The Israeli Penal Law (“the Law“) places a blanket prohibition on gambling activities, including all forms of lotteries, games of chance and betting – with three main exceptions. These exceptions are in the form of a national lottery monopoly, national sports betting operator and purely social gaming. These exceptions are regulated as follows:
Mifal Hapayis (the National Lottery) – the Israeli National Lottery offers scratch cards, weekly subscription lottery and other lotteries and raffle products. The operations of Mifal Hapayis are supervised and regulated by the Ministry of Finance.
Israel Sports Betting Board (ISBB) – under the Law for the Regularisation of Sports Betting 5727-1967, the ISBB has the exclusive right to organise and regulate sports betting in Israel.
Social Gaming – Israeli law states that the prohibition on gambling does not apply “to a game, lottery or betting that meets the following three conditions: (1) its conduct is intended for a certain circle of persons; (2) it does not exceed the scope of amusement or entertainment; and (3) it is not held in a place of prohibited games or a place for the conduct of lotteries or betting”.
Within the Israeli Penal Law, there are several provisions that relate to the definition of gambling activity. Chapter Twelve of the Law, titled “Prohibited Games, Lotteries and Betting”, sets out a prohibition on organising “lotteries, betting and prohibited games” (section 225) and a prohibition on “participating in prohibited games” (section 226).
The Law defines these terms as follows:
“Prohibited game” – a game at which a person may win money, money’s worth or a benefit according to the results of the game, such results depending more on chance than on understanding or ability;
“Place of prohibited games” – premises in which prohibited games are habitually conducted, whether such premises are open to the public or to certain persons only; and it is immaterial whether such premises are occupied also for some other purpose;
“Lottery” – any arrangement under which it is possible – by drawing lots or otherwise – to win money, money’s worth or a benefit, winning depending more on chance than on understanding or ability; and
“Betting” – any arrangement under which it is possible to win money, money’s worth or a benefit, winning depending on the guessing of something; it includes a lottery connected with the results of sports matches and contests.
As we can see, Israeli Law defines three separate categories of gambling. The way in which these are defined however, is extremely broad – and the three categories in practice cover all forms of gambling. The three definitions are so broad that they also overlap – resulting in certain types of gambling activity falling under more than one category at a time.
Case law in Israel saw courts recognising, amongst others, the following as constituting gambling under Chapter Twelve of the Law: casino games; roulette; bingo; betting; slot machines; lotteries; and sports betting.
In addition, case law in Israel saw the introduction of the “predominance test” to the process of assessing whether an activity qualifies to be a gambling activity. Israeli courts have established that in order to determine whether a game is to be perceived as “based on chance more than understanding or ability”, the predominance test will be applied, assessing whether the predominant element in determining the outcome of the game is skill, or rather chance.
In a ruling from 2011 dealing with the assessment and definition of “betting”, the District Court of Tel-Aviv determined that where a particular activity combines both elements of skill and chance, the “social interest and utility” of the game in question need also to be taken into account when determining its classification and overall legality (Class Action (Tel Aviv) 30284-01-10 Simon Davush v Connective Group Ltd.).
Finally, it is important to note that even though the provisions of the Law do not explicitly make reference to online gambling, online gambling is considered to be illegal to the same extent as terrestrial gambling. Israeli court decisions as well as the official views expressed by various government bodies and agencies (including the Ministry of Justice, the State Comptroller, the Israel Police etc.) have clarified that the definitions and prohibitions set out in the law regarding gambling apply just the same to online gambling (see, for example, Special Requests, (Tel Aviv) 908617/07 Carlton v The National Unit for the Investigation of Fraud, Special Requests (Jerusalem) 1153/02 The State of Israel v Aberg’il and Annual Report 61B for the Year 2010 and the Accounting Year 2009, Jerusalem May 2011, Chapter 3 at p. 357, published by the State Comptroller and Ombudsman of Israel).
The Israeli Supreme Court had even ruled that enforcement should be stricter when directed against illegal online gambling activities, as online activities pose a greater degree of risk to the social interest (see, for example: Criminal Appeal (Supreme Court) 6889/11 The State of Israel v Eliran Oved); Administrative Appeal (Supreme Court) 3782/12 The Commander of the Tel Aviv-Jaffa District Israel Police Israel v The Israel Internet Association; and Special Criminal Appeal (Supreme Court) 7064/12 Or Pando v The State of Israel).