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Gambling in Europe

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Map of Europe (Wikipedia®)Online gaming in Europe is sometimes called a “gray market” because the ever-changing laws and parameters for the different territories can be confusing. Although Europe is a collection of separate countries, many of them are united under the umbrella of the European Union, or EU, which is governed by the European Commission. This governing body exercises great influence over online gambling laws in the EU's 28 constituent countries. Some of the EU's most significantly impacted countries, when it comes to online gambling, are Germany, France, Belgium, and the Netherlands.

The Growth of Online Casinos in the EU

Online gaming is one of the EU's fastest growing markets. In 2011, the industry generated a revenue of €9 billion. In 2015, profits are expected to exceed €12 billion. According to commission statistics, approximately 6.8 million EU consumers participate in some type of virtual gaming each year. That high number, coupled with the fact that Internet and mobile technologies are exploding, adds up to significant profit potential for the EU market.

Different Gaming Frameworks in the EU

A blanket statement cannot be made about how online gaming is governed in the EU. While some territories operate their markets through the granting of licenses, others are run solely by public or private administrators. The word “diversity” is key when it comes to understanding the framework of virtual gambling in the EU.

European Commission: Striving to Keeping the Industry Safe, Open, and Free

The European Commission's primary goal in governing the diverse EU virtual gambling industry is the protection of its citizens. This includes the prevention of crimes like money laundering and fraud, the safeguarding of sports team integrity, and the provision of equal marketing opportunities for all member countries. The EU advocates an open border policy in which no single country can theoretically monopolize the EU's gambling industry. This system is not perfect, however, as evidenced by the struggles recently seen in Germany's market.

Germany: Struggling to Create an Amenable Online Gambling Treaty

Germany has struggled to create an online gaming policy deemed acceptable by native marketers and the rest of the EU for years. In 2011, a document called the “German State Gambling Treaty” was drafted. In theory, this document opened up Germany's online gambling market to competitors from other EU states. In fact, however, the document granted special privileges to monopoly-holding German online marketers that the rest of the EU found objectionable.

The German state of Schleswig-HolsteinBy early 2013, all 16 German states ratified the treaty which allowed for 20 online sports betting licenses and unregulated online casino games. This included Schleswig-Holstein, the state which formerly boasted a much more liberal licensing policy. In spite of Germany's unanimity over the treaty, the EU objected to the document, claiming that it gives German online operators an unfair advantage over other EU nations. Spent by the years-long debate on the issue, the German Federal Court suspended its decision on the treaty indefinitely in January of 2013.

France: Online Gaming Still New

Online gaming is still a fairly new phenomenon in France. In 2010, the activity became legal when the French National Assembly issued licenses to Bwin Party, PartyPoker, and several other companies. Licenses were granted on the condition that the companies operate games of strategy and not games of chance. Games of strategy include poker, horse racing, and sports betting. Slot-type games are excluded from this category.

Horse race betting is one of the most popular forms of gambling in France. Land-based horse race betting is somewhat profitable for the country; virtual betting is profoundly so. While 2012 saw a three percent increase in French live horse racing revenue, the first half of 2013 saw a 20 percent increase in revenue for French virtual sports betting. These statistics are promising for France and for the online gaming industry as a whole.

Paris Mutuel Urbain (PMU)Gambling in France is overseen by the Paris Mutuel Urbain, or PMU, and regulated by a police force called “Sous Direction des Courses et des Jeux.” After 80 years at the helm of the French horse racing wagon, the PMU took responsibility for the globalization of French horse racing in 2010. The industry, since then, has never looked back.

Belgium: Blacklisting Foreign Companies

Belgium does not embrace the free online market philosophy proclaimed by the EU. The country allows its land-based casinos to apply for online gaming licenses, but virtual company applications are always denied. Unlicensed companies who solicit online Belgian customers are, in fact, blacklisted by Belgian officials. At the time of this writing, 78 such casinos had been identified by the Belgian Gaming Commission. Fines of up to €100,000 apply to offending companies who fail to respect Belgium's wishes.

Belgian Gaming Commission (Kansspelcommissie)Some smaller land-based casinos in Belgium have found their way around this regulation by forming partnerships with larger international companies like Bwin Party. Online gaming companies in Belgium face a hefty 34 percent corporate tax assessment and an additional 15 percent gaming tax on top of that. Once approved, these licenses do not expire.

The Netherlands: Aspiring to Work Out All Details by 2015

Dutch gaming law, overseen by the Netherlands Gaming Authority, or NGA, is also in a state of flux. By January 1, 2015, the parameters for the online gambling market in that country are expected to be fully realized. Although that date is nearly a year and a half away, a draft of the Dutch Remote Gambling Act has already been penned.

Under the tentative Dutch Remote Gambling Act, online casino taxes would weigh in at 20 percent, nine percentage points less than land-based tax rates in that region. Problem gambling programs would receive 1.5 percent of gross gaming revenue in addition to that 20 percent, a move consistent with the protective values of the European Commission.

Those wishing to operate an online casino in the Netherlands would need to establish a subsidiary business in the country before being granted a license. Licenses would last for five years and would give proprietors the right to dabble in sports betting, poker, and casino games. After one year of operation, the businesses would be required to successfully pass a quality assurance audit by the commission.

As the 2015 deadline approaches, citizens have raised concerns about the proposed gambling act. Many of these concerns deal with safeguarding the public from the ills of addiction and regulating the industry so consumers are fully protected and informed.

Applying for a Gambling License in the EU

In theory, an online gaming license obtained in any EU territory grants the holder the automatic right to do business with people in all other EU jurisdictions. While it's true that some states, like Germany, continue to hold the monopoly on online gaming in their individual territories, EU policy does its best to override this. Obtaining an online gaming license in the EU is no simple task. First of all, there must be "virtual" space available for a new vendor under the country's existing law. If space is indeed available for a new vendor, certain requirements must then be met.

Malta Gaming Authority logoIn Malta, for example, a person wanting to obtain an online gaming license must submit a business plan, contract agreements, and an outline of any necessary software to the European Commission. This paperwork must satisfactorily meet all requirements; not everyone's application is approved. Upon approval of these documents, a letter of intent from the Malta Gaming Authority is penned to signify the new proprietor's acceptance as an online gaming vendor. After software certification, a five-year gaming license is then issued. Fees and taxes are assessed: Fees alone cost roughly €13,000. Taxes tack on at least another €7,000 to the monthly bill.

Licensed Online Gambling Protects Everyone

The vast, unregulated nature of the Internet makes the potential for corruption in the online gaming world significant. In order to protect both gamblers and business holders, rigorous licensing practices are observed in most countries. For this reason, perhaps one of the trickier aspects of running an online gambling business in the EU is obtaining the gaming license in the first place.

Anyone who wagers money in a virtual sense stands to lose money in a real sense. Online gamblers, therefore, should stick with reputable gaming companies no matter what country or continent they choose to deal with. Fortunately for gamblers, the online gaming market in the EU is backed by the rigorous support of the European Commission. As the EU market expands, more and more lucrative opportunities will present themselves to gambling businesses and pleasure seekers alike.

Online share of the European gambling market (2003 to 2020 forecast)
Online share of the European gambling market from 2003 to 2015 - *2020 forecast