Will protection of EU national interests stop the unstoppable?

By Jana Sedlakova
European institutions are cautious when it comes to harmonising online gambling rules. The recent European Betting and Gaming Association (EGBA) five point Manifesto has, in its opinion, outlined the bottom line for a level playing field in European online gaming. Lack of harmonised policy in the EU and the exclusion from the E-Commerce Directive has left the balance of power to the discretion of Member-states’ National Authorities. A growing number of debates and consultations affirm the vast problems that fragmentation means in relation to the Internal Market, taxation, free movement of goods and services and the breach of EU laws, not to mention consumer protection issues.

Magnus Silfverberg CEO at Betsson AB sees “keeping track of the legal development in 27 member states, maintaining compliance in 3 different EU jurisdictions now (Malta, Denmark, Italy) – soon probably more jurisdictions – and paying higher (and non harmonized) taxes in different jurisdictions” as the main challenges to the business. 

Sigrid Ligne, Secretary General at the EGBA, said “there is a growing acceptance that the online gambling sector is cross-border by nature and cannot continue to be regulated solely on a national basis. Commissioner Barnier, backed by the European Parliament, has played a key role in refuelling the EU debate on online gambling. So there is today a momentum in favour [of] an EU framework for online gambling with a focus in particular on the definition of common regulatory requirements and consumer protection standards. With the European Court drawing ever-clearer ‘red lines’ for national regulation, in particular when it comes to Germany and its turbulent gambling history, the European Commission has today also strong legal arguments to bring Member States to comply with EU law and cooperate on the development of a sustainable EU gambling policy.”
Online gambling remains by definition a highly political debate across Europe, hence the reluctance to confront Member-states whose approach to online gambling has arguably been in breach of EU laws. But does the sensitive nature of the topic justify the Commission’s failure to act upon such claims and, as Sigrid Ligne has stated, “indefinitely to delay its decision on a given infringement complaint on the grounds that it is unable to reach a political consensus on how to proceed”. 
As such, Commissioner Barnier is seeking to strengthen the role of the European Commission as the ‘Guardian of the Treaty’ in order to oversee adherence to EU jurisprudence by national authorities. As more cases end up at the European Court of Justice one would expect further confrontation between national and EU interests.
A further question remains as to what extent players will turn to unregulated or unlicensed services if the industry is restrained whilst demand is growing. Cross border cooperation is being encouraged for various reasons such as the widely mooted and politically acceptable notion of consumer protection. The potential contribution to public finances is less well publicised. The tax generation capacity of a growing and properly regulated pan-European online gambling market cannot be overlooked, particularly in these times of austerity.
A trade based argument for closer cross border cooperation, and perhaps regulatory unification, is that the EU market should be seen as a single entity. 
In its Interactive Gambling Report, Global Betting and Gaming Consultants calculates that Europe currently accounts for 40% of global internet gambling gross gaming yield. It seems clear, therefore, that there is some urgency for a unified European policy particularly with the prospect of US liberalisation which could potentially render the market leaders in the EU easy prey for larger US counterparties.
Although it is generally accepted that greater attention should be paid to problem gambling and consumer protection, harmonisation of the rules has raised yet another concern. That is whether it would actually mean a positive step forward. Mandy Barrie at Gamcare whilst welcoming the debate has added that “the trick is to ensure that adopting common standards doesn’t mean falling back on the lowest common denominator – this should be an opportunity to raise everyone’s standards, not lower them.” 
The statistics on problem gambling confirm that whilst the demand to play is increasing, so are its negative externalities. Mandy Barrie highlights “for the vast majority of people, gambling is an enjoyable leisure pursuit. The position in Great Britain, as noted in the last Gambling Commission prevalence survey, is that over half the population of GB had gambled in the past year and the figure increases to 73% including the National Lottery.” There are an estimated 450,000 problem gamblers in the UK.
Innovations and developments in technology are going some way to provide customer protection but there is a knowledge gap and perhaps the key challenge now will be to understand and further capture how technology can be best utilised to implement cooperation amongst Member-states and enhance consumer protection. Paradoxically consumer protection is in fact, one of the main premises for online gambling being left to the wills of national powers, and being exempted from the European E-Commerce Directive.
Following a Green Paper consultation and European Commission communication there are high expectations that progress will be made later this year. The Communication has identified the main challenges for mutual cooperation and existence of national laws within the Internal Market, and suggests measures to be adopted at Member-state and EU level. 
Although, as Magnus Silfverberg stated, implementing harmonised rules will be “very difficult, since the member states don’t seem to be interested in harmonisation regarding gambling”.
Businesses are no doubt keeping a close eye on the EU consultations. A multiplicity of legal regimes, the EU’s benign approach towards member states, and the political and economic turbulence of recent events across Europe from France, through to Holland and Greece yet again confirm that there is no such thing as business as usual. 
As a case in point, Magnus Silfverberg views Swedish jurisdiction rather pessimistically “I think Sweden (like all others) wants to regulate on its own, and don’t really care about EU cooperation in this area. Perhaps they might agree to standards regarding responsible gaming and technology requirements, if there are compulsory EU rules”.
It is yet to be seen how difficult harmonisation will be to adopt in practice whilst closer cooperation may be an easier pill to swallow. The fact that Member-states such as Sweden and Germany may find it hard to accommodate common rules, plus the drive towards consolidation, are both signs that we are at a pivotal point in the development of the industry; and regardless of the EU political drivers advances in technology and the scramble for market share, will continue. 

Read more about gambling regulatory issues in Europe in GBGC Global Gambling Report – Against The Odds and Interactive Gambling Report

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