Gambling laws in Turkey
Authors
- Regulatory framework
-
Structuring and corporate governance
- Is a local presence necessary to run gambling activity?
- If yes, are there any mandatory legal forms of business for gambling companies?
- Can a local subsidiary be formed by foreign shareholders?
- Are there foreign investment restrictions?
- Are there any minimum requirements for a gambling company’s statutory capital?
- Can management include foreign individuals?
- Are there any mandatory reporting requirements (beyond tax) regarding a gambling company’s corporate governance matters?
-
Licensing
- Do local regulations set out a clear licensing framework for gambling (including the licensing process, criteria, submission requirements, licensing conditions and ongoing compliance requirements)?
- Is gambling licensing specific to:
- .1 Betting?
- .2 Sports?
- .3 Skill games?
- .4 Card Games?
- .5 Casinos?
- .6 Lotteries?
- .7 Arcades?
- Is the creation of video games for gambling by a software developer subject to gambling licensing?
- What is the term of a licence/permit?
- How long does it take to obtain a licence/permit?
- Is there any limit on the number of licences that can be granted?
- Are there any specific licensing requirements?
- Compliance
- Data Protection
-
Currency control and other cross border issues
- Are there any currency/exchange/finance controls at the present time to transfer cash out of and into the country?
- Where currency/exchange/finance or capital controls do exist:
- .1 What is the approval regime and process in place?
- .2 Must permission be sought for each transaction, or can pre-approvals take place (subject to defined limitation, or otherwise)?
- .3 Other comments
-
Marketing and advertising
- Is the advertising/marketing of gambling activity allowed in your country?
- Are there any advertising methods which cannot be used by gambling companies?
- Can gambling companies be sponsors of sports events?
- Is it allowed to involve celebrities to advertise gambling activities?
- Are there any CSR requirements for gambling companies?
- Are there any other restrictions/limitations on advertising gambling activities?
-
Tax
- Is there any specific tax regime for gambling companies?
- Is there a tax implication for transferring cash out of the country?
- Is there a tax implication for transferring cash into the country?
- Is there a tax implication for offering trading activities remotely in the country?
- Are there any other observations regarding the taxation of gambling activities (locally and remotely)?
1. Regulatory framework
1.1 Is there a Gambling Act (or equivalent) in place?
Yes.
Although providing a venue and opportunity for gambling is forbidden, subject to licensing requirements, various activities similar to gambling can be operated within the legal framework. Betting and games of luck are allowed and regulated by the Law on the Regulation of Betting and Chance Games in Football and other Sports Games.
Betting on horse races is allowed and regulated under the Law on Horse Racing. The fact that betting on horse races is regulated under its specific regulations differentiates it from other betting activities and it may be subject to other provisions.
1.2 Is online gambling a regulated activity?
Yes.
Under Article 228/3 of the TCC, it is forbidden to provide a venue and opportunity for gambling through using information systems.
Games of luck including tile-matching video games can be legally played online through the website of the National Lottery, which is exclusively operated by an authorised Turkish company (as further detailed under section 3.A below). Regulation on Online Games of Fortune forbids unlawful online operation of games of fortune. The Turkish National Lottery Administration reports any online gambling website and informs the Technologies and Communication Authority in order to block access to these websites.
Online betting and online horse betting are on the other hand regulated and allowed under the relevant regulations.
- Regulation on Mutual and Fixed Odds Betting on Sports Matches regulates online betting. Regulation on Mutual Betting on Horse Racing regulates online horse racing betting.
1.3 Are there any regulators?
Yes.
Turkish National Lottery Administration (the “Administration”), Turkish Spor Toto Organisation, Turkish Jockey Club.
1.4 Is there a regulatory regime related to advertising gambling?
Yes.
The Betting Law states that persons who encourage individuals, by advertising or any other means, to participate in fixed-odds or pari-mutuel betting based on sports events or games of chance, will be sentenced to imprisonment from one year to three years and punished with a judicial fine of up to three thousand days (i.e., up to TRY 1,500,000, approx. EUR 30,000). Regulation on Commercial Advertisements and Unfair Commercial Applications also prescribes that advertising for illegal betting and gambling is prohibited.
2. Structuring and corporate governance
2.1 Is a local presence necessary to run gambling activity?
Yes.
To operate games of luck, betting and betting on horse racing activities, a company established under the Turkish Commercial Code is required. To operate betting activities, Turkish companies can form a joint venture with foreign companies.
2.2 If yes, are there any mandatory legal forms of business for gambling companies?
Yes.
A joint stock company established in accordance with the Turkish Commercial Code is required to operate games of luck.
2.3 Can a local subsidiary be formed by foreign shareholders?
Yes.
2.4 Are there foreign investment restrictions?
No.
2.5 Are there any minimum requirements for a gambling company’s statutory capital?
Yes.
A company’s paid-up capital should be at least TRY 5 million (approx. EUR 100,000) to operate games of luck.
2.6 Can management include foreign individuals?
Yes.
2.7 Are there any mandatory reporting requirements (beyond tax) regarding a gambling company’s corporate governance matters?
Yes.
Companies operating games of luck should obtain the permission of the Administration for all changes to their shareholding structure. Any assignment of shares made without the permission of the Administration cannot be registered in the share ledger and is deemed invalid.
Companies operating betting activities should obtain permission from the Turkish Spor Toto Organisation for all changes to their shareholding structure.
Companies operating betting on horse racing activities should obtain permission from the Jockey Club of Turkey for all changes to their shareholding structure and assignment of shares.
3. Licensing
3.1 Do local regulations set out a clear licensing framework for gambling (including the licensing process, criteria, submission requirements, licensing conditions and ongoing compliance requirements)?
Yes.
A. Games of Luck
Under the privatisation of national lottery operation, a games of luck licence includes only the licence that transfers the rights to plan and organise games of luck, execute draws, install systems of games of luck, and operational activities. In 2017, the Administration transferred the licence to operate games of luck activities to the Turkey Wealth Fund for 49 years. The Turkey Wealth Fund is entitled to make agreements with third parties to operate games of luck. Turkish or foreign companies can participate the tenders arranged by the Turkey Wealth Fund to operate games of luck through a service procurement agreement. Currently, games of luck activities are operated exclusively by a Turkish company, which won the tender organised by the Fund. The Turkish company and the Fund have a ten-year agreement that entered into force in 2020.
B. Betting on Horse Racing
On 1 January 2018, the rights and authorisations to organise horse races in Turkey for 49 years, as well as to accept joint bets from Turkey and abroad on horse races organised both in Turkey and abroad, were transferred to the Turkish Sovereign Wealth Fund.
A licence to operate betting on horse racing activities through a bookmaker is obtained from the agents of the Turkish Jockey Club (the “TJK”). Bookmakers are required to provide cash security, either with a bank receipt or a bank guarantee. Furthermore, various Turkish companies have recently signed Online Bookmaker Agreements with the TJK, and these companies have started offering horse-race betting services on their websites as official online bookmakers of the TJK.
C. Betting
On 28 February 2019, a Turkish company (which is also the company referred to in paragraph A) took over the operation of “iddaa,” Turkey’s first and only fixed-odds sports betting game, under a 10-year contract with the Spor Toto Organisation. Licence applications to conduct betting activities through a bookmaker are submitted to this Turkish company via the channels provided by iddaa.
3.2 Is gambling licensing specific to:
Gambling licensing is only issued for betting, betting on horse racing, and games of luck.
3.2.1 Betting?
Yes.
3.2.2 Sports?
Yes.
3.2.3 Skill games?
N/A.
Forbidden.
3.2.4 Card Games?
N/A.
Forbidden.
3.2.5 Casinos?
N/A.
Forbidden.
3.2.6 Lotteries?
Yes.
3.2.7 Arcades?
N/A.
Forbidden.
3.3 Is the creation of video games for gambling by a software developer subject to gambling licensing?
N/A.
Forbidden.
3.4 What is the term of a licence/permit?
Yes.
Depends on the relevant activity.
3.5 How long does it take to obtain a licence/permit?
As games of luck can be operated if a tender is arranged by the Turkey Wealth Fund and betting on horse racing licences can be obtained if the Super Toto Organisation or Jockey Club of Turkey receives applications, no period of time can be estimated.
3.6 Is there any limit on the number of licences that can be granted?
This depends on the relevant activity.
3.7 Are there any specific licensing requirements?
Yes.
Games of luck, betting and betting on horse racing operators must comply with a wide range of requirements to obtain and maintain their licences. These requirements include, but are not limited to, a good reputation and lack of a criminal record of the operator and its directors and legal representatives; articles of association being limited to the activity addressed in the licence agreement; and a transparent corporation structure and organisation chart which will not prevent the Administration from supervising effectively.
To obtain a licence to have authorisation to operate betting activities in a workplace, a workplace opening and operation licence should be obtained and: (i) the individual operator must be a Turkish citizen; (ii) the legal entity operator must employ at least one employee to operate the activities.
4. Compliance
4.1 Are there any mandatory AML rules generally and for gambling industry specifically?
Yes.
Law No. 5549 on the Prevention of Laundering the Proceeds of Crime is the general framework AML legislation in Turkey, and it also applies to the gambling industry.
4.2 Are there any specific reporting obligations for gambling companies in terms of AML and data protection?
Yes.
Gambling operators have the same AML/data protection-related reporting obligations as all other reporting entities under the general legal framework.
5. Data Protection
5.1 Are there any specific Data Protection regulations in place?
Yes.
Law No. 6698 on the Protection of Personal Data is the general framework data protection legislation in Turkey, and it also applies to the gambling industry.
5.2 If yes, do they apply extra-territorially?
Yes.
Law No. 6698 on the Protection of Personal Data applies to all personal data processed in Turkey, and only has extraterritorial implementation regarding data transfers to and from Turkey.
5.3 Is there a Data Protection Regulator?
Yes.
The Personal Data Protection Authority (Kişisel Verileri Koruma Kurumu).
6. Currency control and other cross border issues
6.1 Are there any currency/exchange/finance controls at the present time to transfer cash out of and into the country?
Yes.
EUR 10,000 or more (or its equivalent in another currency) is the threshold at which an individual is required to declare the respective amount to the relevant customs directorates.
6.2 Where currency/exchange/finance or capital controls do exist:
In Turkey, while the prevention against foreign currency transactions is stipulated under Decree No.32 on the Protection of the Value of the Turkish Currency, the limitations on capital movements are regulated under the Capital Movements Circular. In addition, the Banking Regulation and Supervision Agency has enacted a decision regarding restrictions on commercial cash loans to be used by the companies depending on their foreign exchange assets.
6.2.1 What is the approval regime and process in place?
As per the Capital Movement Circular (the “Circular”), the disbursement of loans from abroad is subject to several limitations. To prevent disbursements against the provisions of the Circular, legal entities receiving transfers exceeding USD 50,000 in all foreign currencies and TRY 250,000 for Turkish Lira transfers should submit a declaration to the receiving bank stating whether the transfer is linked to a loan issued abroad. If the legal entity does not submit such declaration, the transfer will not be completed and will be returned.
6.2.2 Must permission be sought for each transaction, or can pre-approvals take place (subject to defined limitation, or otherwise)?
No.
6.2.3 Other comments
Turkey has introduced several new laws and amended existing ones due to hyperinflation and depreciation of the Turkish Lira. Likewise, new regulations can be expected if the current financial situation continues. Therefore, please contact your local counsel for further details on capital and foreign exchange controls in Turkey.
7. Marketing and advertising
7.1 Is the advertising/marketing of gambling activity allowed in your country?
Yes.
Betting Law states that persons who encourage individuals, by advertising or any other means, to participate in fixed-odds or pari-mutuel betting based on sports events or games of chance without being authorised by law, will be sentenced to imprisonment from one year to three years and punished with a judicial fine of up to three thousand days (i.e., up to TRY 1,500,000, approx. EUR 30,000). In the case of legal entities, security measures may be imposed, including confiscation of profits derived from the crime and cancellation of operating licences, if applicable.
7.2 Are there any advertising methods which cannot be used by gambling companies?
Yes.
The advertisement of both betting and games of luck activities should be in accordance with the Regulation on Commercial Advertisement and Unfair Commercial Applications, which imposes several restrictions.
A. Betting Activities
The Spor Toto Organisation Presidency should be informed of the advertising, and advertisements should not encourage people under the age of 18 to make bets and should not damage the moral values of society.
B. Games of Luck
Advertisements should not:
- mislead the public with incorrect information about winning terms, bonuses, or the cost of participation;
- be aimed at those under the age of 18 or at-risk groups;
- reflect games of luck as an alternative option instead of working or another way out of financial difficulties;
- mislead individuals as winning is based on factors other than luck;
- associate with addictive substances, gambling and similar games prohibited by law.
7.3 Can gambling companies be sponsors of sports events?
Yes.
7.4 Is it allowed to involve celebrities to advertise gambling activities?
Yes.
There is no prohibition against using celebrities in the marketing of gambling activities; however, advertisements should be in accordance with the Regulation on Commercial Advertisement and Unfair Commercial Applications and other restrictions mentioned in 7.2.
7.5 Are there any CSR requirements for gambling companies?
Yes.
There are no specific requirements, however companies should not encourage people under 18 years old to gamble and should not damage the moral values of society.
7.6 Are there any other restrictions/limitations on advertising gambling activities?
Yes.
See 7.2 above.
8. Tax
8.1 Is there any specific tax regime for gambling companies?
Yes.
Under the Law on Taxes, Funds and Public Charges Levied On Games of Luck revenues of games of luck, betting on horse races and betting activities are subject to the game of luck tax.
Mutual Odds Betting on Sports Tax. A monthly tax of 5% calculated on the total revenue.
Betting on Horse Racing Tax. A monthly tax of 7% calculated on the total revenue.
Games of Luck Tax. A monthly tax of 10% calculated on the total revenue.
8.2 Is there a tax implication for transferring cash out of the country?
No.
8.3 Is there a tax implication for transferring cash into the country?
Yes.
Depending on the type of payment.
8.4 Is there a tax implication for offering trading activities remotely in the country?
Yes.
The earnings and income of companies resulting from their activities in Turkey are taxed. These companies are classified as limited taxpayers.
8.5 Are there any other observations regarding the taxation of gambling activities (locally and remotely)?
No.
