Europe’s online gambling scene saw a number of important changes last year. More EU countries officially regulated their iGaming markets (the Czech Republic, Poland), while other countries acknowledged the importance of the introduction of proper regulations (Sweden) in relation to the provision of this type of service. Other countries (Norway) reaffirmed their stance that the monopoly model was the best for their residents in terms of the safe and socially responsible conduction of gambling activities.
Regulators (the UK Gambling Commission, the Netherlands’ Kansspelautoriteit) toughened their stances and launched crackdowns on violators of the main regulatory principles of their countries.
And we expect that in 2018 more reforms will likely be added to the ones already undertaken last year. What is more, first results and consequences from the changes implemented in 2017 are to be witnessed this year. Whether the changes are positive or negative, it is yet to be seen. But one thing can be said with certainty, the online gambling sector is growing and will continue growing with tech-savvy millennials gradually establishing themselves as the ones wielding the most buying power. Hopefully, the industry will be transformed in a manner that will be able to accommodate their demand in a proper manner.
And without further ado, here are some of the online gambling regulatory stories we provided the widest coverage of throughout 2017 and will remain focused on this year.
The Netherlands made the headlines quite often over 2017 in relation to the long delayed regulation of its gambling market. First signals that the time for such a move might have finally come appeared in the summer of 2016 when the Dutch House passed an gambling bill that would, among other things, make it possible for international operators to apply for licenses and participate in the country’s gambling industry. The legislative piece is yet to be voted by the Dutch Senate.
Last May, the Dutch gaming regulator, Kansspelautoriteit, introduced an overhauled system of rules regarding the provision of online gambling services to Dutch players. The rules aimed to remind unlicensed operators that iGaming and betting were illegal in the country and that violators risk being subjected to heavy fines.
Generally speaking, the new system of regulations concerned both gambling operators and affiliates promoting their services to local players. Among other things, Kansspelautoriteit prohibited the use of typically Dutch images for advertising unregulated iGaming services. What is more, operators were banned from accepting Dutch players from .nl affiliate websites. As a result a number of major gambling companies announced departure from the Netherlands’ unregulated market and said that they would consider their return once a new regulatory framework comes into force.
Late in November, the Dutch House approved a previously proposed measure for a temporary increase of the the gambling tax paid by licensed operators to the country’s coffers. The tax will be raised by 1.1%, which means that the new rate will be 30.1%. Here it is important to note that the new rate will be valid through January 1, 2019, or six months after the expected introduction of the Netherlands’ new gambling laws.
The six-month window was given so that the Dutch Gaming Authority is able to make the necessary adjustments related to the new gambling regulations.
It is yet to be confirmed when exactly the new gambling law will be adopted. It is believed that lawmakers are targeting a mid-2018 implementation. On the other hand, Kansspelautoriteit’s Vice President Henk Kesler said during an industry event in October that the new regulations may come into effect on January 1, 2019. In other words, it seems that 2018 will likely be just as eventful for the Netherlands’ gambling industry as 2017 has been.
Sweden has long been among Europe’s most attractive online gambling markets. However, foreign companies targeting Swedish players have been operating in an unregulated environment, as the state-run Svenska Spel is the only operator officially authorized to provide iGaming services within the country’s borders.
It is also important to note that Sweden has been part of the group of European countries most heavily criticized for failing to provide a regulated environment that allows international companies to obtain licenses and be part of that legal environment.
However, it became clear in the spring of 2017 that the status quo would change within the next several years. Back in 2015, the Swedish government ordered a review of the state of the nation’s gambling industry. The review was led by former Lotteriinspektionen Director General Håkan Hallstedt and its findings were released this spring.
The report recommended that the current regulatory regime be scrapped and replaced with a more liberal one that admits more operators. It is understood that the new laws will likely come into effect on January 1, 2019.
Meanwhile, Sweden’s unregulated market continued growing in 2017. According to information from Lotteriinspektionen, revenue from unlicensed operators grew 11% year-on-year during the nine months ended September 30, 2017 to a total of SEK4.045 billion. What is more, revenue from such operators accounted for nearly 25% of the total revenue generated during the reviewed period. Sweden’s gambling market was worth SEK16.557 billion during the first three quarters of 2017.
Germany’s online gambling regulation effort spans more than five years back, and it failed to produce any significant results last year, as well. A new version of the 2012 Intestate Treaty on Gambling was introduced last spring and was hoped to be approved by Germany’s all 16 states as soon as possible.
Here it is important to note that the new version of the Treaty was produced due to criticism that the 2012 original and subsequent versions were not compliant with the EU treaty for the free movement of services across the union.
One of the most heavily contested provisions in the legislative piece was the introduction of a cap on the number of sports betting operators that would be allowed to operate in the country. Under the original Treaty, just 20 operators would have been granted a license to provide their services to German bettors. The new version of the legal document was hoped to scrap the cap completely. However, it was just raised to 40 online sports betting licenses.
In late September, the state of Schleswig-Holstein voted down the amended Interstate Treaty on Gambling, and also confirmed its intention to introduce and possibly implement its own gambling law that will include more online gambling options. Here it is important to note that the Interstate Treaty on Gambling will regulate online sports betting only. Online casino games will thus remain part of the unregulated gambling field. However, Schleswig-Holstein plans to include such games to the list of legal gambling options within its borders.
Germany’s online gambling effort hit another setback in October when the Federal Administrative Court in Leipzig issued a ruling stating that the current ban on the provision of online casino games, poker, and scratchcard games did not violate the German constitution or the EU treaty for the free movement of services among member states. The ruling came as a result from lawsuits filed by Gibraltar- and Malta-licensed operators who targeted German players.
Indications that Switzerland would try to provide more clarity regarding the regulation of its gambling industry appeared early in 2017. Information emerged that lawmakers were planning to order that unauthorized online gambling websites be blocked from the country, and it was confirmed later on that changes to Switzerland’s gambling laws would be implemented.
It was in early October that the Swiss government approved previously proposed amendments to the Money Gaming Act, ones that were centered around the provision of both online and land-based gambling services.
Under the proposed (and approved) reforms, only local operators with physical presence will be able to operate iGaming websites. International operators will not be admitted to the Swiss gambling scene. Local Internet service providers will be required to block foreign websites.
It is believed that foreign operators may be eventually allowed to operate in the country by forming partnerships with local land-based operators. However, nothing has been confirmed in relation to that possibility.
Portugal regulated its market in 2015 and issued its first online gambling license in May 2016. However, criticism over the country’s regulatory regime never faded. The taxation portion of Portugal’s new gambling law has been blasted by industry stakeholders and trade associations as an unreasonable one.
The country taxes online sports betting operators on percentage on their annual turnover with the rate growing to 16%. Casino games operators and online poker operators are taxed at up to 30% on their revenue. Both rates are extremely high, have, according to many, driven major operators away from the Portuguese market.
The Remote Gambling Association, which represents some of Europe’s major gambling companies, has been among the most vocal critics of Portugal’s taxation system. The association has repeatedly called for a review of the gambling regulations. However, the Portuguese government has maintained that it would review its gambling industry two years after the first iGaming license was issued.
A review will be conducted in May. It has recently been announced that certain changes would be presented to the way online gambling activities are conducted. However, critics of the current regime will be disappointed that these changes will be primarily concerned with international liquidity.
Portugal was one of the four countries, with Spain, Italy, and France being the other three, to sign a shared online poker liquidity agreement this past July. The project is yet to be materialized, but Portugal has already started considering changes in its gambling regulation in a manner that would allow it to merge its player pools from other casino games with those of other European markets with proper iGaming regulations.
As for taxation, there will be changes in how proceeds from gambling taxes are distributed. However, there has been no mention of reforms in the current taxation rates.
The UK Gambling Commission, to the shock of many, slapped last year several behemoth fines on UK-facing operators for inappropriate and misleading advertising content and for the operators’ failure to prevent their affiliate partners from violating advertising codes when promoting their brands.
BGO (fined £300,000) and Broadway Gaming (fined £100,000) were among the operators that were stung with heavy fines by the regulator.
In addition, the Commission announced that it would raise the overall standards in the country’s gambling market to protect gambling customers and to secure a safe gambling environment for them.
As part of the regulatory body’s crackdown on the iGaming industry, operators were required to make sure that they and their affiliate partners were promoting gambling services in a fully compliant manner. That requirement implied that any type of gambling-related content on any gambling-related website had to be structured in a clear and socially responsible manner.
And it can be said that that requirement opened Pandora’s Box and unleashed a world of trouble, to both UK-facing operators and affiliates’ dismay.
Following the publication of an article in the Sunday Times, the UK Gambling Commission urged its licensees and their affiliate partners to remove any ads on their website that could be found appealing to children. Operators were also criticized for the wording of their terms and conditions, with the UK Gambling Commission arguing that these could be quite misleading at times.
Among many other things, the UK Gaming Commission’s purge resulted in several operators closing their affiliate programs or limiting the number of affiliates that would work with in future. Sky Betting & Gaming, known to be one of UK’s largest gambling operators, closed its affiliate program in early September. And their affiliates woke up to the realization that they would no longer receive commissions for players they had previously referred to the operator, helping it build its brand across the field. LeoVegas and bet365 were among those to inform their affiliates that they would only work with select few UK-facing partners.
Terry Davis holds a degree in Psychology, but it was after his graduation that he found his real passion – writing. Previously, he worked for a local news magazine.