EC Green Paper on iGaming in the Internal Market

Dr. Silvana Zammit | 30 Mar 2011

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iGaming is a fast developing business in Europe, with almost 15,000 iGaming websites already identified and total annual revenues exceeding € 6 billion in 2008 (representing 7.5% of the overall EU gambling market). It is the fastest growing sector of the gambling market and is expected to double in amount by 2013.

National regulatory models between one Member State and another differ enormously, with different rules applying to licensing, related online services, payments, public interest objectives, and the fight against fraud. Therefore, it is important to determine how such different national systems can co-exist within the internal market, in order to guarantee legal certainty and effective protection of its citizens.

In the absence of a common regulatory framework, it is for each MS to determine, in those areas, in accordance with its own scale of values, what is required in order to ensure that their regulations are in conformity with EU standards.
 

Purpose of the Consultation


The long-awaited Green Paper on iGaming services in the internal market was released last Thursday, the 24th March 2011, in response to calls from the European Parliament and its Member States for us to address certain challenges jointly.

The EC identified that the primary aim of the Green Paper consultation is to “obtain a facts-based picture of the existing situation in the EU online gambling market” while investigating the “different national regulatory models.”

The EC stated that it will accept contributions from stakeholders within the industry until the end of July 2011. It will collect in-depth information on key policy issues such as the organisation of iGaming services and the enforcement of applicable rules of law, consumer protection and other significant public policy issues as well as commercial communications and payment services. Such contributions to the consultation will determine “the need for and form of any EU follow-up action in this field.” The EC also reassured that expert workshops on specific themes will be organised to complement this consultation.

Michel Barnier, the European Commissioner for Internal Market and Services said that “with this Green Paper, we have launched an ambitious consultation with no pre-determined views on its possible follow-up.” Since national regulatory models between one Member State and another differ enormously, it is important to determine how such varied frameworks can co-exist within the internal market, in order to guarantee legal certainty and effective protection of its citizens. In fact, Michel Barnier goes on to say that “this consultation is not about liberalisation of the market,” but “it is about ensuring that the market for online gambling services within the EU is well-regulated for all.”
 

iGaming in the EU: the Current Situation


Up until 5 years ago, Malta was one of the few countries in Europe, apart from the UK and Gibraltar, to have enacted regulations governing iGaming.

At the moment, the regulatory situation for gambling differs between the Member States. While some Member States restrict or even ban the offer of certain games of chance, others have more open regulated markets. A number of Member States, such as Italy, France, Spain, Germany, Denmark and Belgium have also recently reviewed their iGaming legislation or are embarking on such a process.
 

Key Policy Issues of the Consultation


iGaming is an essentially borderless, cross-border service that poses regulatory and enforcement challenges as well as societal and public order challenges.

The key policy issues of the consultation include:
 

Definition and organisation of iGaming services


The EC Green Paper gives a definition on iGaming services and is consulting on the differences between this definition and those definitions at a national level and the enforcement of the applicable rules of law. It is also consulting on the main advantages or difficulties associated with differing national frameworks that co-exist within the internal market relating to the licensing of iGaming services.
 

Related services performed and/or used by iGaming service providers


The EC Green Paper is consulting on specific national regulations pertaining to online communications, customer verification and regulations for payment services in view of iGaming services and player accounts.

Public interest objectives


The EC Green Paper focuses on 3 public interest objectives which may be suitable for Member States in relation to their national online gambling policies. These include:

  • Consumer protection – the EC Green Paper aims to collect in-depth information relating to problem gambling or excessive use of iGaming services and the instruments used to protect players and prevent or even limit excessive problem gambling. Another issue involves consulting on how to ensure the protection of minors and other vulnerable groups. Questions raised relate to the promotion and marketing of iGaming and online age controls imposed for customer identification, both for opening an account and for processing payments.
  • Public order – the EC Green Paper is consulting on best practices to detect and prevent various types of fraud, money laundering and other crimes.
  • Financing of benevolent and public interest activities as well as events on which online sports betting relies – the EC Green Paper looks at varied systems of revenue channelling to fund public interest activities and mechanisms for redistributing revenues from public and commercial iGaming services to the benefit of society such as the arts, education or sports.

 

The EC Green Paper is consulting on regulatory bodies such as gambling authorities in the Member States, to control issues such as illegal iGaming services. It is estimated that our of 14,823 active iGaming websites in Europe, there are more than 85% operating without a licence. An unauthorised cross-border market is currently accessible to consumers, due either to de facto tolerance or lack of effective enforcement. Effective enforcement is essential for Member States to ensure the achievement of public interest objectives behind their national gambling policy. That is why the EC Green Paper is seeking to evaluate current enforcement systems that are in place and cross-border cooperation between Member States and gather in-depth information on the efficiency of the blocking systems (such as payment blocking or domain name filtering).
 

European Gaming and Betting Association (EGBA) comments


The EGBA is stressing the point that without a clear regulatory framework, the European iGaming market risks being driven underground into the hands of black market operators to the detriment of consumers, legitimate EU licensed operators and state finances. People will keep on betting legally or illegally, therefore it makes sense to tidy up the rules.

Member States, the European Parliament, the European Economic and Social Committee and all other interested parties are welcome to submit their views on any of the questions raised in the EC Green Paper until the 31st of July 2011. All the information and data received at the end of this process will be thoroughly assessed by the EC in determining any follow-up action in this field.

 

Contributions should be sent to one of the following addresses to reach the Commission:


markt-gambling@ec.europa.eu

European Commission
DG Internal Market and Services
[J-59 08/061]
Rue de la Loi 200
B-1049

 


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