by an accountant or a lawyer) also apply – see
213 CHAMBERS.COM
Powered by FlippingBook