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Online Gambling Scenario in Europe

By: Shirley Spicer, Saturday December 31st 2011
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The European Union mandates a uniform flow of goods and services through the member nations. Ideally this should translate into a uniform legalized and regulated online gambling regime across Europe. The European Commission has been trying to implement such a regime over the last few years, but without much success. As matters stand at the end of 2011, every European country has taken its own independent stand on online gambling.

The country to make the first move was the United Kingdom. In 2005 the Gambling Act was passed and the Gambling Commission established to regulate online gambling. All verticals of online gambling are permitted. Later the UK released a white list of online gambling jurisdictions. Operators licensed in these jurisdictions were allowed to advertise in the UK online gambling market and solicit business there. These operators pay lower taxes than the UK licensed operators and this is a major cause of friction. Many leading UK online gambling operators have moved base to such jurisdictions. Now the UK government is planning to levy a secondary tax on these offshore operators to level the playing field, but apparently this move has not been well accepted. The demand is to lower British taxes.

Italy was the first mainland European country to usher in a regime of legalized and regulated online gambling in 2009. The verticals first introduced were poker tournaments, skill games, fixed odds sports betting and bingo. The success of these led the Italian government to introduce online poker cash games in February 2011 and online casino gambling in June 2011. The turnover of online gambling is expected to double in 2012. Italy legally allows only those operators who have been licensed by the regulatory body AAMS and is trying to block offshore operators.

France established its online gambling regulation in April 2010. Private operators were allowed to compete in restricted verticals after getting a license from ARJEL, the regulatory authority. The allowed verticals were only sports betting, horse racing and poker. Online casino gambling was considered too addictive and is not being allowed. One of the major disappointments in the French regulatory system is the taxation. France levies tax on gross turnover and not on profits, as is being done in Italy. Therefore many leading European online gambling operators have stayed away.

Spain will be the next European country to legalize and regulate online gambling. The new system is expected to go online from January 1, 2012. All through this year the concerned authorities painstakingly cleared hurdles one by one, from passing of laws to establishing regulatory mechanisms. By December 14, 2011 62 applications for online gambling licenses were received, out of which 58 have been accepted. 32 of these are reportedly Spanish-owned companies that already hold a large presence in the gaming and media sectors in the country.

Greece has been one of the sad stories of European online gambling. Greece desperately needs additional revenues from online gambling in order to meet the revenue generation it has committed to while accepting bailout assistance. However it is unwilling to let go of the situation that now exists, with the state owned company OPAP having monopoly control over the market. It has proposed a regulatory mechanism that will be struck down by the European Commission. The main objectionable clauses are that the licensees are required to locate their servers in Greece and carry out financial transactions through Greek banks.

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