Posted 3/25/11 : What happened to free movement of goods and services?
Influential online gambling trade associations like the Remote Gaming Association and the European Gaming and Betting Association have welcomed the release of the European Commission’s Green Paper on Online Gambling, but are worried about the apparent lack of commitment to enforce fundamental EU principles such as free movement of goods and services, and the trend toward individual and fragmented national approaches to regulation.
Since the departure of his predecessor, who took a strong line on enforcement, the present head of the Commission, Michel Barnier, has shown little appetite for confrontation with nations seeking to exclude operators holding licensing from other EU member nations, seemingly prepared to accept a Europe in which national gambling markets are ring-fenced and commercial protectionism is a priority.
Reacting to the Green Paper this week, EGBA lamented the “apparent lack of commitment to curb further fragmentation of the common market and ensure that consumers throughout the EU enjoy consistent standards of regulated, safe and high-quality products.”
The trade association pointed out that without clear EU framework rules, the European online gambling market, estimated at Euro 9.08 billion in 2011, according to H2 Consultant numbers, risks being driven underground into the hands of black market operators to the detriment of consumers, legitimate EU licensed operators and state finances.
Secretary General of EGBA Sigrid Ligné said: “We welcome the Commission coming forward with a Green Paper and a factual discussion on all aspects of online gambling.
“We are deeply concerned though that the focus of the paper seems to be on a national rather than an EU approach despite the clear cross-border nature of this sector.
“What we expect is the Commission to propose an EU regulatory framework for online gambling, as it has done for other inherently highly regulated sectors such as telecoms or pharmaceuticals.
“In parallel, the Commission in its role as guardian of the EU Treaty should vigorously and systematically pursue infringement proceedings against those Member States that continue to violate EU law.”
Ligne added that EGBA’s main comments on the Green Paper are:
The Commission rightly devotes much attention to the questions of consumer protection and prevention of fraud. Indeed as confirmed by the Commission, the Internet offers unique opportunities ‘as it provides the operators with more sophisticated possibilities to track the transactions of each player compared to off-line gambling formats’. Valuable initiatives have been developed in these areas, most recently by the European standards body CEN, which issued a workshop agreement on ‘Responsible Remote Gambling Measures’ on 24 February, setting out a list of 134 concrete measures that ensure responsible gambling and provide greater protection for consumers throughout the EU.
Unfortunately the Commission is silent on the need for hard EU rules to combat the increasing fragmentation of the Internal Market through uncoordinated national prohibitions and restrictions. Yet, as the Commission itself admits: ‘The development of the internet and the increased supply of online gambling services have made it more difficult for the different national regulatory models to co-exist.’
The cost of this fragmentation and duplication of national requirements is particularly high. A study conducted in 2010 by Price Waterhouse Coopers shows that, for France alone, the administrative and technical costs for obtaining and maintaining the national licence to operate on the French market are Euro 8.7 million for a single EU operator, already licensed in one or several other Member States. National licensing regimes imposing such burdens on the service providers only benefit non-EU licensed black market operators to the detriment of player protection.
Go-it-alone national rule-making risks being at odds with the jurisprudence of the CJEU, which sets clear limits to restrictions that can be imposed on legitimate EU operators, and may infringe competition rules. Between 2006 and 2010, over 150 national draft acts and laws have been notified to the Commission for single market screening, and many have received a formal warning from the Commission for not complying with EU law. Infringement cases have been commenced against several national laws put in force despite the Commission’s early warning. However, since early 2008 no developments have taken place in the pending infringement cases and no new infringement proceedings have been opened.
Ligné concluded: “The launch of this Green Paper should under no circumstances cause the Commission to freeze pending or avoid opening new infringement cases against national regulations that are in violation of the Treaty.”
Further comment came from UK Tory MEP Malcolm Harbour, chairman of parliament's consumer protection committee, who described the draft legalization as a "good start" for the development of "safe and responsible" betting.
"Online gambling is a cross-border issue and it needs a clear EU framework in order to fulfill its potential. "At the moment there is a patchwork of licensing regimes or state monopolies across the EU and a lack of clear legalization is leaving important decisions to be made by the courts," said the ECR member.
"Online gambling is one area where some EU legalization can be justified. If we do not set out a clear framework at EU level for legitimate and regulated online gaming we are only going to see further growth of unlicensed or black-market operators.
"Through the ‘CEN initiative' the industry has shown that it is already working to improve standards and to provide consumer safeguards. This is very welcome and must be taken into account in any EU action.
"We should create a viable online gambling industry in the EU that is regulated well and regulated as consistently as possible across the single market."
The European sports security association (ESSA) said the green paper was a "solid step" towards building a single market in online gaming in Europe. But the association still questioned the Commission's assertion that sports events where betting takes place may, due to criminal activities, be subject to a higher risk of match fixing.
Clive Hawkswood, the chief executive of the Remote Gambling Association, said, "We hope that the green paper, and the evidence submitted in response to it, will provide the basis for an objective assessment of the issues.
"The RGA is looking forward to participating in this consultation."
He added, "However, this could be a lengthy process and in the meantime many member states will be bringing forward gambling legalization at a national level. It is vitally important that the Commission takes all reasonable steps to ensure that those new regimes are fully compliant with EU law.'