Things Looking Brighter on the European Regulatory Scene

27 May 2008

The EU States are lightening their opinion on competition and online gambling. That makes eCOGRA even more important. Here is a commentary from the CEO of eCOGRA Andrew Beveridge.

The year 2008 could prove a watershed for the online gambling industry, as pressure from leading betting companies prepared to litigate against state monopolies, and the compliance efforts of the European Commission start to create a persuasive climate for liberalisation.

The EU’s compliance arm currently has investigations against 10 of the 27 member states in progress and appears prepared to take recalcitrant governments to the European Court of Justice if required, where case precedents suggest an outcome may be favourable to the concept of free movement of goods and services between member nations.

Now, more than ever before it is important that eCOGRA accredited operators adhere to the eGAPs that have taken so much international expert input and effort to construct, providing a set of best practice standards across the operational spectrum that will meet the scrutiny of the most discerning jurisdictions.

The regular FGA quarterly dispute reports indicate strongly that the eGAPs are effective, with the average number of disputes per venue per month at very low levels unheard of elsewhere.

There is cause for optimism as the liberalisation of European markets unfolds.

Last year the Italian government executed a brisk about-turn on its anti-online gambling policies, instead introducing a draft licensing and regulatory system that is being steadily refined as both land and online possibilities are realised. Spain followed towards the end of the year, allowing its autonomous provinces to introduce individual licensing regimes.

This year we have seen firm indications from the French political leadership that the bad old days of PMU and Francaise des Jeux exclusivity may be numbered as prime minister Francois Fillon’s office studies a detailed report compiled by former MP Bruno Durieux, and mulls over ways to bring the country into compliance with European Commission requirements. Three possibilities exist: issuing licenses limiting online betting to sporting events; permitting betting on card games or licensing all games except lotteries.

The new rules will open the market, and Patrick Partouche, head of the Partouche land casino group, welcomed the possibility last month. His company already has an interactive gambling division.

Although the German states remain recalcitrant, bwin has triumphed in important litigation, and given the changes in train by other leading EU members and the threat of European Court of Justice appearances, there is room for reconsideration there, too.

Taking most industry people by surprise, one German state – Lower Saxony – will soon have an online casino operation up and running in partnership with Chartwell Technology, a significant breakthrough. Spielbanken Niedersachsen GmbH (SNG), the exclusive Lower Saxony state licensed and regulated casino operator, has already signed up for an online gaming system from Chartwell.

Finland and Norway are proving equally resistant to change, but neighbouring Denmark has in recent weeks signalled a radical rethink, with minister of taxation Kristian Jensen studying a regulatory regime that will likely moderate the aggressive and lucrative monopoly for so long held by Danske Spil.

Minister Jensen is quoted as saying: ”That’s (licensing and regulation) a possible situation, if the foreign bookmakers can live up to the strict regulations we have (in mind) for those who want to offer legal gambling in Denmark. I do not wish any Wild West situation. I want a regulated market.”

In Poland the Deputy Minister of Finance, Marek Kapica has made a public statement that his country plans to regulate and license online gambling as early as the second half of 2008. Minister Kapica told Polish media that the government was being pragmatic on the issue, saying: “We cannot control this process anyway and it is better that the budget at least derives some revenues from it.”

Kapica’s ministry is apparently drafting legislation to introduce a regulatory regime, and this will be sent to the European Commission to ensure that it meets EU requirements for the free passage of goods and services between EU member states as required in the trading bloc’s treaty.

In the Netherlands the fight goes on between De Lotto and large betting companies that have challenged its state monopoly over Dutch gambling. Whilst the local courts have thus far favoured the monopoly, the Dutch are clearly feeling EC pressure, and the Senate refused to grant an exclusive online license to the state-owned Holland Casino earlier this year.

The Dutch are proving to be especially obdurate in hanging on to the lucrative monopoly concept, and recent news is that the government is actively considering an UIGEA-like intervention aimed at halting financial transactions with online gambling companies.

The latest court ruling is the 17th occasion on which Dutch judges have ruled against EU companies seeking to access the Dutch online gambling market, but the court acknowledged that the state is at odds with EU law on the issue and could find itself in a higher court.

In Greece, the OPAP monopoly has signalled its preparedness to enter discussions with the European Commission, an early but positive move that could lead to a more EU-compliant dispensation.

In South Africa the pace toward legalisation of online gambling continues to be agonisingly slow, but progress is being made, and a licensing and regulatory regime could be in place by 2009. Victor Chandler, bwin and other online gambling groups have already expressed an interest, according to media reports.

Across the pond, the American situation remains mired in a hodge podge of confusing federal and state laws and exceptions for certain types of online gambling that are clearly being protected (horseracing and state lotteries, for example). It is unlikely that online gambling will see true liberalisation there anytime soon, but despite that there have been encouraging moves to regulate and license.

Congressman Frank and 47 other members of Congress are pushing the IGREA which if eventually accepted would effectively overturn the UIGEA by introducing a licensing and regulatory system.

The UIGEA itself, still without supporting regulations some 18 months since being enacted, has been subjected to heavy media and congressional hearing attacks for its ambiguities and the impractical nature of expecting the financial services industry to enforce it for the government. Federal officials have admitted to difficulties in drafting the regulations, and last month Congressmen Frank and Paul launched HR 5767, which seeks to halt federal officials from further drafting.

Meanwhile, Florida Representative Wexler has a proposal seeking to exempt poker from the UIGEA on skill grounds, and Nevada Representative Shelley Berkely has called for an independent enquiry to study all the implications of online gambling, a concept the American Gaming Association has supported. And in California, another proposal going through state legislative processes is aimed at a state-wide study on legalising poker.

One question testing the minds of industry observers is how the drastic economic slowdown in the United States will influence both political and business thinking. When the UIGEA was signed into law, the US business was conservatively estimated at around $7 billion a year – a tempting source of extra revenues for American land businesses now feeling the pinch, and for possible tax generation for increasingly cash-strapped individual states. Only time will tell.

What is certain, though is that the global regulatory landscape is in a dynamic phase where some significant changes are likely, especially in Europe. The indications are sufficiently strong to warrant serious consideration by online gambling operators of their positioning in the industry, particularly with regard to superior and integrity driven operational standards and a commitment to professionalism, player protection and responsible gambling.

eCOGRA’s eGAP standards have been carefully crafted and continuously reviewed to achieve exactly that, and we believe that “Safe and Fair” seal operators who comply with eCOGRA’s requirements can meet most licensing conditions and inspections with confidence.

Make sure you check for the eCOGRA seal on the sites you play on! With their standards you are assured it is Safe and Fair!

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