New European plan for online gambling
Market reCap January 2013 edition
- Enhancing the effectiveness of the listing regime: response to Consultation Paper 12/2
- Major changes proposed for controlled companies with a premium listing
- Primary Market Bulletin No.4: update on UKLA Knowledge Database
- Inside AIM – fifth edition focussing on nomad's consideration of directors
- Takeover Code changes operating satisfactorily concludes Takeover Panel report
- New European plan for online gambling
- The Kay Report: government proposals to tackle short-termism in the UK equity markets
In October 2012, the European Commission published its long-awaited Communication “Towards a comprehensive European framework for online gambling”, together with a Staff Working Document. The Communication is the Commission’s response to its consultation from March to July 2011, initiated by its Green Paper “On on-line gambling in the Internal Market”, the primary objective of which was to collect information from all interested stakeholders on the existing treatment of the EU online gambling market and the key policy issues that the growth of this market gives rise to. The Staff Working Document provides more detailed information on the Commission’s proposals and an analysis of the consultation responses to the Green Paper.
Of particular note, at this point in time, the Commission has deemed it inappropriate to propose EU-wide legislation. Rather, the Commission has proposed a number of initiatives which cover five priority areas. These are:
- enforcing compliance of national regulatory frameworks with EU law;
- enhancing supervision, administrative cooperation among member states and efficient enforcement;
- protecting consumers and citizens, minors and vulnerable persons;
- preventing fraud and money laundering; and
- safeguarding the integrity of sports and preventing match-fixing.
The above initiatives will be introduced throughout the next two years, following which the Commission intends to fully evaluate how the initiatives have progressed. In conjunction with these initiatives, the Commission intends to set up an expert group on gambling before the end of 2012 and to convene a stakeholder conference in 2013. Importantly, if the initiatives are found to be less than adequate, the Commission has indicated it will consider whether the introduction of additional legislative measures at EU level are appropriate.
Online gambling is a fast growing business within the EU. With revenues rising by about 15% annually in recent years, it is estimated that annual revenues by 2015 will be in the region of €13 billion. This figure is about 40% higher than in 2011. It is no surprise, therefore, that the treatment of this service activity is on the Commission’s radar. Bucking the downturn, which has adversely affected much of the EU, the fast pace of online technologies would appear to be the key to the industry’s success, allowing gambling services to be provided via the Internet, mobile phones and even digital TV.
The regulation of online gambling is also very much on the UK government’s agenda. Whilst Member States are free in principle to set their own policies and regulations regarding games of chance, they must of course comply with EU law and internal market principles and rules. The UK government will have no doubt placed the recent Communication under the microscope, to ensure that its own legislative proposals are in keeping with the Commission’s very current strategy which, depending on how things progress over the next couple of years, could yet result in legislative measures being introduced at EU level.
Most recently, in December 2012, the Department for Culture, Media and Sport ("DCMS") published the Draft Gambling (Licensing & Advertising) Bill for pre-legislative scrutiny by the Culture, Media and Sport Select Committee. The intention is for the Bill to amend the Gambling Act 2005, principally so that remote gambling in the UK will be regulated at the point of consumption (i.e. the UK) rather than the point of supply. This means that all operators who wish to supply online gambling services to customers who are accessing those services in the UK will need to hold a Gambling Commission licence. This, of course, would mean such operators would have to pay operating licence fees. Also, it is proposed that such operators would pay a UK gambling tax. However, it is expected that that this latter proposal will be challenged by the gambling industry on the basis that it would be an unjustified restriction on the free provision of services in the EU. Some of the Bill's other proposals have perhaps been influenced by the Commission's work. For example, overseas based operators will, for the first time, be required to report any suspicious betting patterns (involving UK customers) to the Gambling Commission. Also, they will be required to contribute towards research, education and treatment regarding UK problem gambling.
Separately, the Offshore Gambling Bill is due for its second reading in the House of Commons on 25 January 2013. This was introduced to Parliament last year as a Private Member's Bill and also seeks to amend the Gambling Act to regulate remote gambling on a point of consumption basis. It remains to be seen whether this particular Bill will be withdrawn from Parliament in the light of the Draft Gambling (Licensing & Advertising) Bill.
- European Commission Communication on a European framework for online gambling COM(2012) 596, 23 October 2012
- Staff Working Document: Online gambling in the Internal Market, 23 October 2012
- Draft Gambling (Licensing & Advertising) Bill