European Gaming & Betting Association

• 1. So what do we mean by proportionate and non-discriminatory?
• 2. Principles of regulation and licensing
• 3. Principles of recognition and licensing

1. So what do we mean by proportionate and non-discriminatory?

There should be a level playing field across the European Union for both state and private operators. This is reflected in Article 49 of the Treaty of Rome which stipulates that the internal market should be open for free movement of services. Opening up markets to competition gives consumers the benefits of lower prices and a wider choice of products and suppliers. It also improves consumer security and game fairness. The alternative, as has been demonstrated in the United Sates recently, is to deter the regulated, publicly listed operators from participating in a market and to leave consumers who will still want access to the product, to the unregulated operators who have much lower standards.

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2. Principles of regulation and licensing

If the principles in the EC Treaty and ECJ jurisprudence are respected then EGBA members, who are all licensed in the EU, should be allowed to operate across the internal market under their current licence. There should be no blanket condition which requires that a licence be obtained from each Member State and Member States with regulatory and licensing regimes should recognise that the rights of operators licensed in other member states to operate and market their services are equal to the rights of local licensees. Having said that, EGBA supports any proportionate and non-discriminatory process for mutual recognition that is aimed at consumer protection.

This process of recognition is important. The regulators in each member state should have confidence in each other’s standards, they should have regular communication and they should have a clear process of enforcement across territorial boundaries. EGBA is supporting efforts to aid cross-border co-operation between regulators in the industry.

Statutory standards should be set to cover advertising, social responsibility, customer age and identity verification, security and testing and fairness. Restrictions imposed should be applied equally to local and non-local licensees.

For more information on:

1) legal principles for licensing and regulation
2) Existing regimes

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3. Principles of recognition and licensing

The following framework is intended to provide a set of principles for EU jurisdictions that are considering the establishment of a remote gambling licensing regime or developing any existing licensing regime.

EGBA aims to assist the development of effective and practicable regulation in Europe that:

• ensures that regulation protects the interests of the increasing number of consumers in Europe who are enjoying the wide range of remote gambling services on offer; and
• protects the rights of European operators to offer their licensed and regulated services.

In Part 1, we provide an application of the status and rights of holders of remote gambling licenses from EU member states and in Part 2, we provide guidance on the principles for the proper content and scope required for remote gambling licensing regimes.

Part 1: The status and rights of holders of remote gambling licenses from EU/EEA member states
Part 2: Guidance on the principles for the content and scope required for remote gambling licensing and recognition regimes.

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Part 1: The status and rights of holders of remote gambling licenses from EU/EEA member states

The rights and recognition described below are designed to benefit all EU/EEA licensees.

This includes those states who are considering their existing legislation and/or new legislation so that they represent an opportunity;

• both for licensees who have previously enjoyed a territorial monopoly to date to expand and develop their businesses throughout Europe,
• as well as for licensees who have been restricted from offering and marketing their services in certain territories to date.

The principles are based on the freedoms enshrined in the Treaty of Rome and the EEA Agreement and the jurisprudence from the European Court of Justice.

1. Level Playing Field for licensing: There should be no condition (or effect that amounts to the same) which requires that a license be obtained from the member state seeking to regulate remote gambling in its territory (“Regulating State”), regardless of licenses held under the regulatory regime of the country of origin where the same is another EU/EEA member state.

2. Recognition of EU and EEA Licensees: There should be a presumption of recognition by the Regulating State of licenses held under the laws of another EU or EEA member state (an “EU License”), the effect of which accords to that EU Licensee all of the same rights to operate and market to residents of the Regulating State as are enjoyed by the licensees under its own licensing regime (“Local Licensee” and “Local License”) and such recognition shall apply for all such services as may be offered under the applicable EU License, whether or not the Regulating State regulates for the same scope of services or not.

3. Limited Challenge to Recognition:

3.1 The recognition described in 2 above should only be challenged by the Regulating State where the standards of the applicable EU License and regulatory regime are demonstrated to fall short of the requirements set and enforced against Local Licensees (where applicable) in the Regulating State. In addition such challenge must only relate to the prevention of social harm and not related to revenue objectives or other objectives of the local state.

3.2 A Regulating State may however undertake a reasonable and justified process for recognition of an EU License or Licensee. Here are some caveats that we think should apply to such an approach:

(i) The Regulating State should make available a transparent process for such recognition to be given and provide for reasonably expedited time frames during which recognition shall be assessed, the expiry of which should mean that the EU License shall be presumed to be recognized;

(ii) The Regulating State should provide for an opportunity for expedited appeal to an independent body or the courts where recognition is denied;

(iii) Consideration for recognition shall be made on clear criteria that only relate to requirements and standards (a) applied on a non-discriminatory basis as between Local Licensees (where applicable) and EU Licensees and (b) that apply only to issues relating to the prevention of social harm and not related to revenue objectives or other objectives for the local state; and

(iv) Where a territory is organized at both Federal and local state level (e.g. Germany), any such recognition process should be operated at a Federal, rather than state level to avoid unnecessary segmentation and on the basis that the internet transcends territorial boundaries.

4. Enforcement and Communication between regulating authorities
With respect to any alleged breach in respect of any standards relating to the provisions set out in paragraph 8 of Part 2 below and which apply to Local Licensees and other EU Licensees on a proportionate and non-discriminatory basis, the Regulating State shall be entitled to contact the regulating authority of the relevant EU Licensee with a request to require curtailment of the claimed breach. EU licensing authorities should develop clear processes to handle any such contacts and to determine the appropriate response to the same.

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Part 2: Guidance on the principles for the content and scope required for remote gambling licensing and recognition regimes.

The guidance outlined in this section is aimed at ensuring that any regulation for remote gambling contains relevant provisions designed to:

• protect consumers in the applicable state and
• ensure that regulation covers the full range of services enjoyed by consumers within Europe

This guidance is provided without prejudice to the rights and recognition described in Part 1.

1. Proportionate and Non-Discriminatory: Any and all restrictions on the provision of remote gambling services should be proportionate to the public policy objective of preventing social harm based on reasonable risk-based criteria and must be provided for and applied on a non-discriminatory basis in relation to all EU Licensees.

2. All forms of Remote Gambling: As part of any licensing and/or recognition regime for gambling in a territory, a jurisdiction should provide for a remote gambling licence. The licence should provide for all forms of gambling services that are made available to customers, such as casino style, skill gaming, peer to peer, sports and other forms of betting.

3. Appropriate Taxes and Fees for local Licensees: Any fees or taxes applicable for the activity undertaken under such licence (as opposed to recognition of an existing EU License under the recognition approach) should be considered carefully for relevancy and appropriateness with respect to the model of service provided.

4. Centralised Licensing: Where a territory is organized at both Federal and local state level (e.g. Germany, Spain), the operator should have the opportunity to apply and obtain a remote gambling licence from a central regulator applying to the national territory to avoid conflicts that are no longer relevant or supportable in the modern age of the internet.

5. No artificial limit: There should be no limits set as to the number of licences available, provided that each applicant meets the standards provided in accordance with these guidelines.

6. Eligible Customers: The licence should allow an operator to provide remote gambling services to any adult whether the customer is in the jurisdiction or outside the jurisdiction.

7. Eligibility of Operators: The licence should be made available for application to any operator willing to meet the standards set out in the regulation provided that such standards do not discriminate on the basis of nationality or residency of the applying company or person or whether there is either a bricks and mortar or other corporate presence in the licensing state’s jurisdiction. Where such persons have undergone an equivalent test in another jurisdiction, they should be considered as part of the recognition or licensing process.

8. License Conditions/Codes of Conduct: The regulation should include license conditions, for example by way of mandatory codes of conduct, covering the following issues:

 

8.1 Advertising: Advertising shall be responsible in its promotion of remote gambling services and subject to the advertising regulators’ enforcement. Guidelines should be laid down for advertising that deals with target audiences, location of adverts, advertising times in relation to the broadcast medium, responsible content and other such advertising-related issues.

8.2 Social Responsibility: All operators shall adhere to licence conditions on social responsibility. Operators will be required to give players control of their gambling activity. Specific social responsibility functionality related to financial self-limits and self-exclusion tools will be required of operators’ systems.

8.3 KYC and Age/ID identification: Knowing your customer is important from the perspective of preventing potential money-laundering and ensuring that the services are available to adults only. Protecting minors from gambling is an essential part of regulation, but it must also be acknowledged that requirements must be realistic and proportionate to the actual risks. Any regulation should include the need for operators to implement practical measures to identify its services as for non-minors and to minimise the accessibility of on line gambling to minors. This should be based on the availability of necessary tools, such as verification services and databases. Governments should consider their role in making databases available for the ongoing improvement of such standards.

8.4 Testing and Fairness: Licence conditions will include agreed standards for the testing of systems that rely on a random number generator. Such testing will test the correct operation, fairness and security of such games. They will also specify the retesting requirements when a substantial change to software has been made. Certification of testing-services used in the industry should be considered. 

 

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