On-line gambling is a fast developing business in Europe, with almost 15,000 websites already identified and total annual revenues exceeding EUR 6 billion in 2008 and expected to double in size by 2013. National legal frameworks vary enormously across the EU, with different rules applying to licensing, related on-line services, payments, public interest objectives, and the fight against fraud. In order to ensure legal certainty and effective protection of EU citizens in this fast-growing cross-border service activity, it is important to evaluate how possibly differing models can co-exist within the Internal Market. The primary aim of the Green Paper consultation, launched today, is therefore to obtain a facts-based picture of the existing situation in the EU on-line gambling market and of the different national regulatory models. The Commission seeks the views of stakeholders and wishes to collect detailed information and data on key policy issues such as organisation of on-line gambling services and enforcement of applicable laws; consumer protection and other relevant public policy challenges as well as commercial communications and payment services. Contributions to the consultation, which can be submitted until 31 July 2011, will determine the need for and form of any EU follow-up action in this field. Expert workshops on specific themes will be organised to complement this consultation.
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What is the current situation in the EU?
Today on-line gambling services are widely offered and used in the EU and the economic significance of the sector is growing rapidly.
The advent of the internet and the growth in on-line gambling opportunities are posing regulatory challenges as these forms of gambling services can operate across borders and national regulatory frameworks differ significantly between Member States. These frameworks can be broadly categorised into: a) licensed operators operating within a strictly regulated framework and b) a strictly controlled monopoly (State-owned or other). Most, if not all, Member States have also embarked on a review of their gambling legislation to take account of these new forms of service delivery.
The growth of on-line gambling opportunities has given rise to the growth of an unauthorised market, which consists of both a) unlicensed illegal gambling and betting activities, including from third countries and b) operators licensed in one or more Member States offering gambling services in other Member States without having obtained the specific authorisation in those countries (the so-called ‘grey market’).
There are a significant number of illegal gambling sites potentially accessible to consumers in Europe. In 2008 it was estimated that out of almost 15,000 active gambling sites in Europe, more than 85% operated without a license of any sort. Citizens search across borders for competing on-line gambling services and currently they may not be sufficiently protected against the risks associated with these illegal offers, among which fraud.
What is the size of the on-line gambling market?
Figures available for 2008 indicate that on-line gambling services accounted for annual revenues in excess of EUR 6 billion, representing 7.5% of the overall EU gambling market. It is the fastest growing segment of the gambling market (1) and in 2008 was expected to double in size by 2013. The channels used to offer on-line gambling services are namely the internet, mobile applications and Internet Protocol Television (IPTV).
National levels of demand for these on-line services vary across the EU depending on a number of factors. The UK, for example, is currently the largest market given that its e-commerce market is twice as large as the EU average (2). Germany is the second largest market. Noteworthy is that that some of the largest markets in 2008 were Member States characterised by the restrictive regulatory model, i.e. France, Germany, Italy and Sweden.
Why do we need a public consultation on on-line gambling?
The developments described above pose regulatory and technical challenges. They also give rise to societal and public order issues, such as the protection of consumers from fraud and the prevention of gambling addiction.
Since 2008, Member States (3) and the European Parliament (4) have been calling on the Commission to address these issues jointly.
What is the objective of the public consultation?
The Commission is seeking detailed facts and views from all interested stakeholders on the existing situation of the EU on-line gambling market and the following key policy issues that the growth of this market gives rise to:
- the existence and extent of societal and public order challenges associated with on-line gambling;
- the regulatory and technical methods Member States use or could use to improve enforcement, consumer protection and the preservation of public order;
- the appropriateness and effectiveness of current rules applicable to on-line gambling services at EU level in terms of ensuring the overall coherence of national systems and evaluating whether further cooperation at EU level might assist Member States to more effectively achieve the objectives of their gambling policy.
Contributions to the consultation will determine the need for and form of EU follow-up action in this field, as well as the level at which such action should be taken.
The objectives of the consultation are ultimately to achieve a market for on-line gambling services that is well-regulated for all.
What does the Green Paper cover?
1. Definition and organisation of on-line gambling services
The term “on-line gambling” covers a large number of different gambling services that individual consumers can access directly via electronic means. These include on-line provision of sports betting services (including horse racing), casino games, spread betting, media games, promotional games, gambling services operated by and for the benefit of recognised charities and non-profit making organisations and lottery services.
Internet and other interactive technological platforms are used (a) to offer gambling services to consumers; (b) to allow consumers to bet or gamble against each other or (c) as a distribution technique (for example to purchase lottery tickets directly from the service supplier at a distance).
As regards the organisation of such services, there are different regulatory systems across Member States for granting licences to operators where these are required, such services being banned in some jurisdictions. These systems differ in terms of qualitative and quantitative limits to be met by licence-holders.
The Green Paper is consulting on the main advantages/difficulties associated with the co-existence in the EU of different national systems and practices for the licensing of on-line gambling services.
2. Promotion of on-line gambling services, payment services and other intermediary services
On-line service providers use commercial communications to promote their services. These can be on-line banners and pop-ups on non-gambling sites, sales promotions (e.g. discounts through premium offers or free gifts), direct marketing and sponsorship agreements, as well as advertising (TV or printed press).
Payment services are also used by gambling operators. Typically, consumers of on-line gambling services are generally required to deposit funds on player accounts before playing. The payment services used can be credit cards, e-wallets, bank transfers, pre-paid cards or cash transfers.
On-line service providers also use other services including data storage centres, internet service providers and those of telecom/audiovisual companies.
The Green Paper is consulting on rules and practices relating to commercial communications, customer identification, and regulations for payment systems for on-line gambling services and player accounts.
3. Public interest objectives
This section focuses on three objectives:
Consumer protection: The consultation aims to collect information on (a) problem gambling and gambling addiction, (b) the effectiveness of national measures pursued to protect players or to prevent or limit such problems, and (c) treatment of gambling addiction. Few Member States to date provide nationwide statistics on the extent to which such problems are associated with on-line gambling.
Member States use a number of instruments to try to limit these problems associated with on-line gambling services, which generally mirror those used for off-line gambling. These may include age limits, bans on credit use, restricting certain forms of games or bets, warnings or self-limitation systems. The regulatory frameworks in Member States seek to protect minors and other vulnerable groups, although these frameworks may differ across borders, for example the age limits set for gambling or restrictions on marketing and promotion of gambling services.
Public order: All Member States seek to prevent fraud and unfair games. National legislation aims to protect both consumers and operators in this respect. Types of fraud can include players not receiving their winnings from unlicensed illegal operators, unauthorised use of credit cards or tampering with software to manipulate the outcome of a game or event. This does not concern cases where winnings are withheld due to the licensed operator carrying out additional customer identification controls although the operator should explain the delay in such cases.
The Green Paper is consulting on best practices to prevent fraud and to identify instruments in place for control or certification of gambling equipment and to prevent outcome-fixing of sports events. It also seeks information methods used to detect and prevent money laundering and the operational practices used to fight this problem, such as customer due diligence, payment controls and operational controls.
Financing of benevolent and public interest activities and events: Various systems exist in the Member States for redistributing revenues from public and commercial gambling services to activities of public interest such as the arts, education or sport.
The Commission is also consulting on the possible existence of a principle of return to event organisers and on on-line gambling revenues from sports betting being directed back into sports at national level.
4. Enforcement
There are different types of structures for regulation and supervision of on-line gambling in the Member States. Administrative cooperation between some Member States is today carried out on an ad hoc basis.
Tighter forms of cooperation may be developing in some Member States where gambling authorities are working with sports stakeholders and/or betting operators, for example on educational campaigns or early warning systems.
The cross-border nature of on-line gambling implies that public authorities are facing challenges in enforcing their respective rules. 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.
Who can contribute to the public consultation?
A wide range of stakeholders are invited to contribute:
- citizens (people who purchase such services for entertainment or players making a living as professional gamblers)
- private and public gambling operators
- providers of media-related services
- intermediary service providers (data storage centres, internet service providers, payment service providers etc)
- sports event organisers,
- beneficiaries of good causes,
- public administrations and authorities,
- other interested stakeholders, including those with an interest in treatment or prevention of problems related to gambling and addiction.
How can they contribute to the consultation?
A public consultation website has been set up for stakeholders to express their views, share their experience and provide available data. The site provides an online questionnaire, the Green Paper and an accompanying Working Document with additional information on the online-gambling market, e.g. on the size of the market, legislation and case law.
The public consultation will be open until 31 July 2011.
What are the next steps?
The public consultation is launched without any pre-conceived views on its follow-up. The information and data collected at the end of the consultation process, as well as the exchange of best practices will be thoroughly assessed by the Commission in determining follow-up action.
For more in-depth discussions, a number of thematic workshops are being organised around the key issues identified, to benefit from the knowledge and experience of selected experts in the field. Details will be made available on the Commission’s website (see below).
Notes
1 : Source: H2 Gambling Capital
2 : See Report on retail Market monitoring, 5 July 2010 (COM(2010) 355 final
)
3 : Conclusions on the framework for gambling and betting in the EU Member States, 10 December 2010 – Council document 16884/10.
4 : European Parliament resolution of 10 March 2009 on the integrity of online gambling (2008/2215(INI))
Source: European Commission
