Policy Roadmap Calls for Tougher Enforcement, Consumer Protection; No Specific Regulation—Yet

EU governments are in principle free to set their own policy objectives on games of chance and to define the level of protection they want, but national regulatory frameworks must comply with EU law and internal market rules, the EC said. Ensuring that national laws comply with the Treaty on the Functioning of the EU is a prerequisite of a successful policy on online gambling, it said. EU countries can’t address the challenges posed by Internet gambling alone, so the EC said it will set up an expert group on gambling, made up of representatives from member countries, to exchange good practices and advice on preparing EU gambling initiatives.

Many governments have reviewed their gambling legislation to take account of new forms of gambling services, the EC said. Those regulatory changes have led to the rollout of more services and considerable differences in national regulations, it said. In addition, cross-border operators, often not authorized under national rules in the receiving nation, have challenged the compliance of national legislation with EU law in the European Court of Justice (ECJ), it said. That court has given general guidance aimed at helping national courts assess when restrictive national gambling laws are justified on grounds related to the general interest, it said.

Countries may restrict or limit cross-border online gambling services on the basis of public interest objectives such as consumer protection, addiction, protection of minors and crime and fraud prevention, the EC said. But governments must show why restrictions are suitable and necessary, and that they are being pursued in a consistent and systematic manner, it said. The EC has gone after a significant number of EU members whose Internet gambling laws are deemed to infringe the treaty, but said it will now speed up its assessments in pending cases and take enforcement action wherever necessary.

Another arm of the action plan is to increase supervision, administrative cooperation and efficient enforcement, the EC said. It wants to boost dialogue among gambling regulators and explore the possibility of enforcement measures such as payment blocking and disabling website access at EU level, it said. The EC will also clarify the procedures for notifying and acting on unauthorized content hosted in the EU by online intermediaries. It urged national governments to set up competent regulatory authorities and decide how to tell consumers about available authorized online offers in order to drive demand to the legal market.

In the consumer protection arena, the EC said it will publish recommendations on protecting bettors and resolving gambling advertising issues next year, and support benchmarking and testing of parental control tools to improve age-rating and content classification systems. The EC will also assess recommendations on gambling-related Internet addiction among adolescents. It asked national authorities to do more awareness-raising of gambling-related risks and strengthen cooperation between gambling regulators and consumers groups.

To prevent fraud and money-laundering, the EC said it will consider extending the anti-money laundering directive, which now applies only to casinos, to all forms of gambling. The more frequent kind of gambling fraud is identity theft, which is part of the general challenge posed to online provision of services by cybercrime, the EC said. That could be addressed in the context of ongoing cybercrime policy discussions, the EC said. In addition, it promised to explore the possibility of an EU standard on gambling equipment, including software, in 2013. Finally, the EC said it will take several steps to stop betting-related match-fixing.

The proposals “appear to be worthy attempts to address the headline issues,” said Remote Gambling Association Chief Executive Clive Hawkswood. The RGA hopes they'll eventually lead to more regulatory consistency and end Europe’s completely fragmented market, he said. But it’s also important that the licensed private sector online gambling industry be treated fairly and in accordance with EU law, he said. There are more than 30 complaints pending against national laws and rules that are claimed to breach EU legislation, and the EC has done nothing about them since 2008, he said. The EC’s “credibility as guardian of the Treaty can only be guaranteed if it now proceeds” with rapid and substantive action, he said.

The decision to relaunch infringement proceedings “ends four years of legal and regulatory limbo,” said the European Gaming and Betting Association. EGBA expects “litigation at EU level to swiftly restore legal certainty for our sector in Europe,” said Secretary General Sigrid Ligné. EGBA also welcomed EC confirmation that legitimate gambling offers are key to keeping consumers away from unregulated sites, and its plan to cut red tape in the operator authorization process, she said. But she questioned how the EC, relying on “soft” rules rather than legislation, can “stop the rapid emergence of ‘27 mini markets’ in the EU,” referring to the 27 member states in the EU, and reverse the plethora of purely national licensing requirements.

As with many national government regulators, the EC focused on perceived harms such as problem and underage gambling and fraud, said Global Betting and Gambling Consultants Director Lorien Pilling. That’s understandable but fails to reflect the amount of work already done by e-gaming operators to verify customers’ identity, prevent problem gambling -- often less than 1 percent of the population -- and report fraud or suspicious betting patterns, he told us. But after more than a decade of legal battles in the ECJ, and regulatory uncertainty, Europe’s Internet gambling industry will be pleased that the EC has created a plan to clarify the rules over the next two years, he said: “It cannot happen soon enough.”