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October 22, 2012

EC Set to Unveil Framework for Online Gaming Across Europe

By: Ifrah Law

On October 23, 2012, the European Commission will unveil a series of initiatives and actions that it plans to put into effect relating to online gaming with the overall goal of providing a better framework for online gambling services in the European Union.

One of the main problems that the European Commission is facing is the differences in rules and regulations among member nations governing online gambling. Currently, no EU legislation specifically applies to the online gambling industry, which generated $13.7 billion in earnings in the EU in 2010.

Sigrid Ligne, Secretary General of the European Gaming and Betting Association (EGBA), which represents companies offering online betting games, has said that this is an excellent opportunity for Europe as a whole to offer strong consumer protection in the gaming arena.

Ligne has said, “We deplore the situation today where we see 27 ‘mini-markets’ for gambling in Europe. We are calling for the introduction of European rules to ensure proper protection for consumers and maintain a crime-free environment throughout the EU, while affording open, fair, and transparent licensing conditions for EU-regulated operators.”

Private online gambling operators have expressed frustration with the EC for not forcing member states to open their online gambling markets. According to EU treaties, any business should be able to sell products and services in the EU countries as easily as it does in its own local market. The EGBA has accused the Commission of “failing in its role as guardian of the treaties” by not requiring member states to apply EU treaty rules in the online gambling sector.

Several European national governments, however, have opposed broader EU legislation because they want to protect betting monopolies that generate significant revenues for the state. The EGBA was hoping that the Commission would develop model legislation for its member states, but the Commission stated in June that it would only be developing an action plan at this stage, despite demands from the European Parliament for legislation. The action plan is expected to set out the Commission’s plan in the areas of consumer protection, fraud prevention and sporting integrity. The Commission could still develop legislative proposals in the future.

The EGBA has announced that it will file a complaint against Germany in the near future because its gambling law does not meet the criteria set forth by the EU Court of Justice or the concerns that the Commission raised. The EGBA has said the Germany’s procedure for granting licenses has led to the exclusion of non-German operators in violation of EU treaty rules. The law, which was ratified by 15 of the 16 German states in June, will only allow a limited number of sports-betting licenses and does not allow for online poker licenses. The Commission had been critical of Germany’s gambling law in the past, but gave Germany some time to test the rules before it intervened.

The EGBA is also challenging the Belgian gaming law that has been in place since January 2012, which it argues is an “opaque and protectionist system.” The EC has yet to rule on the challenge.

Time will tell what the European Union action plan will look like, but we think the European Union should strive for universal legislation across states. Universal legislation will allow for greater quality and consistency in games offered to consumers and allow for gaming operators to be more efficient in the delivery of their product by only having to focus on one set of regulations.