Regulation vs. Better Harmonization Debated at Opening Parliamentary Talks on Internet Gambling

The only way to regulate online gambling is to have some harmonization in the European single market, said member Ashley Fox, of the European Conservatives and Reformists Group and the U.K., who is preparing the response to the EC proposal (WID Oct 24 p3) for lead committee IMCO. But any regulation must recognize the principle of subsidiarity as much as possible, he said.

Fox’s report, which will appear sometime next week, will address several areas, he said. One is compliance with EU law. Most legislators realize that there was a period of several years where the EC did little or nothing to enforce laws relating to online gambling, he said. It’s now more proactive but there’s still much to do. There should be more coordination among national regulators to, for example, set up a common system for identifying gamblers, he said. There should also be stronger laws on consumer protection and advertising of online gambling services, he said. Consumers should be able to set monetary limits on their gambling and exclude themselves from such sites, he said. Fox’s report will also discuss the possibility of a “Kitemark” code of conduct for gambling operators, money laundering and how to ensure the integrity of sport by ending match-fixing and other crimes, he said. A Kitemark is a British Standards Institution service quality certification, most often used to certify safety products.

Internet gambling raises sensitive issues because EU governments have chosen different approaches that must be respected, said Sirpa Pietikäinen, of the European People’s Party and Finland. The question is how to balance Internet gambling, an activity that’s inherently global as well as European, with EU members’ positions, she said. Gambling can’t be compared with other services in the internal market because its addictive nature must be closely monitored, she said. Parliament must focus on protecting consumers, minors and other vulnerable groups, she said. She suggested an identification system for each player, to see who is playing and where the money comes from and goes to. There should also be self-imposed gambling limits for consumers, after which they're blocked from continuing, she said. In the longer run, operators should be licensed in Europe rather than nationally, she said.

Pietikäinen said money laundering and other criminal acts appear to be more concentrated in the online world, a claim dismissed by Fox. Lawmakers must ensure that online gambling regimes don’t facilitate such activities, but don’t “go over the top,” he said. Internet gambling leaves an electronic trail and there’s little evidence that it plays a large role in such crimes, he said.

The Socialists and Democrats applaud the EC’s recognition of the need for “a step-by-step approach” that takes into account the policies of individual EU members, said Christel Schaldemose of Denmark, author of an earlier report on online gambling. She said she’s not yet willing to push for regulation but wants more coordination among national authorities. Internet gambling has a special nature which must be taken into account, and changes will take time, she said.

Addiction and money laundering can’t be solved on a national basis, said Jürgen Creutzmann, of Germany and the Alliance of Liberals and Democrats. Whether it’s called regulation or something else, what’s needed is a European solution, he said. The EC hasn’t been ambitious enough; its proposal makes no binding rules, he said.

The debate must be based on the fact that online gambling is a revolution compared to what’s been available in the past, said Mario Borghezio of Italy and the Europe of Freedom and Democracy Group. There were problems with offline gambling, too, but they could be monitored and regulated at the same time as authorities pursued illegal activities, he said. But now there’s a “global online gambling den” which, among other things, poses an enormous challenge to tax authorities, he said. Gambling operators in Italy, a country in financial crisis, had revenue of over 15 billion euros ($20 billion) in 2012, he said. Many operators are in tax havens where no one knows who’s behind them, he said. Policy must not only protect consumers but protect consumers from themselves, Borghezio said. He wants to control access to Internet gambling.

Lawmakers have to “mention the forbidden word, legislation” but only in the area of consumer protection, one member said. Governments wouldn’t dare oppose allowing people to exclude themselves from gambling websites, he said. Minors should be banned from gambling, another said.

Fox urged colleagues not to take a “moralistic view” and say gambling is wicked. Politicians shouldn’t look down their noses and “say ’tut, tut,'” he said. They should improve gambling offers for consumers while protecting them, he said.

The discussion “went pretty much as expected” with most speakers reiterating their established positions, said Remote Gambling Association Chief Executive Clive Hawkswood. RGA believes the thrust of the final IMCO report will be to support the requirement for EU members to have gambling rules that properly comply with EU law, and that there should be more of a concerted move toward a consistent approach to consumer protection, he told us. There is still a view in Parliament that some form of harmonizing legislation is needed as opposed to the EC’s “softer approach” that seeks to strengthen cooperation among regulators, he said.

Parliament’s position on gambling has made huge progress over the past two years, with all now agreeing that EU action is needed to effectively address the cross-border challenges, said European Gaming and Betting Association Regulatory Affairs Director Maarten Haijer. All lawmakers singled out consumer protection as a key priority for EU action, with some even calling for immediate regulation in this area, he said. Most also welcomed the new anti-money-laundering directive, which for the first time will cover all types of gambling activities, and which confirms that Internet gambling is covered by a growing number of EU-harmonized laws, he said.

It was also significant that legislators from the left and right side of Parliament said enforcement of EU law is necessary to ensure that governments comply with the EU Treaty, Haijer said. “This will further increase the pressure on the European Commission to take legal action in the many pending infringement cases and new complaints against national regulation.”