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Wiggin EU regulation roundup — October 2017

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Chris Elliott and Beth French of law firm Wiggin provide a regulatory snapshot of markets across the EU, with Belgium, Slovakia and the Netherlands updated

In conjunction with Chris Elliott and Beth French of Wiggin LLP, iGaming Business provides a regulatory snapshot of igaming markets across the EU/EEA. This includes all regulated products, legalised operator types and any impending market updates. Belgium, Slovakia and the Netherlands are among those updated in this issue.

AUSTRIA
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: licences for sports betting and horse race betting are available for private operators on a regional basis within Austria whereas poker, casino, bingo and lottery are controlled by the monopoly, Casinos Austria, which has exclusive rights until 2027.

Status: an appeal challenging Austrian tax legislation is seen as a test case by other offshore operators targeting Austrian business. In 2016 court decisions reached conflicting decisions on the compatibility of Austria’s current gambling legislative framework with EU law, which remains unclear. The Austrian government put forward a proposal to block unlicensed offshore operators targeting the country, although the next steps are unclear.

BELGIUM
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: all products are available to private operators, save for lotteries, which are reserved exclusively for the monopoly provider. However, online operators need to partner with local casinos in order to satisfy the land-based establishment requirement. Alternatively, they can apply for one of 34 retail licences (F1 licences) which can be extended to cover online (F1+ licence).

Status: the potential for EC infringement proceedings remains. The introduction of VAT at 21% of GGR for online games of chance in 2016 may also be subject to legal challenge. Active enforcement measures against operators and players are in place. A draft bill has been notified to the EC that would, if implemented, restrict gambling advertising during sporting events.

BULGARIA
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery (excluding raffles and instant lottery games).
Operator type: all products are available to private operators save for lotteries, which are reserved exclusively for the monopoly provider.

Status: any operator from an EU/EEA jurisdiction or the Swiss Confederation can apply for a licence. The Bulgarian regulator has awarded approximately 20 licences to date, including those to a number of international operators. The change from a turnover to a GGR tax-based system has prompted a number of operators to apply for a local licence.

CROATIA
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: all products are available to private operators, save for lotteries, which are reserved exclusively for the monopoly provider. Private operators can be licensed to offer igaming only if they obtain a land-based casino or betting licence.

Status: following Croatia’s accession to the EU in July 2013, it was understood it would submit new legislation which was compatible with EU law. However, on 5 March, 2014 the Croatian government notified a draft bill which sought to embolden the position of the monopoly and local operators, giving rise to further incompatibility issues. The receipt of a detailed opinion from the EC stalled the legislative process.

CYPRUS
Regulated gambling products: sports betting, horse race betting and lottery.
Operator type: OPAP has a monopoly over lottery operations; sports betting licences are available to private operators.

Status: Cyprus regulated online betting in July 2012, although a licensing regime was not established until 2016. Applications for online sports betting licences were accepted for only a one-month period: 3 October to 3 November, 2016. Following the closure of the licensing window, the government announced it would implement blocking measures with the publication of a blacklist, and warned local ISP providers that they would face fines for failures to block sites offering unlicensed gambling products. The first sports betting licence was granted in January 2017. Cyprus notified a new draft betting law to the EC on 28 June that, among other things, sought to remedy an infringement identified by the EC related to the obligations of ISPs. The standstill period ended on 29 September and there is no indication yet whether the EC intends to issue a detailed opinion.

CZECH REPUBLIC
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: EU- and EEA-based operators are able to apply for licences.

Status: amendments to the Czech Republic’s gambling legislation became effective on 1 January, 2017 and allow EU/EEA companies to apply for online licences. The first international operator licence was granted on 28 January, 2017. The licensing regime has recently been called into question after at least one operator announced it will no longer pursue a licence, citing the current regime as incompatible with EU law. There is no transitional/grace period for licence applicants while they await full licensure.

DENMARK
Regulated gambling products: sports betting, fantasy sports, horse race betting, poker, casino, bingo and lottery.
Operator type: sports betting, poker and casino licences are available to private operators. Bingo, lottery and horse race betting (fixed odds only) are controlled by the state monopoly.

Status: the Danish online gambling regime went live on 1 January, 2012. ISP-blocking measures are active in the jurisdiction and the Danish Gaming Authority has been granted an injunction to block operators and suppliers that have been targeting Danish customers without the requisite licence. Following a government announcement earlier this year, Denmark has passed amendments to the country’s gambling legislation which will open up online bingo and horse race betting markets to private operators. The amendments are expected to enter into force on 1 January, 2018.

ESTONIA
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: licences for all gambling products are available to private operators, save for lotteries, which are reserved exclusively for the monopoly operator.

Status: operators seeking to accept business from players in Estonia must be issued an activity licence for the type of gambling they wish to offer, then an operating permit to provide the services remotely. A blacklist of around 1,100 operators is maintained and updated by local authorities and ISP and payment blocking is in force. Although some operators argue that the regime is still not compatible with EU law, there has been no criticism or open challenge by the EC to date.

FINLAND
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: all gambling products are under the exclusive control of the three monopoly providers: Raha-automaattiyhdistys (“RAY”), Fintoto Oy and Veikkaus Oy. The monopolies merged into one state entity on 1 January, 2017.

Status: an ECJ ruling confirmed that Finland’s three monopoly providers are legally permitted, which was subsequently written into law. In November 2013 the EC also withdrew infringement proceedings. Active enforcement measures are in place (restrictive marketing for offshore operators and ISP blocking).

FRANCE
Regulated gambling products: sports betting, horse race betting, poker, bingo and lottery.
Operator type: private operators can obtain online licences for sports betting, horse race betting and poker. The monopoly has exclusive rights to bingo and lottery.

Status: a regulated market since the introduction of a licensing regime in 2010, following which the EC withdrew its infringement proceedings. Parliament announced a full review of French gambling legislation in 2016, although little progress has been made so far except for changes to allow for international poker liquidity and provisions relating to the organisation of esports tournaments. It is understood that ARJEL has now reached an agreement with regulators from Portugal, Italy and Spain to allow for international poker liquidity, with implementation expected by the end of 2017.

GERMANY
Regulated gambling products: Schleswig-Holstein, a small Northern German state, regulates sports betting, horse race betting, poker, casino and bingo. Germany's other 15 states currently permit only sports betting and horse race betting.
Operator type: private operators can no longer obtain licences in Schleswig-Holstein, and those in existence will expire on 30 June, 2019. In the other 15 states, horse race betting licences are available at a regional level but the position surrounding the 20 available sports betting licences is still uncertain.

Status: the licensing regime in Germany is in a state of flux. The tender for 20 federal sports betting licences was aborted, following a number of appeals by operators not granted a licence. The CJEU ruled in 2016 that Germany’s sports betting regulation was incompatible with EU law and that enforcement actions would be unlawful where none of the 20 licences could, in practice, be acquired. The decision led to calls for comprehensive legal reform of Germany’s gambling legislation. In March 2017, all 16 German states signed amendments to the country’s gambling law to allow for an unlimited number of sports betting licences, although the ban on online casinos would be upheld. However, on 22 September, Schleswig-Holstein’s state parliament voted not to ratify the amendments. Without the support of every state, the intended reforms will not take effect, delaying reforms further.

GREAT BRITAIN
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: all licences are available to private operators, save for lottery, which is reserved exclusively for the monopoly provider, Camelot.

Status: any operator that transacts with, or advertises to, British residents requires a licence from the Gambling Commission. Licensed operators are required to source gambling software from Commission-licensed businesses. A corresponding tax rate of 15% of gross profits was introduced on 1 December, 2014. A Gibraltar trade association challenged the taxation regime by arguing that it infringed EU law, but the CJEU ruled in June 2017 that Gibraltar and the UK should, for the provision of services, be considered a single member state as a matter of EU law. On 5 December, 2016, the UK government announced that the first use of free plays for remote gaming will be taxed and winnings will be brought into the duty calculation at the end of the rewagering process. The changes are due to have effect for accounting periods that began on or after 1 August, 2017. The Horserace Betting Levy Regulations 2017 became effective on 25 April, 2017, requiring all gambling operators (including companies based overseas) that offer bets to people in Great Britain on horse racing in Great Britain to pay a 10% levy on the profit on those bets where that profit exceeds £500,000 a year.

GREECE
Regulated gambling products: sports betting, horse race betting and lottery.
Operator type: all products are exclusively reserved for the monopoly providers although 24 transitional licences for private operators remain active, with all products permitted.

Status: the enabling regulations that implement an online Greek gambling licensing regime are yet to be implemented. In 2012, a “transition period” commenced whereby the Greek government granted 24 transitional licences to operators, enabling them to keep transacting with Greek residents. The fate of the 24 licences is still unclear, although a continued delay to the implementation of the legislation led to the EC sending a letter of enquiry to the Greek authorities at the beginning of 2017 to question the lack of development in the remote gambling sector.

HUNGARY
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: only the state monopolies (Szerencsejáték Zrt. and Magyar Lóversenyfogadást-Szervező Kft) and local concession companies can apply for a licence.

Status: amendments to Hungarian gambling law came into force on 1 October, 2015. They allow only two land-based casinos to hold remote casino concessions. The regulator has since issued fines, a number of which have been challenged by operators, against unlicensed operators that continue to target the market. In June 2017, the CJEU delivered its ruling in such a case, which concerned two ISP blocking orders against one operator’s websites. The ruling determined Hungary’s gambling regime to be incompatible with Article 56 TFEU, and that Hungarian authorities cannot impose sanctions on operators where the national gambling law infringes EU law.

IRELAND
Regulated gambling products: online gaming is not specifically accounted for in Ireland’s outdated legislation and as such is currently unregulated. Online betting has been regulated since August 2015.

Status: Ireland is currently updating its legislation, which will create a comprehensive igaming regime and payment restrictions. More substantive developments are expected in 2017. The Betting (Amendment) Act 2015 now requires remote bookmakers to hold a licence and pay a 1% turnover-based duty.

ITALY
Regulated gambling products:
sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: fully regulated market. The Stability Law 2016, passed in December 2015, introduces various measures affecting the remote gambling industry, including tax changes and tighter advertising rules. The law also provides for the award of 120 new online gaming licences (lasting for six years), although 40 of those are likely to be issued to licensees whose licences expired last year. The tender process for the award of the licences has been delayed since mid-2016. However, there is speculation that the process will launch imminently.

LUXEMBOURG
Regulated gambling products: lottery
Operator type: monopoly.

Status: the general prohibition on gambling appears sufficiently wide to cover all forms of online gambling.

MALTA
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: private operators can apply for a local licence (save for lottery products).

Status: following an announcement by the Malta Gaming Authority in 2015 that it was to modernise its online gambling rules, Malta has recently published a white paper proposing widespread reforms to its regulatory framework on gambling. The white paper seeks to replace the licensing system with only two types of licence (B2B and B2C). The consultation on the white paper closed on 23 August.

NETHERLANDS
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: monopoly for all products.

Status: the Dutch Lower House approved the Online Gambling Bill in mid-2016. It will introduce an online gambling licensing regime in the Netherlands and impose a 29% GGR tax on both online and land-based operators. The Bill still requires approval from the Senate and licensing is not expected to commence until at least 2019. A new coalition government agreement made reference to a need for (future) licensees to have an establishment in the Netherlands, but it remains unclear what this will entail. In the interim, the regulator continues to implement enforcement measures against operators targeting Dutch players and has announced that, as of 1 June, 2017, it would expand its approach to enforcement to pursue any operators who are “specifically and unequivocally” targeting the Dutch market.

NORWAY
Regulated gambling products: sports betting, horse race betting and lottery.
Operator type: online gambling is reserved for its two monopoly providers, Norsk Tipping and Norsk Rikstoto.

Status: the monopoly has extended its offering to include live betting, online bingo and casino games in an attempt to redirect traffic from unlicensed sites. In March 2017 the government published a long-awaited white paper on how best to regulate the gambling sector. It proposed that the gambling monopoly remain in place and no licensing system be introduced. The Norwegian regulator continues to step up enforcement efforts against unregulated operators, local banks and payment service providers.

POLAND
Regulated gambling products: sports betting, horse race betting, casino and poker.
Operator type: betting licences are available for companies with a representative in Poland. Casino and poker are reserved for a state monopoly.

Status: legislation enacted on 1 January, 2012 permits betting. To date, only a handful of local land-based operators have obtained a betting licence (including Fortuna, Millenium, STS, E-Toto and Totolotek). Following the approval of various amendments to the Gambling Act in 2016, online gaming (including poker) has as of 1 April, 2017 no longer been prohibited, although the exclusive rights to offer such products are reserved to a state monopoly. Provisions that provide for the establishment of a blacklist of unlicensed operators and ISP and payment blocking entered into force on 1 July, 2017. Totalizator Sportowy, the state-owned monopoly provider for online gaming, has published a call for tender for delivery of its online casino.

PORTUGAL
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: any EU/EEA operator can apply for a licence for online gambling. Lottery games and land-based fixed odds sports betting remain reserved for a monopoly.

Status: a regulated market since 2015. Although operators can now apply for licences, their Portuguese revenue streams will be subject to comparatively high tax rates, particularly sports betting, which is subject to an 8-16% tax on turnover. In 2015, the RGA filed a state aid case with the EC challenging the Portuguese betting tax as breaking EU trade rules.

ROMANIA
Regulated gambling products: sports betting, horse race betting, casino, bingo and lottery.
Operator type: any operator from an EU/EEA jurisdiction or the Swiss Confederation can apply for a licence. Lottery games remain reserved for the monopoly.

Status: the Romanian government passed legislation at the end of 2014 that allows entities within the EU to apply for a licence, and it imposes a reform on licence fees while eliminating many (but not all) of the tax burdens placed on player revenues. The Gambling Law (as amended) introduced a legal framework for a fully regulated online gambling market, and requires licences to be held by online gambling operators, as well as software providers, payment processors, affiliates and testing labs. After some delay, the secondary legislation that fully implemented the new licensing regime came into force on 26 February, 2016. In July 2015 the National Office for Gambling in Romania published a blacklist of unlicensed gambling operators.

SLOVAKIA
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: all products are operated by the monopoly, save that land-based sports betting operators can offer services online owing to a legal loophole.

Status: the Finance Ministry published an information notice indicating that the Government will make proposals to reform the regulation of online gambling, with a public consultation expected in January 2018. Whether any amendments will introduce a formal licensing system remains unclear.

SLOVENIA
Regulated gambling products: sports betting, horse race betting, poker, casino, bingo and lottery.
Operator type: online gambling must be operated by land-based casinos or lotteries and, as a result, only the monopoly holds online licences in Slovenia.

Status: the Finance Ministry notified secondary regulations for the operation of online gambling services to the EC on 17 August, 2016. The proposals would remove the cap on the number of licences and the requirement for a local establishment, although sports betting would remain as a monopoly.

SPAIN
Regulated gambling products: sports betting, horse race betting, casino, poker, bingo and lottery.
Operator type: private operators can apply for licences for all gambling products, save for lottery.

Status: the first online licences were issued on 1 June, 2012. Under the law, operators must hold a general licence and a specific licence for each activity from the National Gambling Commission. In June 2015, 10 new licences were awarded, the first since the market opened in 2012. In addition, 25 online slot permits were issued to new and existing operators. This followed the approval of the regulation of slots and betting exchanges. The Spanish regulatory body has formally announced it will soon launch its third official call for tender, following which applications for online licences will be accepted from operators for a period of one year.

SWEDEN
Regulated gambling products:
sports betting, horse race betting, poker, bingo and lottery.
Operator type: only public benefit organisations, the horse racing industry and the state lottery may obtain a licence. No licences are available for private operators.

Status: the Swedish government is under pressure to update its regulations following the commencement of infringement proceedings by the EC. On 31 March, 2017, the government published its long-awaited report on the re-regulation of the online gambling market, which includes a proposal to introduce a licensing regime that would allow private operators to obtain a local licence. The report is seen to be a key driver behind draft legislation to be published later this year, with a licensing regime not likely to emerge before 2019.

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Related article: Wiggin EU regulation roundup – September 2017