A new trend has been developing in the remote gambling industry within the EU as national markets start opening up to foreign competition. For the first time ever, remote casinos are able to get licensed and operate legally in markets that were closed off before, all thanks to new laws being passed and regulation being increasing. We discuss the cases of Portugal, Romania and the Netherlands, and talk about what this means for the casino operators and the players right here in the United Kingdom.
Thanks to the European Union, the liberalisation of the gambling industry throughout the member states of the EU is well underway. Based on the European law, no member state can hinder the free movement of goods and services, dictating that international remote casino operators should be allowed to freely participate in all national markets and generate profits.
However, in practical terms that hasn’t been the case in quite a few European countries which have kept their gambling markets closed and only allowed national companies to participate. Any operators wishing to enter the market from abroad were prohibited to do so. Despite the United Kingdom harbouring the largest online and mobile gambling industry in Europe, there are considerable markets for it elsewhere in Europe and the interest in remote gambling is only growing. That’s why, we look into the cases of Portugal, Romania and the Netherlands, and see how those markets have been, or are in the process of being, opened up and liberalised.
The Case of Portugal
International operators should start getting very excited, especially if they have wanted to enter the Portuguese gambling market for quite a while. Last week, the president of the country approved the proposed changes in online gambling which will come into law on June 28th and will ensure that international casinos can set up shop and operate legally in Portugal.
Until this law came into effect, the government had a monopoly on gambling in the country called Santa Casa da Misericordia (SCM). Although all types of gambling were allowed in the country (operated by SCM), the restriction on foreign casinos doing business in the country was strongly enforced.
So what caused such a change of heart? Well, as usual it’s all about the money. As some of you may know, Portugal had to be bailed out by the EU during the global financial crisis, but left the rescue programme last year.
Since then, it has been scrambling to get in more tax revenue and decided that licensing and taxing remote gambling operators is a great way to generate an extra €25 million for the recovering economy. Although foreign operators can now get licensed in Portugal, they are still unhappy with how the entire thing was handled. For one, SCM will retain its monopoly on offline gambling, but more importantly, they will only pay half the tax of its online competitors.
The Case of Romania
Romania too is on the path to opening up its remote gambling market and has been ever since the first proposals were made back in 2009. Now that the frameworks have been sorted out and the legislation fully spelled out, the proposed law has been sent to the president for his final approval. After it receives that last signature, it will come into effect pretty quickly – within a week or so. This will make Romania the first Eastern European country to open up its gambling market to international operators, much to the praise of the European Union.
Before this law, only national operators could provide their services and although the situation wasn’t as bad as in Portugal where a government backed company had a monopoly on gambling, it definitely comes as a breath of fresh air to the entire industry in Europe. However, having spent more than six years on the legislation, casinos licenced and operating in Romania will be subject to a whopping 20% tax on online gambling revenues – that’s higher than the POC tax in the United Kingdom! Only time will tell how many operators will be interested in dealing with that, and Romanian government hasn’t reveal if it has had any interest from potential licencees yet.
The Case of the Netherlands
Contrary to the Romanian government, the Netherlands is quick to brag about how many potential applicants have expressed interest to legally operate in the Dutch market – 200 to be precise! Just last week, the Parliament was delighted with the fact that there would be so many casinos to regulate and (of course) tax, giving casinos and players alike hope that the Dutch Remote Gambling Act will be passed soon.
Although it’s still being debated in the Parliament, the country is in desperate need of updating its remote gambling laws, because currently the online casinos are unregulated and the players are vulnerable as there is no fund protection or social responsibility measures. The proposed tax rate of 20% is the same as in Romania, but there is one distinct difference. The 20% rate is actually welcomed, as offline casino operators are taxed at a staggering 29%, making online gambling an attractive alternative to those seeking higher payouts and more incentives to play.
The implications of European remote gambling markets opening up are countless. As more and more countries pass laws to license, regulate and tax online and mobile casinos, it will make the industry more fair and just throughout Europe. Operators will have equal opportunities in all countries to run their businesses legally and responsibly. Furthermore, increased and healthy competition among operators will lead to better incentives being offered to players and possibly ever-larger payouts too.
With regulation and licensing, the players are better protected because their funds are safer and the social responsibility checks that the casinos will have to pass will ensure that the risks of problem gambling are minimised.
Lastly, for UK players, the increasingly regulated national European markets mean that the UK won’t be the only country that is regulating its remote gambling market and taxing the operators. This will promote a feeling of fairness – after all, regulation of the market is far from ‘pure evil’ and has many pros.