The Latvian Parliament passed a law called “On Measures for the Prevention and Suppression of Threat to the State  and Its Consequences Due to the Spread of COVID-19”.

The law, with regard to its impact on the gaming industry, suspended land-based gaming operations with immediate effect, but was unclear and directly contradictory in terms of online gaming. Enlabs has since been awaiting clarifications from the licensing authority, the Latvian Gaming Authority, and has always been fully operational in Latvia.R

On April 5, 2020, an addition to the “On Measures for the Prevention and Suppression of Threat to the State and Its Consequences Due to the Spread of COVID-19” law was introduced, with no exceptions for online gambling. It is Enlab’s opinion that the Latvian Gaming Authority will officially issue all licensed operators an order to temporarily suspend all licenses for online gambling in the country. Until such an order gains enforcement, Enlab’s online business will remain open without risk of violating anything in the regulations. The temporary revocation of licenses will remain as long as the state permit issued by the Latvian government in the country, currently until 14 April 2020.

Enlab’s gaming operations originate in Latvia, which is an essential market for Enlabs, which is the market leader in the regulated market. Financial impact depends on the time factor, how long the recall will last. 

Approximately 50% of Enlab’s total costs are turnover-based and 50% comprise fixed costs, which will be minimized through a cost-saving program that is introduced immediately, and through the receipt of state aid. Enlabs believes that the company will be profitable even if operations in Latvia are shut down. Furthermore, the closure of both land-based and online games would put strong pressure on other players lacking geographical diversification. Enlabs believes that this can lead to consolidation in the market, which Enlabs will strive to take an active part in. Enlabs has a very strong financial position, and will in the long run probably benefit from the current turbulence. A large cash and no interest-bearing liabilities provide the conditions to overcome the challenge posed by the current global crisis, and be able to get out of the same both quickly and in a stronger position.

The operations in Estonia, Lithuania, Finland and the rest of the world are working according to plan and will continue to be given full focus. During a period of suspended license, Enlabs will conduct an important technical migration of operations conducted on Optibet.lv to its proprietary gaming platform. This will result in a significant improvement in the gaming experience and generally bring about radical operational changes, resulting in annual cost savings of around one million euros. An important part of Enlab’s commitment is to maintain an open and clear dialogue with the company’s Latvian customers, and to continuously inform about the development of the ongoing situation, technical development and keep our promise to return to an even better standard than before.

Enlab’s most important priority is to ensure that the workforce is intact and disposed of in the best possible way under current conditions.

Comment from President and CEO George Ustinov. We did not expect the political development we are now seeing in Latvia. Politicians around the world aim to protect their population from the consequences of Covid-19. The Latvian Parliament’s argument for introducing temporary suspension of online gaming licenses is to protect people who are financially at risk.

Our view is that this goal will not be achieved as a suspension of the regulated market will open the doors to illegal operators. Customers receive a completely different level of security and general protection in a regulated environment. Regardless, obvious logic does not apply in these times. We see a global risk that other countries may follow similar regulations unless the spread of the corona virus is suppressed. Our goal is to offer entertainment, in a safe and responsible way for our customers. The obviously harmful development for the country and its population, which we are now seeing in Latvia, will make it clear that the real threat to financially vulnerable people – are illegal actors that operate without a license and overall control by authorities. Our view that the combination of balanced regulation and protection of markets against unlicensed operators will gain clearer hearing after the Covid-19 crisis. 

What we now see, we regard as a temporary shutdown, which we do not see problems being able to get through. Our Latvian customers will see a heavily developed product, and I am absolutely convinced that we will see new levels ahead in our operations. Now, just keep working. This period will require even greater effort from all of us in the company, we will take care of each other and come out of this stronger than ever.