The European Commission today unveiled an action plan, with a series of initiatives over the next two years aimed at clarifying the regulation of online gambling and encouraging cooperation between EU Member States. Online gambling is one of the fastest growing service activities in the EU, with annual growth rates of almost 15% and an estimated EUR 13 billion in annual revenues in 2015.
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Why is the Commission adopting an Action Plan on online gambling?
Online gambling services are both in demand and widely offered throughout the EU and the economic significance of the sector continues to grow. This process has so far proven to be largely independent from the level of restrictions imposed by individual Member States. Thus in 2008, four out of the five largest national online gambling markets in the EU were characterised by very restrictive regulatory models (Germany, Italy France, Sweden)
Online technology is developing rapidly, including through diverse channels like the internet, mobile phone technology or digital TV. The different forms of gambling services can operate across borders and can also operate outside the control of Member States’ responsible authorities. Consumers in Europe searching beyond national borders for online gambling offers can often be exposed to prevailing risks such as fraud.
An ever-increasing number of Member States have undertaken a review of their national gambling legislation over the past few years. Online gambling regulation in Member States is characterised by a large diversity of regulatory frameworks. A few Member States prohibit the offering of games of chance on the internet, either for all games or for certain types, such as poker and casino games (e.g. Germany, The Netherlands). In some European jurisdictions, monopolistic regimes (offering online gambling services) have been established (e.g. Finland, Portugal, Sweden). These are run either by a state-controlled public operator or by a private operator on the basis of an exclusive right. A growing number of Member States has however established licensing systems thus allowing more than one operator to offer services on the market (e.g. Denmark, Estonia, France, Italy, Spain).
Last year’s Green Paper consultation showed that Member States essentially have the same objectives: protecting consumers, ensuring a fair and transparent offer, preventing fraud and protecting the integrity of sports. The consultation also showed that views converged on the benefits of cooperation because in an online environment Member States cannot effectively address the challenges they face on their own. This is only achievable if Member States and the EU institutions work together, hence today’s action plan.
How big is the gambling market in the EU?
In 2011, the annual revenues generated by the gambling service sector (1) were estimated to be 84.9 billion (EU27). Online gambling services accounted for annual revenues in excess of 9.3 billion in 2011, approximately 10% of the overall gambling market and representing an average annual growth rate of 14.7%.
In 2015, it is estimated that in the EU online gambling will generate annual revenues of 13 billion, 14.2% of the overall gambling market. (2)
What is covered by online gambling?
“Online gambling” can refer to a range of different gambling services and distribution channels. The definitions at national level are fragmented. Where the activity is offered online, the term “games of chance” can cover:
Betting services (including horse and dog racing, event betting and pool competitions)
Poker and casino services
Bingo services
Gambling services operated by and for the benefit of recognised charities and non-profit making organisations
Lottery services
Media gambling services (i.e. games in the editorial content of the media)
Sales promotion services consisting of promotional games with a prize or where participation is exclusively linked to purchase.
In most jurisdictions a game of chance is a game that offers an opportunity to compete for prizes and which depends completely or partly on chance, meaning that it cannot be influenced by the player.
What is the Communication proposing?
The Communication sets out a comprehensive action plan encompassing a number of complementary initiatives.
The Communication covers five priority action areas:
1. Compliance of national regulatory frameworks with EU law
Member States are in principle free to set the objectives of their policies on games of chance and to define in detail the level of protection sought. Nonetheless, national legislation must comply with EU law. The provision and use of the cross-border gambling offer falls within the scope of the fundamental freedoms of the Treaty on the Functioning of the EU, as repeatedly confirmed by the Court of Justice of the EU (CJEU).
Member States may restrict or limit the cross-border supply of all or certain types of online gambling services on the basis of public interest objectives that they seek to protect in relation to gambling. While Member States usually offer legitimate reasons for the restriction of cross-border gambling services, they must nonetheless demonstrate the suitability and necessity of the measure in question and the consistency of the regulatory system.
The Commission has in recent years launched infringement cases against a number of Member States and a significant number of additional complaints have been registered including very recently, with the Commission, on the application of Articles 49 or 56 TFEU in the field of gambling.
In light of the in-depth information gathered in the Green Paper consultation and the latest case law of the CJEU, the Commission is now in a better position, wherever necessary, to take action to enforce the relevant Treaty provisions in respect of any national rules not complying with EU law.
The CJEU has confirmed that the provision and use of cross-border gambling offers is an economic activity that falls within the scope of the fundamental freedoms of the TFEU. In particular, Article 56 TFEU prohibits restrictions on the freedom to provide services to recipients in other Member States. National rules which prohibit the provision of gambling services authorised in other Member States were found to restrict the freedom of national residents to receive, over the internet, services offered in other Member States. They also restrict the freedom of operators established in other Member States to provide gambling services.
Restrictions or limitations on the cross-border supply of online gambling services put in place by the Member States focus mainly on consumer protection objectives, in particular the prevention of problem gambling and the protection of minors, and on crime and fraud prevention. Member States must demonstrate that the public interest objectives they have chosen to ensure are being pursued in a suitable, consistent and systematic manner and they must not undertake, facilitate or tolerate measures that would run counter to the achievement of these objectives.
The Commission will:
Accelerate completion of its assessment of national provisions in the pending infringements cases and complaints and take enforcement action wherever necessary.
Infringement Proceedings and complaints
Five Member States are currently at the second (the so-called ‘reasoned opinion’) stage of infringement proceedings: Finland, Greece, Hungary, the Netherlands and Sweden. The Commission has sent so-called ‘letters of formal notice’ to Sweden (on a different matter) and Germany. In other Member States the proceedings are less advanced. However, in view of the legislative developments that have occurred in recent years in several Member States, the Commission will, from today, request all Member States concerned to provide information about the latest developments on their gambling legislation.
Complaints against 20 Member States are currently registered with the Commission. These are registered in CHAP (Complaints Handling Accueil des Plaignants’), the instrument designed for the management of complaints and enquiries by European citizens on the application of EU law by a Member State. All Member States subject to complaints will also have to provide information on their current gambling legislation.
Wherever necessary, the Commission will take action to enforce the relevant Treaty provisions, taking into account the latest case law of the CJEU. Furthermore, the compliance of draft national legislation on on-line gambling with EU law will continue to be assessed under the so-called notification procedure.
2. Enhancing administrative cooperation
Enhanced administrative cooperation will assist Member States and gambling regulators in their regulatory and supervisory role and improve the quality of their work. Practical cooperation will enable Member States to become familiar with the systems and practices of others, and to develop closer working relations at operational level.
The Commission will:
Facilitate administrative cooperation between gambling regulators and explore the possibilities that could be offered at a later stage by the Internal Market Information System (3) to cover the exchange of information/cooperation between Member States
Enhance exchange of information and best practice on enforcement measures and explore the benefits and possible limits of responsive enforcement measures, such as payment blocking and disabling access to websites at EU level
Provide clarification on the procedures for notifying and acting on unauthorised content hosted in the EU by online intermediaries
Develop regulatory dialogue with third countries.
3. Protecting consumers and citizens
The Commission aims to ensure that all EU citizens are guaranteed a high level of protection. The objective is to draw players away from unregulated and potentially harmful gambling offers often originating from outside the European Union/European Economic Area. Furthermore there are risks associated with gambling, such as addiction or excessive gambling and adequate measures are needed to prevent the development of such problems. Another important objective is the protection of minors, in particular to prevent them from accessing gambling websites.
The Commission will:
Adopt Recommendations for Member States on:
common protection of consumers
responsible gambling advertising
Assess recommendations on gambling-related internet addiction among adolescents under EU NET ADB (4)
Assess market performance of online gambling services under the Consumer Market Monitoring Survey
Report on the relevant working groups under ALICE RAP (5) and carry out an assessment of these research results.
A common set of principles elaborated at EU level should aim at ensuring a high level of consumer protection. These principles should include effective and efficient registration of players, age verification and identification controls in particular in the context of money transactions, reality checks (account activity, warning signs, signposting to helplines), no credit policy, protection of player funds, self-restriction possibilities (time/financial limits, exclusion) as well as customer support and efficient handling of complaints (6).
4. Preventing fraud and money laundering
The effective application of anti-fraud and anti-money laundering mechanisms is imperative, both by responsible national authorities and by operators, some of which already apply, e.g. customer verification and payment monitoring. Fraudulent transactions (e.g. credit card fraud or theft of bank details) can involve many countries. Coordinated efforts between gambling regulators will help to tackle these issues more effectively.
The Commission will
Consider extending the scope of the Anti-Money Laundering Directive (7) to all forms of gambling
Consider, in the context of its overall policy on cyber criminality, the possible specificities of and solutions developed for the online gambling sector
Explore the possibility of an EU standard on gambling equipment including gambling software.
5. Safeguarding the integrity of sports and preventing match-fixing
Betting-related match-fixing concerns sports organisations, sports people, consumers and regulated gambling operators. More in-depth cooperation between betting operators, sports bodies and national authorities including enforcement authorities, is needed both at national and international level to fight match-fixing.
The Commission will
Adopt a Recommendation on best practices in the prevention and combating of betting-related match-fixing
Promote international cooperation and dialogue on the prevention of match fixing.
In its recommendation, the Commission will develop anti-match fixing measures applicable across Member States and sport disciplines in cooperation with stakeholders with a view to:
promoting a more efficient exchange of good practices in the prevention of betting related match-fixing, including initiatives on awareness raising and training for actors in the field of sports
ensuring mutual reporting and follow-up actions of suspicious activities by sports bodies, operators and regulators, including gathering reliable figures on the scale of the problem
establishing minimum conflict of interest provisions, for example betting bans for sports people and sports officials as well as the exclusion of youth events from betting, and
introducing hotlines and other reporting or whistle-blowing alert mechanisms. Dedicated workshops will be organised to this purpose with the involvement of experts on gambling.
What are the benefits of the planned initiatives?
Action at EU level will serve to enhance legal clarity and establish policies based on evidence gathered from the Member States and from interested stakeholders.
Consumers will benefit from more readily available information including on authorised operators, on the customer account activity, warning signs and information on risks associated with gambling.
Online gambling operators and other stakeholders such as internet service providers, payment services and commercial communications intermediaries, will benefit from a clearer online gambling regulatory environment.
Consumers and operators will benefit from measures intended to prevent money laundering and fraud.
National regulating authorities will benefit from the sharing of good practices.
Minors will be protected through measures intended to enhance age verification tools and software filtering in the home for example in order to prevent them gaining access to gambling websites.
Why not opt for sector-specific legislation?
It was not considered appropriate at this stage to propose sector-specific EU legislation covering a broad range of issues. The Communication identifies a number of priority initiatives to be adopted over a two-year period. These initiatives respond to the issues highlighted in the contributions by Member States and by industry to the Green Paper consultation. These contributions revealed that a step-by-step approach in the EU is required.
A number of Member States have taken part in a review of gambling legislation and all Member States will benefit from the sharing of practical experience regarding the regulatory and technical challenges of the national regulatory authorities. Encouraging administrative cooperation and providing a high level of protection to consumers throughout the EU are immediate priorities.
The Communication is largely based on non-legislative initiatives. Will these measures be effective throughout the EU?
Several of the initiatives will be drawn up together with the Member States, some of which will also involve stakeholders. The Commission will carry out an evaluation of the implementation and application of all the measures two years after the adoption of the Communication. It will draw up a report of the findings of the evaluation. If the actions as implemented are found to be inadequate, additional measures to be taken at EU level could be considered.
Notes
1 : Measured on the basis of Gross Gaming Revenues (GGR) (i.e. stakes less prizes but including bonuses)
2 : H2 Gambling Capital
3 : http://ec.europa.eu/internal_market/imi-net/index_en.html
4 : Aimed at evaluating the prevalence and determinants of borderline addictive internet use and internet addiction among European adolescents
5 : This is a trans-disciplinary project, funded under the 7th Framework Programme for research and technological development. It focuses on research related to addiction and lifestyles in Europe over 5 years (2011-2015), Further information
6 : As proposed in the proposals for a Directive on consumer Alternative Dispute Resolution and a Regulation on consumer ODR
7 : Directive 2005/60/EC
Source: European Commission
