By Jana Sedlakova
The European Commission (‘the Commission’) set out the action plan for online gambling at the end of last month [23 October]. This follows on from July when Internal Market and Services Commissioner Michel Barnier called for action and to promote a set of common principles that the gambling industry in the European Union (‘EU’) would be governed upon.

As the EU online gambling laws are highly varied with a bias towards ring fenced models, there is also the matter of free movement of services that causes so much debate. National legislators are allowed to protect their public interests and thus restrict the services. ‘EU wide legislation’ is not supported in the action plan, but a “set of actions and common principles on protection” is proposed.
“Any EU law intervention has had to rely on the so-called “fundamental freedoms” of the EU Treaty, i.e. that national gambling legislation infringes either Articles 49 and/or 56 of the Treaty by imposing unjustifiable restrictions on the freedom of establishment of nationals of one Member State in the territory of another or imposing unjustified restrictions on the freedom to provide services throughout the EU. 

However, the Treaty does permit restrictions on the basis of legitimate public interest objectives of the Member State concerned. Much of the legal controversy has turned on where one draws the line between a country’s legitimate concerns to protect its consumers against, for example, problem gambling and the unjustified use of public interest objectives as a disguised means of maximising tax revenues and protecting national, often State-owned, monopolies.” [David Zeffman, Partner at Oslwang in “The Commission unveils its action plan for online gambling regulation – A small swing back on the pendulum” 24 October 2012] 
Further to this, “…any restriction or limit on the freedom to provide services (Article 56) and the freedom of establishment (Article 49), as enshrined in the Treaty on the Functioning of the European Union (“Treaty”), could amount to an infringement of the Treaty if the national legislator fails to fulfill the proportionality requirements developed by the European Court of Justice (“CJEU”) in gambling case law. Any justification depends on the Member State’s gambling policies and whether or not it could be argued that it conducts a coherent and systematic gambling policy.” [DLA Piper in “European Commission Publish Action Plan for Online Gambling” blog 24 October 2012] 
The Commission has acknowledged and emphasised that the online gambling industry is one that is growing. Also it has noted that it operates within a fast paced technology environment providing a range of services to millions of players taking part in some sort of online gambling. The highlight, however, was that there is a large number of unlicensed, or perhaps a better term would be unregulated operators or websites [“often from outside the EU”]. 
These represent significant threats to consumers [and to the public], can be a hub of criminal ‘underground’ activities.
Under the framework of the EU and its policies it can be difficult to deal with these complexities on a national level and even hard to imagine for it to so continue in this way. The fragmented regulatory environment in the EU calls for these measures and the objective of the plan to deal with this. The known risks to end users arising from the cross border nature of the services, particularly if unregulated, is one to be addressed. 
Therefore, maintaining the EU principle of subsidiarity, the action plan deals with the five priorities aiming to ensure customer protection: 
• “Compliance of national regulatory frameworks with EU law”; 
• “Enhancing administrative co-operation and efficient enforcement”; 
• “Protecting consumers and citizens, minors and vulnerable groups”; 
• “Preventing fraud and money laundering”; and 
• “Safeguarding the integrity of sports” 
Source: DLA Piper 
The action plan will be examined in two years and defines the initiatives. In the press release, Commissioner Barnier said: “Consumers, but more broadly all citizens must be adequately protected, money laundering and fraud must be prevented, sport must be safeguarded against betting-related match-fixing and national rules must comply with EU law. These are objectives of the plan we have adopted today.”
One may question whether tax revenues are not in fact a bigger impediment to the plan. Reading between the lines, it is the tax issues that stand behind the reluctance to open up one’s market. This makes it challenging to tackle the cross-border nature of the Internet when it comes to gambling.
An expert group will be established this year that would “facilitate exchanges of experience on regulation between Member States”. It says that it would be helpful in developing a “well-regulated, safer online gambling sector in the EU” and to move consumers towards regulated sites. The expert group is anticipated to meet first in December 2012. 
Then the Commission is expected to arrange a conference in 2013.
The Commission also recognises the requirement for increased protection of ‘vulnerable groups’ [“75% of EU citizens under the age of 17 use the Internet”]. This has been addressed by promoting technology development and in particular “better age-verification tools and content filters” as well as stressing the importance of responsible advertising and “increased parental awareness of the dangers associated with gambling”. 
The Commission also considers other vulnerable groups, in particular those already suffering from a problem with gambling such as addiction and other gambling related disorders. Although it calls for more effective methods of treatment and prevention, it acknowledges that better insight is required to understand the underlying causes.
Understandably, the paper discusses fraud and money-laundering which has become one of the priorities. It is appreciated that from the nature of the industry itself fraud prevention is rather difficult, and that Member States are unable to “effectively apply anti-fraud mechanism”. 
Thus, it is stressed that member States should tackle this issue together. The trend towards national cooperation is not new in online gambling regulation and a lot of initiatives have already taken place to address this.
A similar approach is taken to tackling another issue, the integrity of sports. High level of cooperation is a prerequisite. The Commission will encourage “faster information exchange, whistle-blowing mechanisms, and overall cooperation at national and international level between stakeholders, operators, and regulators to preserve the integrity of sports, as well as better education and increased awareness of sportspeople.”
Three recommendations are listed to be adopted by the Commission to the Member States. “i) common protection of consumers, ii) responsible gambling advertising and iii) the prevention and fight against betting-related match-fixing.” Other discussion points include ” support to the benchmarking and testing of parental control tools; the extension of the scope of the anti-money laundering directive; and the promotion of international cooperation for the prevention of match-fixing.” 
A number of other potential action points include “to carry out surveys and data collection on gambling disorders; to promote the training of the judiciary on fraud and money laundering and to set up national contact points bringing together all actors involved in fighting match fixing.”
In the last part of the press release, the Commission has not left untouched the infringement issues and stated it will ask for an update information from all of the Member States taking part in the cases that are open since 2008. It will enquire about the development of national legislation in this regard. Requests will also be made to those states whom against complaints have been lodged. 
Clive Hawkswood, CEO at the Remote Gaming Association (‘RGA’), said in their press release [23 October] “We look forward to discussing the detail of these proposals, but in the main they appear to be worthy attempts to address the headline issues. In the longer term we hope that they will lead to greater regulatory consistency across the EU and bring an end to the completely fragmented market that has developed so far. We will continue to engage and work with the European Commission and other stakeholders so that governments and consumers can have confidence in the regulation of our industry. ”
It is equally important that the licensed private sector online gambling industry is treated fairly and in accordance with EU law. At the moment there are over 30 complaints against Member State laws and regulations that are apparently in breach of EU law. There has been no action since 2008 on a single complaint or infringement proceeding. The Commission’s credibility as guardian of the Treaty can only be guaranteed if it now proceeds with the rapid and substantive action that Commissioner Barnier has indicated will take place”. 

Source: European Commission Communication “Towards a comprehensive European framework for online gambling” Strasbourg, 23.10.2012