Malta is objecting to a draft law that would restrict online gambling in Cyprus and has informed the European Commission that it considers it as being in breach of EU rules.
Following an electoral promise made before the last election, Malta’s sister Mediterranean island is seeking to ban much of the online gaming taking place on its territory, although online sports betting will still be allowed.
Although EU member states are allowed to introduce national laws regulating gambling, they are not allowed to discriminate and Malta and the UK, who have the largest online gambling registers in the EU, smell a rat and Britain too has voiced objections.
“The law may be used to limit online competition to current casinos operating in Cyprus and to distinguish among online gaming operators and the games they are allowed to conduct,” a Malta-based operator in the online gaming industry told The Times.
Through favorable legislation and incentives, Malta has become a magnet for online gaming operators in the past few years with hundreds of foreign companies registering with the Malta Lotteries and Gaming Authority.
Malta has sent a detailed opinion to the European Commission spelling out why it considers the draft law “not to be in line with EU rules,” a Maltese government spokesman told The Times. The objection is based on the belief that the law may have negative consequences for the functioning of the EU’s internal market.
While Cyprus may not take Malta’s opinion into consideration, the spokesman warned that “if a member state adopts a text without taking account of the detailed opinions issued by the Commission or the other member states on the draft regulation, the Commission may initiate an infringement procedure provided for under the EU Treaty in respect of those elements which are considered by the Commission to be in breach of EU law”.
According to the Cypriot government, the ban is needed to control the “gambling-vice” which, online alone, is estimated to churn out a turnover of €2.5 billion a year. On the other hand Cyprus still allows gambling to take place in various casinos on the island.
Cypriot gamblers are said to be exploiting a loophole in the law which means that online gambling via providers based in other countries is virtually unregulated.
The government wants to exert more control through the creation of a licensing authority to issue permits and regulate permitted forms of gambling. Malta’s objections to the Bill, together with those voiced by the UK, have ruffled some features among Cypriot legislators. The President of the Legal Affairs Committee of the Cypriot Parliament, Ionas Nicolaou accused the two countries of putting spokes in the wheels.
“The interventions and comments by Malta and the UK were made purposely as online gaming is licensed in both countries and they receive huge amounts of money for those licenses,” he charged.
Brussels has now sent a number of questions to the Cypriot government about the draft law and is expecting a response by mid-March.
If the Commission deems the draft legislation as illegal, the Cypriot government would have to change the law or face legal action.