Gambling laws coming to a head
On 18 July2011 the European Commission (EC) issued a detailed opinion on the proposed gambling laws submitted by Germany and basically reiterated what everyone in the industry knew – that it did not conform to EU law. It is likely that the EC saw straight through the intentions of those who wrote the gaming law: protect state owned gambling operators at all cost. The EC gave Germany a month to modify the legislation before it starts infringement proceedings.
The EC’ reaction to the German national gambling laws is particularly striking when compared to the favourable opinion it earlier gave to the draft gaming laws presented by the German state of Schleswig-Holstein. The small northern state was unhappy at the legislation drafted by the other states and has threatened to go alone if the national gambling law is not rendered more liberal. It drafted its own gambling laws that were widely praised by operators. This opens up the interesting possibility that German states could eventually end up with different gambling laws in competition with each other.
Another state that has run into trouble with the EC is Greece. Greek legislators would also like to protect the state owned gambling monopoly OPAP from foreign operators. The EC told the Greek government that the requirement for operators to have a bank guarantee from a bank based in Greece, for operators to be based in Greece, and the peculiar requirement to limit financial transfers to local banks infringed European legislation. Amazingly, many Greek legislators even thought that the gaming laws presented to the EC were too liberal and convinced the government to make the legislation more restrictive. By the way it drafts its gambling laws, Greece does not give the appearance a country in dire financial straits that is in a hurry to start cashing in from gambling licence fees and taxes.
Romania and Bulgaria are also struggling to produce acceptable gambling laws and they too are addicted to protectionism. Bulgaria’ draft gaming laws have been rejected twice by the EC. Contentious issues in the Bulgarian draft include that applicants for a licence must have five years’ experience in the Bulgarian market, must use Bulgarian banks (what is it with this idiosyncratic obsession in using local banks?) and an unbelievable full ban on gambling adverts. Bulgaria has been given until the end of July 2011 to comply.
Romanian gambling laws are not faring much better than Bulgaria’. The first draft was rejected by the EC in October 2010 but Romania went ahead and implemented the gaming laws anyways. Provisions that the EC questioned included the requirement of operators to be based in Romania and the requirement to be involved with a Romanian land based gambling company. The provisions that the EC rejected were not removed from the second submission, so it will not have come a surprise to the Romanian government that in March the EC has rebuffed their gambling laws for a second time.
Denmark is ahead of the Eastern European countries in setting up a regulated gambling framework. Danish authorities initially planned to have their gaming laws in place and market opened by January 2011 but had to postpone as land-based casino operators objected to paying higher gambling tax than online operators and filed a complaint with the EC. The Danish government contends that the two are separate and non-comparable markets. It is not clear when the EC will rule on the issue, but if the ruling is in favour of the Danish government the enactment of the gambling laws should soon follow. However, if the Danish government loses the argument, it is back to the drawing board.
However, it is not all doom and gloom. The comprehensive primary gambling laws in Spain received the go ahead by the EU and passed all legislative hurdles. Now operators are just waiting for the secondary gaming laws to be enacted and the new Spanish regulator should start issuing licences by the end of this year.
But further liberalisation is not limited to only Europe. In the US even though a federal online gaming law is unlikely in the near future, many states, including California, New Jersey, Washington and Florida, are working to enact their own gambling laws.
In South Africa, a commission set up by the government recommended the legalisation of online gambling and further liberalisation of betting regulation, particularly horse racing.
But the ultimate prize for the gambling industry would be the liberalisation of Chinese gambling laws, but we have to wait a bit longer for that.