EC Rules against Six Countries for Infringing upon Gambling Rules
In a major decision that has been widely hailed by the online gaming industry, the European Commission (EC) has filed formal charges against six member states for their failure to adhere to European law when it comes to gaming. The governments of Belgium, Cyprus, the Czech Republic, Lithuania, Poland and Romania have all received letters from the EC demanding that they change gambling legislation so that they are less restrictive and adhere to European rules when it comes to the free flow of services across member nations. In addition, Sweden has been threatened with potential legal action unless it confirms with EU rules, and it has been given just two months to respond. All jurisdictions have clung to a monopolist model when it comes to gaming despite growing pressure from the EC.
Pressure to act has been mounting for some time. As online gambling can cross borders, and rules on gambling differ between member states, it has become increasingly apparent that the EU needs to address the rise of unlicensed online gambling and the need for adequate state supervision of the industry. In March 2013, members of the European Parliament began to draft a report in the Parliament Committee on Internal Market and Consumer Protection that argued that Parliament should address the rights and obligations of both the service provider and the consumer when it comes to online gaming. The committee also argued that there should be a more coordinated approach when it comes to online gaming legislation while calling for the opening of borders to offshore operators and a more liberalized market.
In all, the EC has announced that it will launch cases against 20 member states over their failure to adhere to EC rules. In a press statement, Secretary General of the European Gaming and Betting Association (EGBA) Maarten Haijer welcomed the decision, saying, “today’s decision by the Commission is highly significant, as it will bring further legal clarity to the online gambling market in the EU. We commend Commissioner Barnier and his services for their perseverance and commitment to making sure gambling regulation functions properly. EGBA urges member states to use this opportunity to put in place effective, commercially viable gambling legislation which takes into account the CJEU (Court of Justice of the European Union) requirements and to avoid the need for litigation at the Court of Justice.”
Casino Revenue Down by More Than 6 Percent
A report released by the European Casino Association (ECA) has revealed that casino revenue in Europe stood at € 6.58 billion in 2013, representing a decrease of 6.5 percent compared to the year before. The data was collected from 800 casinos, as the ECA represents the interests of approximately 800 casinos and 55,000 employees in 23 countries. According to the analysis, revenues across Europe were affected by the smoking ban, increasing competition from online gaming and slot parlors, and the continuing “widespread economic malaise” currently affecting Europe.
The report revealed that just eight countries accounted for more than 80 percent of last year’s € 6.58 billion total. In first place was France, which contributed 35 percent. Germany, Switzerland, the Netherlands, Italy, Greece, Spain and Portugal accounted for between 4 percent and 10 percent each. Crucially, all eight countries recorded declines in revenue in 2013. The report also found that the largest drop in revenues occurred in Greece, Italy and Switzerland, all of which have “been slammed with a triple bill of expanded gambling offerings, stuttering consumer confidence levels and a boom in online gaming from which they have been largely excluded.” Revenues for Greek casinos have fallen by over a fifth (€ 339 million), while Italian casinos have fallen by 19 percent (€ 449 million) and in Switzerland by 11.5 percent (€ 623 million).
According to the report, thanks to the government’s decision to ban all slot machines outside of casinos, Hungary emerged top of the table in terms of year-on-year growth increasing by 32 percent to € 29 million. However, despite the downturn, the report does argue that there is evidence to suggest that the casino industry in Europe is showing signs of recovery. This, according to the report, is due to a tighter focus on operational efficiencies, as well as increasing visitor numbers.
Concern Grows over Fixed Odds Betting Terminals
Concern over the rise in betting via fixed odds betting terminals located in bookmakers in the U.K. could lead to a major change in the U.K.’s gambling laws. According to the most recent statistics released by the Gambling Commission, high street bookmakers recorded profits of £1.55 billion between April 2012 and March 2013 from the terminals alone, meaning that profits have almost increased by half over the last four years.
The Labour Party has called for a change to the law that would reduce the stakes from £100 to £2 with Labour M.P. Tom Watson branding fixed odds betting machines as “a menace to every high street.” The government has also shown concern over the rise in the popularity of OBTs despite the fact that in March 2013, it announced that it would take no action to restrict their numbers or limit their use.
Controversy over the betting terminals has continued to grow as they have been blamed for the rise of gambling in the poorest areas of the U.K. According to a study published by The Guardian newspaper, £5 billion is spent on fixed odds betting terminals in northern cities and the poorest parts of London alone, and they have also been blamed for the rise of underage gambling. Despite rising concern, those opposed to OBTs had a setback in December when Parliament voted 322 to 231 to approve a report by the Department of Culture Media and Sport to keep maximum stakes on fixed odds betting terminals in place.
Earlier in 2013 Culture Minister Hugh Robertson refused to act on the issue during a parliamentary debate, claiming there was insufficient evidence to support the claims and stating the government would not amend the law unless more evidence was put forward. At the time Robertson stated that the government was waiting for the findings of the Responsible Gambling Trust, which was looking into the issue. If the findings provided evidence that the terminals lead to pathological gambling, then, he said, the government would act.
The government, however, is still waiting for the study to be completed and branding the Labour party’s stance on the issue as hypocritical as it was the Labour government that gave the green light for OBTs while they were in office. Meanwhile, opposition to the terminals continues to grow, and members of the Labour party have vowed to continue to lobby for change on the issue in 2014.
Minister Urges Government to Pave Way for EuroVegas
Enrique Ossorio, the minister of Economy and Finance of the Community of Madrid, has urged the government to solve “in the quickest way possible” the necessary modifications required by the EuroVegas project, which would “guarantee” that investment reaches Spain “and not to another country such as Japan.” The minister’s statements come on the back of growing fears that Spain might lose out on the € 18 billion EuroVegas project after growing speculation that the project would be better located outside of Spain and after financial information services Fitch Ratings advised the company that Spain was not currently a good market for casinos and tourism.
In 2011 the local governments of Barcelona and Madrid battled it out regarding ways to make the necessary concessions over labor laws and taxation to try to make their city the more attractive venue for gaming company Las Vegas Sands. In September, Las Vegas Sands Co. Chairman Sheldon Adelson announced that Madrid had won the race. If the project goes ahead, the new complex is expected to make Madrid one of the leading conference centers in Europe that will attract an additional 4.7 million tourists in 2025. It is estimated that tourists visiting Madrid will also double the amount they spend while visiting the city once the new resort is up and running.
However, there has been growing fear that the company will withdraw from the market if the smoking ban is not lifted and if the tax rate is not cut. Spanish tax rates for casinos are higher than in other countries in Europe. However, Madrid Mayor Ignacio Gonzalez in 2013 announced that the gaming tax on casinos will be reduced in Madrid from 45 percent to 10 percent, making it the lowest tax rate on casinos in Spain. Ossorio said the government must amend smoking laws and ensure that Las Vegas Sands is given judicial guarantees that the rules set in place for the company’s investment will be maintained over a long period of time.