Overview of the top gambling regulatory developments in September.
Following Bulgaria’s publication of a blacklist of operators illegally targeting the jurisdiction in June 2013, the country issued its first sports betting licence this month. The licence was issued to Malta-based betting company Europefootball Malta Limited (previously Balkanbet), and according to the state regulator, more licences are to follow.
For the majority of operators, the Bulgarian regime is largely unworkable due to the 15% turnover tax imposed on betting operations. There has been no suggestion that the tax rate would be amended and the regulator is continuing to enforce the regime, augmenting the blacklist with another 20 operators this month (now 130 domain names in total on the blacklist). It remains to be seen how many operators will follow suit and apply for a licence in Bulgaria, or if the Bulgarian regulator will consider changing the tax rate if it fails to achieve the desired revenue.
On the 10 September 2013 the European Parliament published its report on online gambling and the internal market, calling for a balanced and EU-compliant approach when regulating the online gambling market.
The debate began when the so called “Fox Report” (drafted by Gibraltar MEP, Ashley Fox) was published in March 2013, the content of which was very operator-friendly, suggesting a more proactive approach to enforcing against Member States that failed to comply with EU law. However, following a number of parliamentary debates and 425 amendments, the emphasis in the report significantly changed, promoting the principle of subsidiarity instead.
Using the amended Fox Report as a template, the European Commission has now published a 11 page resolution containing more than 50 policy statements directed towards the market, the European Commission and Member States. It focuses on five different topics, being consumer protection, compliance with EU Law, administrative cooperation, money laundering and integrity of sports.
The concept of EU-wide cooperation, compliance with EU law and money laundering regulations are common threads when discussing the regulation of the European online gambling market. However, the proposal that all Member States and gambling operators should ban all forms of live sports betting and any negative betting (i.e. on corner kicks, yellow cards, free kicks, red cards, etc.) is likely to face opposition from the industry. Many operators and markets already offer a comprehensive range of in-play betting and although such gambling activities may be more susceptible to integrity issues, it will be a difficult challenge to reverse a previously liberal stance in this field.
For more information please read: European Parliament report on online gambling
Prior to the Dutch government publishing its draft Remote Gambling Act in May 2013, which seeks to liberalise the monopolistic regime in the Netherlands, attempts to enforce the previously restrictive regime were lacking. The Dutch authorities had largely accepted offshore operators supplying directly to Dutch residents on the condition that they complied with the so called “prioritisation criteria” (no Dutch language version of website, no advertising in the Netherlands and no .nl domain names). However, in September, for the first time ever, the Dutch Gaming Authority sanctioned a Curacao-based gambling company (Globalstars) for offering online games of chance to the Dutch public. The authorities imposed a €100,000.00 fine which was levied following previous written warnings from the authorities.
Although this is the first fine of this nature from the Dutch authorities, it gives the industry an insight to the intention of the Dutch authorities moving forward, and also to the likely consequences should an operator fail to obtain a local licence once the regime is in place.
For more information on this story, please read: Netherlands: First time for online gambling company.
September has been a very busy month for the UK market.
As Great Britain continues its progress towards a new gambling regulatory environment, the UK Gambling Commission (“Commission“) has published two consultations in order to obtain the industry’s views on a number of issues that are pertinent to the way remote gambling operators and their suppliers are regulated. The first consultation looks at the licence conditions and codes of practice (“LCCP“), which form a fundamental part of the regulatory framework in Great Britain. The second looks at the protection of customer funds.
The LCCP consultation proposes a number of significant regulatory amendments on issues such as the location of remote gambling equipment; advertising and marketing of free bets and bonuses; the regulation of remote gambling software providers and the regulation of poker networks. Without delving into the detail, the proposed changes could have a significant impact on the way in which operators/suppliers are licensed and structure their operations in the British market. Therefore, any stakeholders need to consider how the issued raised are relevant to their businesses and, where appropriate, respond to them.
The second consultation on the holding of player funds seeks to gain the industry’s view on bolstering the levels of protection afforded to customers that have funds held with operators. Currently there is no requirement for an operator to segregate any customer funds from its corporate funds, and as such, the Commission is looking at the methods available to operators to segregate and protect such funds. It is also proposing a rating system, whereby operators should assess their own policies based on guidelines produced by the Commission, and with supporting evidence, grade their protection of player funds on a sliding scale. It is unclear how visible such a rating will need to be and if it will make any difference to customers that have trust and loyalty in a particular brand.
Both consultations are open until Wednesday 4 December 2013 so now is the opportunity for the industry, and particularly those that have experience in operating in other regulated markets to share their experiences. After responses have been considered, it is anticipated that changes could take effect as soon as April 2014.
Full details and commentary on all the proposals can be read at British gambling regulation is changing – are you getting ready?
Following a period of public consultation in response to the gambling industry’s concerns over the ASA’s remit to regulate marketing communications on advertisers own websites, the Committees of Advertising Practice (“CAP“) has decided to amend a section of the CAP Code. As of Tuesday 17 September 2013, betting websites regulated by the Commission will be permitted to use individuals under the age of 25 in marketing communications if such individuals are the subject of a bet being offered (provided they are not promoting gambling or the gambling operator).
This is good news for the industry since many elite sporting professionals are under the age of 25 (or appear to be under 25) and previously were unable to be used in advertising materials. It restores the position that existed prior to CAP extending its remit to online (pre-March 2011) and is a good example of the regulator responding to the needs and practicalities of the industry.
For more information, please read: UK: CAP amends gambling advertising regulations
Finally, the Office of Fair Trading, the UK’s consumer watchdog, published the results of its consultation on free to play social games on 25 September. The consultation commenced in April 2013 and focused on the business practices of game providers, with a particular focus on the relation between such products and the children that access them. The results of the consultation produced 8 “Principles” that developers will need to adopt in order to stay compliant with consumer legislation. The principles include providing up-front information about the costs of game features, information about the sharing of personal data with third parties, only accepting payments by “informed consent” and no direct marketing to children. The principles themselves are now subject to further consultation which ends on the 21 November 2013.
Following the consultation it is thought that enforcement of the laws could commence as early as April 2014, which will not only affect the UK but all other Member States given the OFT’s position is based on EU-wide consumer legislation.
For more information, please read: UK: OFT publishes results of freemium study