European Online Gambling

January 11, 2007

In the aftermath of the tragic Unlawful Internet Gambling Enforcement Act (UIGEA) that was passed by the United States in October of last year, it came as no surprise that the focus naturally turned to Europe. Online casino companies, who suddenly found themselves with enormous customer bases blocked from their gambling by US financial institutions, were forced to seek other markets and the natural transition was to Europe and, further afield, to the Far East.

As more and more companies scrambled to grab a piece of an already tight market in Europe, national authorities started to sit up and consider their stance on the issue. Some countries, like England, welcomed the new activity and tried to attract homeless companies with their permissive new laws. Countries such as Italy decided to take advantage of the situation and introduce regulation laws to also attract companies and gamblers alike. Italy has just issued 17,000 licenses to sportbetting companies, poker rooms and other gambling companies and many of them intend setting up online gambling options for their customers.

Even conservative Spain has progressive winds blowing through some parts of the country. Madrid recently issued tenders for companies to operate gambling activities in the city. This week, the popular British operator, Ladbrokes, announced its intentions to team up with a Spanish company in a joint venture to bring electronic gambling to Madrid. Many UK countries applied for licenses both in Italy and Spain in a bid to get a piece of the action.

At the other extreme, some countries such as France, Turkey and Germany tried to toughen their laws. This week the Turkish media stated that the country’s authorities would be starting to prosecute online gambling operators, extending an existent law that prohibits child pornography and other illicit online activity.

Overseeing the entire European scene is the European Commission. EU laws affirm that member states should provide free movement for goods and services and this is obviously not the case when it comes to countries that prohibit online gambling outright. The European Commission has launched proceedings against many countries that operate national lotteries and thus maintain state-run monopolies on the gambling scene. The EU has given seven of these countries until the end of the current year to explain their position, justify their sports betting monopolies, and make the necessary changes if need be.

With so much activity going on in the European gambling industry, it comes as no surprise that the story was picked up by mainstream media. This week, an interesting article on the subject, written by Silvia Spring, appeared in Newsweek and has generated a flurry of interest in the online and offline gambling worlds. Spring questioned the hypocrisy of the position of European countries that want to ban online gambling for reasons related to protecting their population from the ‘sins of gambling’. She showed the ludicrous situation of these countries fighting online casinos yet aggressively promoting their own state lotteries through the local media. "How can you say that you're concerned about gambling being dangerous to the moral and social fabric of your society if, at the same time, you promote a massive lottery and try to get people to come and gamble? It's contradictory,'' Spring writes in her article.

It seems that that the European Commission has a tough fight ahead of it when it comes to countries like France and Germany. Both have state-run sports betting agencies that bring the government incomes of billions of dollars each year. These countries will probably not be willing to give up this kind of income in order to compete with corporate gambling without a fight.

Nevertheless, it is only a matter of time before the issue will have to be addressed and changes be made. It is impossible to ban the 3.3 million Europeans who regularly gamble online, nor is it possible to police the 2300 websites on the internet who offer egambling through a variety of platforms. This week, the activities surrounding online gambling in Europe really drove home this fact.