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EU Gambling study: the case for change!
The European Betting Association and the Remote Gambling Association welcome the final publication by the European Commission on the 12th October 2006 of the Study of Gambling Services in the International Market of the European Union commissioned in November 2004 to the Swiss Institute of Comparative Law.
The study sheds significant light on the gambling market of the EU. It reveals its fragmented nature, the inconsistence of the monopoly restrictions with the EU Treaty and the growth potential of this industry whether in the EU or overseas.
Expansion in the EU provides the opportunity for regulations and supervision of all EU operators, high product quality assurance, increased tax returns and consumer protection. On the other hand, if the industry is driven out of the EU, it may lead to the offer of dubious gambling products in an uncontrolled manner by operators who are outside the scope of EU regulation. This is an outcome that the members of the EBA and RGA wish to avoid.
The study also outlines in the most authoritive manner the current legal chaos prevailing in various EU Member States with legal restrictions and state monopolies, which often do not adhere to the criteria established by the settled ECJ case law. Moreover, in many cases Member States do not provide data or statistics justifying the restrictions in place or providing their proportionality.
"The European Commission has already initiated infringement proceedings to examine these restrictions" comments Didier Dewyn, Secretary General of EBA. “Although the findings of this study which confirm that we have witnessed and suffered in our daily business for years by these restrictions, the European Commission has yet to announce any next steps based on this study”.
EBA and RGA have consistently called in the EU to ensure:
• that there is a level playing field for EU-based private operators to compete alongside state-owned entities or sate-sponsored monopolies; and
• That all forms of gambling there are appropriate levels of consumer protection and measured to minimise any potentially negative effects of gambling.
"These goals can be achieved by either Member State or EU level, but there must be a proper debate and not one determined by misinformation or by those with a vested interest in maintaining the status quo.", states Clive Hawkswood, Chief Executive of the RGA. "Now that it has this Study, the European Commission can lead the debate. Both we and the EBA would be more than willing to sit down with the Commission and stakeholders from any Member State with a view to addressing all of issues of apparent concern".
The study is available at http://ec.europa.eu/internal_market/services/gambling_en.htm
Why a study?
The study was launched against a background of:
• Significant evolution of European Court of Justice (ECJ) case law, which, as from 2003, requires any Member State having in place market restrictions on gambling to demonstrate that it has a genuine and consistent commitment to reduce gaming opportunities
• Furthermore, the ECJ has made it clear that these restrictions must be strictly proportionate and non-discriminatory
• Lack of data and of transparency on how the gaming market is regulated and structured in the 25 Member States
• Technological developments leading to a fast growth of new forms of gambling: interactive TV, Mobile phones, Online etc.
There was therefore an urgent need to start collecting information in order not only to analyse the restrictions and legislation in place in the various Member States but also to access the real size and structure of this sector as well as its true potential.
Main findings of the Study
The Study makes an extensive review of the legislative framework of every Member State of the EU, and descriptively addresses the economic aspects and implications of the gambling market:
• Revenue of more than €51 billion in 2003 alone of which approximately 45% belonged to lotteries, while about 17% amounted to betting services (p. 1101 cf)
• Gambling amounts to 3% of EU GDP in total, approximately comparable to the value of the mobile telecommunications sector (Ibid.)
• Monopoly restrictions in gambling are contrary to the Treaty of the European Union. At the same time, the justifications put forth by Member States have not been tested against the criteria by ECJ case law, nor have many national courts ever addressed the subject ( See Executive Summary p. xxvi cf and more particularly chapter 2 of the Study)
• Current monopoly restrictions in Member States may aim at capturing economic rents (i.e. financial gains) for public revenue and social causes at the expense of the consumer ( See Introduction to the Economic Study, p. 1098 cf)
• In online gambling in particular, the market will continue to evolve even without EU companies as offshore gambling is rapidly growing (p. 1405, p. 1406 cf)
• Member States claim that monopoly restrictions serve to protect the consumer and public in general from gambling-related adverse effects, particularly problem gambling. However, little research has been made by the Authorities of various Member States on the precise nature, range and frequency of such effects that may demonstrate the proportionality of these harsh restrictions, as required by ECJ case law. (pp. 1142-1459)
• The enormous differences between the gambling taxation levels of various Member States create significant market distortions (pp 972-981)