Wednesday August 31,2011 :EGBA's thoughts on European regulation
The European Gaming and Betting Association, an influential trade body whose membership includes most of Europe's large online gambling operators, has submitted its response to the European Commission's Green Paper consultative initiative on the regulation of online gambling.
The document, which is available in full here: http://www.egba.eu/pdf/EGBA-FINAL-green-paper-contribution-110801.pdf , in general supports the concept of a harmonised regulatory system for the 27 EU nations, and salutes Commissioner Michele Barnier for pushing the process forward beyond the "present unsustainable legal uncertainty and fragmentation."
"With 45 percent of the global online gambling market Europe has a leadership position in a growing segment of the burgeoning online economy," the secretary general of EGBA, Sigrid Ligne, writes.
"Without a proper European policy response, this leadership will almost certainly be threatened."
The response examines the current industry, where consumer demand continues to grow, and emphasises the need for online gamblers to be protected by fair and uniform regulations.
However, it points out that while ever more EU Member States are regulating the sector and introducing licensing systems, a significant part of these national regulations are contrary to the fundamental principles laid down in the EU Treaties, not least because they are based on purely national approaches and duplicate requirements that already have been fulfilled in other Member States.
The high costs of having to licence in a diverse range of countries is additionally counter-productive, especially where regulations are in many cases similar.
"Unnecessarily high regulatory costs act as a barrier to an attractive legal offer that can channel the consumer away from the black market and to the regulated operators," EGBA observes, “The proper application of basic EU Treaty rules would go a long way to address this issue.
Whilst Member States are rightly entitled to have restrictions in place to achieve certain public policy objectives like consumer protection, these must be consistent, proportionate and non-discriminatory, is an opinion already expressed by the highest EU courts.
The trade body does not shy away from criticising the Commission's actions, noting that it is failing in its role as Guardian of the [EU] Treaties and has arguably aggravated the problem.
Ligne comments: "Despite issuing numerous formal warnings on recent draft legalization for failing to comply with EU law, the Commission has not opened any infringement proceedings since early 2008. Indeed, even existing gambling infringement procedures have been on hold since that date and no Member State has ever been taken to Court for failing to comply with EU law regarding its gambling legalization.
"The Commission must act now and pursue infringement cases in a systematic way to correct existing legislative flaws and to prevent new national rule-making from breaching EU law. If the Commission continues to turn a blind eye to breaches of EU law, it is hard to see how any agreement will be reached on meaningful next steps after this consultation."
Turning to the Green Paper itself, EGBA applauds the opportunity it affords to examine thoroughly the state of the EU gambling market. The questions relating to responsible gambling, the protection of minors and sports integrity cover the key societal issues that need to be addressed when deciding next steps at EU level, the response opines.
It also offers reassurance to offline interests concerned that online gambling might cannibalise the market, noting that recent market figures of regulated Member States have confirmed that the regulation of the online market is not to the detriment of the existing offline market.
"Whilst the online market grows, the traditional offline market continues to grow in real terms as well, as do the revenues of most of the traditional land-based operators. The regulation of the online market has positive spill-over effects on the European economy and there is no cannibalisation of existing revenues and funding streams," Ligne asserts.
Regulation of the online gambling sector is a solution rather than a problem regarding societal issue, in EGBA's view. It is the only way to eradicate the black market and benefit from the high transparency and traceability features of the internet that have allowed the regulated industry to develop new and more effective means of protection and prevention than those traditionally available in the offline gambling environment.
As a result, the advent of internet gambling has not led to an increase in problem gambling and the internet provides better tools, for instance to protect minors.
EGBA concludes that there is a sufficient basis and indeed need to develop an EU regulatory framework for online gambling, including targeted harmonisation of consumer protection; anti-money laundering; prevention of fraud and other crime; assessment of personal integrity; mutual recognition of licensing procedures; IT infrastructure; advertising and sponsoring; customer identification; protection of minors; and sports integrity.
The creation of a European authority whose main responsibilities would be to coordinate regulatory cooperation and enforcement and to monitor sports integrity is suggested, and EGA gives an assurance that its members will actively engage to achieve these objectives.