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Consultations over online gambling

The European Commission is lending an ear to interested stakeholders in the online gambling market. With the recent launch of an EU-wide public consultation on a Green Paper dealing with online gambling, the Commission is striving to get its facts right prior to embarking on the arduous task of possibly harmonising, if necessary, the regulation of this ever-growing sector.

Online gambling is a fast developing business in Europe, representing, in accordance with statistics provided by the European Gaming and Betting Association, 11 per cent of the total European gaming market. At least 15,000 websites have been identified and in 2008 the total annual revenues exceeded €6 billion. This figure is expected to double by 2013.

Different national regulatory models for gambling co-exist across the EU since this sector is currently regulated by EU governments at national level. National legal frameworks regulating online gambling vary greatly across the EU. Online gambling refers to a large number of different gambling services that consumers can access directly via electronic means including the online provision of sports betting services such as horse racing, casino games and others.

Different national rules apply to the licensing of companies operating such services, related online services, payments, public interest objectives, and the fight against fraud. While some member states restrict or even ban the offer of certain games of chance, others have more open regulated markets.

The Commission is now of the opinion that in order to ensure legal certainty and the effective protection of EU citizens in such cross-border commercial activity, it is important to evaluate how differing models can possibly co-exist within the Internal Market.

Through the public consultation, the Commission is therefore seeking to ascertain whether stakeholders encounter any difficulties or accrue any advantages from the co-existence in the EU of different national systems and practices for the licensing of online gambling services. It is also focusing on related services performed and/or used by online gambling services providers such as customer identification and regulations for payment systems for on-line gambling services and player accounts.

The consultation also aims to gather information on social problems related to gambling such as addiction and the measures being pursued by the member states to protect players and prevent or limit problematic issues related to gambling. Another key issue targeted in the consultation is how to ensure the protection of minors and other vulnerable groups.

Member states use a number of instruments to try to limit these problems associated with on-line gambling services. Such measures include age limits, bans on credit use, restricting certain forms of games or bets, warnings or self-limitation systems.

The Green Paper is also focusing on best practices and measures used by the different member states to detect and prevent fraud, money laundering and other crimes.

Types of fraud can range from players not receiving their winnings from unlicensed illegal operators, to unauthorised use of credit cards or the tampering with software to manipulate the outcome of a game or event.

The Commission is also seeking to garner information about the various systems set up by member states to redistribute revenues from public and commercial gambling services to activities of public interest such as the arts, education or sport.

The consultation seeks to evaluate current enforcement systems and gather factual information about blocking systems such as payment blocking, internet protocol blocking or domain name filtering, used in some member states to restrict unauthorised offers. Furthermore, the cross-border nature of online gambling possibly implies that public authorities are facing challenges in enforcing their respective rules. Administrative cooperation between some member states is today carried out on an ad hoc basis.

Reactions to the initiative being taken by the Commission have varied. Leading online gaming and betting operators contend that being a cross-border market, there is a strong need for harmonised rules and for establishing a common EU framework. However, they have also emphasised that self-regulation could possibly work as well, if not better, then legislative intervention at EU level.

They assert that the European Commission must ensure that national restrictions are not purely hidden protectionist measures which hamper competition in this important sector. On the other hand, state lotteries have welcomed the European Commission’s insistence that the Green Paper is not necessarily aimed at liberalising the online gambling sector in the interest of purely commercial interests of online gambling companies.

Stakeholders now have until July 30 to make their views known. On the basis of the information gathered, the Commission will then decide whether further cooperation or regulation at EU level is at all necessary. The outcome of the consultation will therefore determine any future course of action to be adopted by the Commission. Due to the ever-increasing importance of this sector to Malta’s economy, the Maltese regulators and other interested stakeholders cannot miss out on this golden opportunity to make their voice heard and in this way to participate in the shaping of the regulation of this sector.

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Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a member of the National Commission for the Promotion of Equality.

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