All-in August (Global)

by DLA Piper
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Top gambling regulatory developments in August.

Australia

With Australia’s federal election set to be held on 7 September 2013 and press reports claiming that leader of the Opposition, Tony Abbott, will overturn Kevin Rudd’s current Labor government, the voluntary scheme to tackle problem gambling published by the Opposition looks likely to be introduced. The policy proposes a four part plan which includes:

  1. a national voluntary pre-commitment programme;
  2. the availability of more and better targeted counselling and support services for problem gamblers;
  3. effective “self-exclusion” programmes; and
  4. a stronger online gambling environment.

Despite being a voluntary scheme, it is thought that the policy will become best practice for most operators in terms of support for problem gamblers. However, proposals to veto the relaxation of the online regulations published by the Department of Broadband, Communications and the Digital Economy in March is likely to face opposition from the industry.

For more information please read: Australia: The Coalition’s “policy to help problem gamblers”

Greece

On 12 August the Greek government put pen to paper to complete the sale of its 33% controlling stake in the gambling monopoly OPAP for €652 million to Emma Delta, an equity fund led by Czech billionaire Jiri Smejc. The sale comes at a time when OPAP is vulnerable, with a draft law seeking to maintain its monopoly position currently being scrutinised by the European Commission and challenges pending from disgruntled operators. 

Nevertheless, it is understood that the Greek government intends to try to continue to discourage offshore operators from targeting the Greek market by adding to its already 401 strong blacklist published in July. The updated blacklist could possibly include domains registered under the transitional licences issued to 24 operators in 2012.

A meeting is scheduled on September 10 between the Finance Ministry and the Hellenic Gaming Commission which could determine the fate of operators still targeting the Greek market, with possible amendments to Law 4002/2011 suggested.

Italy

The Italian Supreme Court held that live Texas Hold’em Poker tournaments are a skill game provided that such tournaments are arranged so that:

            1. there is a fixed price buy-in and no further opportunity to buy more chips;

            2. all players are given the same number of chips of nominal value; and

            3. prizes (whether in cash or kind) are predetermined.

Given live poker games can operate in Italy with no control, this decision may prompt the regulator to introduce new regulations.

For more information please read: Italy: Live poker is a skill game

Mexico

The applicable law governing gambling in Mexico is the Federal Gaming and Raffles Law of 1947 and its Regulations of 2004. Only certain games expressly mentioned in the law are allowed;  casino-style games are prohibited. As the law predates the internet, online activity provided from offshore is not clearly prohibited.  Mexican law follows a territorial principle on its application; however, the law is not clear if a certain activity has been carried out in or outside the Mexican territory.

The Mexican government and Congress recognises the outdated laws and it is understood that President Enrique Pena Nieto intends to draft a comprehensive gaming law. Any amendments are not expected until at least 2014 however.

Norway

The legality of Texas Hold’em Poker has also been debated in the Norwegian courts as well as the Italian courts. Based on the facts of the case, Texas Hold’em poker tournaments in Norway were considered not to be illegal under the Norwegian Penal Code as the motivation for players’ participation was not solely financial.  However, the country’s Lottery Act still deems Texas Hold’em poker to be a game of chance and requires a licence.

It remains to be seen if the laws will be updated to accommodate this conflict.

Further, Norwegian athletes, including Premier League footballers and NHL players, sponsored by unlicensed gambling operators have been threatened with exclusion from national teams.

Norway has a state-owned gambling monopoly (Norsk Tipping) which has exclusive advertising rights and is one of the largest contributors to sports financing in Norway. The fact that athletes partner with unlicensed operators undermines the country’s regulatory position and the sports federations have started to apply pressure on sports professionals signing such deals. Many athletes are now either terminating current deals or not signing new ones; a stance likely to remain as long as Norway fosters a monopolistic gambling regime.

For more on these stories, please read:

Norway: athletes gambling sponsor income under pressure

Norway: Texan Hold’em allowed under the Norwegian Penal Code but still illegal pursuant to the Lottery Act

Sweden

The Swedish Gambling Authority has recently published a proposal to increase the protection for online gamblers. Many offshore operators target the jurisdiction but it is only the state monopolies, the horse racing associations and non-profit organisations that can actually obtain a licence. Therefore, the proposals are likely to have little effect outside Sweden and will probably bring local player protection standards in line with those many offshore operators are already accustomed to. However, any differences may have to be adopted by operators if the online gambling regulations in Sweden are amended (anticipated to be in the next two years).

Online gambling reforms in Sweden are not quick enough for some industry stakeholders though, with the Swedish Horse Racing Totalisator Board vying for the government to make amendments sooner. The Totalisator Board has lost turnover to offshore gambling operators over the years and views a more liberal regime as a better opportunity to compete.

For more on these stories, please read:

Sweden: proposal for new laws for the protection of online gamblers

Sweden: ATG wants to abolish the Swedish gambling monopoly

UK

In the 2012 Budget, the UK government announced its intention to tax remote gambling on a point of consumption basis; requiring all offshore operators to obtain a UK Gambling Commission licence in order to transact with, and advertise to, British customers. A consultation ran from 5 April 2012 until 28 June 2012 whereby operators, suppliers and other interested parties were invited to provide comments and responses. On 16 August 2013, the responses to the consultation were published.

Two key areas of focus in the responses were effective enforcement of the point of consumption tax regime and how to define a “UK customer” in order to determine tax liability.

Based on the majority of responses, the government has decided that a “UK customer” will be determined by reference to where the customer usually lives. Given that most operators are already subject to “know your customer” requirements, identifying where a customer usually lives is hoped not to be too burdensome, but the precise guidelines are set to be published by HMRC ahead of the reforms being implemented.

Effectively enforcing the tax regime brings other challenges. It has been proposed that HMRC will:

  • seek to co-operate with other jurisdictions to recover any tax debts (relying on the EU Mutual Assistance in the Recovery of Debt directive);
  • require operators to appoint fiscal representatives to be held liable; and
  • require operators to provide a form of security.

For operators that fail to abide with HMRC’s requirements a new summary criminal offence will be created, which provides for unlimited fines, up to seven years imprisonment and loss of the UK Gambling Commission remote operating licence.

In addition to the responses by the industry, the first draft of the key Finance Bill clauses were also made available for comment, confirming the government’s intention to impose a tax rate of 15% GGR. The government has set a deadline of 30 September 2013 for views on the responses and draft legislation.

It is thought that any comments on the draft legislation between now and 30 September will simply help to refine the Finance Bill (rather than substantially change it) before a full eight-week technical consultation begins in Autumn. The UK Government intends to implement the reform on 1 December 2014.

It is unlikely that the government will lower the tax rate regardless of comments received from the industry; it has no incentive to do so, especially when other regulated jurisdictions manage to sustain higher tax rates. Challenges to the reforms may help stall the process however.

Read the responses and draft Finance Bill clauses here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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