The new battle

The regulatory landscape of the EU is changing and there is an undeniable shift away from a single market approach. The blame for this primarily lies at the feet of the European Commission, which has adopted a strategy of allowing EU member states to close their borders as long as they have regulatory regimes in place that allow companies from other EU jurisdictions to apply for licences.

In a nutshell, it has adopted a policy that waives the protections that should be provided by the EU freedom to provide services (which is the cornerstone of the internal market), but which instead stands behind the EU freedoms of establishment as an alternative way for companies to gain access to markets.

The much anticipated EC Green Paper on online gambling will consider these and other issues when it is published. It will command a great deal of respect because, taken with the responses made and the associated public debate, it will set the agenda for how the subject will be approached at EU level for many years to come.

And ‘years’ is the key word in that sentence. It must be remembered that a Green Paper is no more than a discussion document that will pose a number of questions. As with all exercises of this kind, some of the questions might be weighted towards a particular position, but there will be no proposals. Those, if they ever come, would probably appear in a White Paper and any concrete action would follow beyond that. If you are looking for a safe bet, it is that this will not happen quickly.

By the time action is taken at EU level, the picture at member state level will have changed dramatically from where we are today. The EC has already cited the Green Paper process as the reason for parking the many outstanding gambling infringement cases against various member states. There is a real fear that those cases will be left in limbo for much longer or even cancelled. This would be a retrograde step that would remove one of the main drivers for fair and proper change in many member states.

Despite that, there is now a momentum for change across Europe. In some instances, like France, this was under pressure from the EU, but increasingly there is a move towards licensing because prohibition does not work and, during a period of recession, some countries (such as Greece) need additional sources of revenue.

The key is to make the most of the situation and not spend too long mourning what might have been. We need to mitigate the negatives, such as potential duplication of infrastructure and regulation, as much as possible. We also need to ensure that when jurisdictions are considering licensing regimes that they take heed of the models that work and discard those that do not. This, for instance, is where getting the right tax regime (by which we mean one based on gross profits rather than turnover) becomes critical.

Every jurisdiction has a different starting position depending on its culture, its existing experience of controlling gambling and whatever policy objective it is seeking to achieve. As a result, we will have to deal with differing regulations. However, common standards will emerge in many areas.

As with all forms of harmonisation, this is great as long as the right regulatory approach becomes the norm. If it is the wrong approach, then harmonisation would be the worst possible outcome. Everyone in the industry needs to push, pull or do whatever it takes to make sure that regulators go down the right road. Places such as Denmark, Spain, the UK and Italy are heading in the right direction. Those like France and Belgium will crash and burn unless they do a smart U-turn. Many others, like Greece and Germany, could still go either way. It’s all still to play for.

This article appears in the forthcoming issue of eGaming Review. For a free trial subscription, click here.