Monthly Newsletter – December 2019

Europe’s monthly online gambling news

EU: EGBA and H2 Gambling publish new data on EU market size

Europe’s online gambling market grew 11% – from €20 billion gross gaming revenue (GGR) in 2017 to €22.2 billion GGR in 2018 – according to market data published on 11 December by the European Gaming and Betting Association (EGBA) in partnership with H2 Gambling Capital. The data confirms the ongoing popularity of online gambling in the EU. According to the new data, covering the 2018 market year, EGBA members had 16.5 million active customers and generated €5.41 billion in online gambling GGR – accounting for 24% of the total EU online gambling market. The annual data collection includes data on the overall EU online gambling market and EGBA member companies – including information about their market value, payments, games, sports, customers, licensing and compliance. EGBA represents bet365, Betsson Group, GVC Holdings PLC, Kindred Group PLC, MRG, and ZEAL Network, who combined had a total of 121 online gambling licenses across 20 EU countries.

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EU: EGBA publishes the Winter edition of its Online Gambling Focus

With several countries adopting new measures related to gambling advertising over the past year, it seems appropriate that advertising should be the topic for this Winter edition of our Online Gambling Focus newsletter. As well as enabling companies to highlight their products and offers to potential or existing customers, a major benefit of gambling advertising is that it directs consumers towards those gambling operators who are licensed in a given EU country. Having said that, there are risks that advertising exposes minors and other vulnerable groups to gambling. The challenge is how to strike the right balance: allowing advertising which is responsible, sufficiently directs betting consumers to the regulated gambling websites and does not entice problem gamblers or young people to gamble. In this issue we are pleased to have contributions from Prof. Mark Griffiths, of Nottingham Trent University, who elaborates on research in this area, and William Fenton, from the European Sponsorship Association (ESA), who gives his perspective on the role of sponsorship of sports.

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National developments

Austria: Austria prepares to give casino scandal probe sweeping powers

Austrian lawmakers have laid the groundwork for sweeping investigatory powers to be given to a new parliamentary committee to tackle a corruption scandal that has rocked Vienna’s political establishment. Austria’s WKStA, the prosecutor for economic crimes and corruption, is investigating 11 individuals in connection with bribery, illicit political funding and the possible promise of changing the country’s gambling law to benefit one of Austria’s biggest companies and its billionaire owner Johann Graf. A special sitting of Austria’s National Council on 26 November saw angry testimony from across the political spectrum as parliamentarians traded accusations of corruption and slander in relation to the WKStA probe. Eduard Müller, Austria’s finance minister, appeared in front of the chamber to give reassurances about his own ministry’s probity and willingness to co-operate with inquiries.

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Belgium: Lottery chief criticised for privatisation remarks

Jannie Haek, Chief Executive of Belgium’s national lottery operator ‘Loterie Nationale’, has been criticised for commenting on the potential privatisation of a state-owned asset. Belgium media had questioned Haek on whether the Loterie would replicate the privatisation of French gambling operator Française des Jeux (FDJ), which grabbed international business headlines by becoming one of Europe’s most successful IPOs in 2019. Offering his personal opinion, Haek stated that a ‘part-privatisation’ of Belgium’s national lottery mirroring FDJ movements could be a ‘beautiful opportunity for Belgian investors’. Haek’s comment would be criticised by outgoing Belgium Deputy PM Alexander De Croo of the liberal Open VLD party, who reminded Loterie’s CEO that he was in charge of a government asset and not a private enterprise.

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Czech Republic: Government prevails in Casino Kartac court case

The District Court for Prague 1 has ruled in favour of the Czech Republic government in a long-running legal battle with land-based casino operator Casino Kartáč over online roulette. The case dates back to 2006, when the operator lobbied the Ministry of Finance for the right to operate online roulette in the country. This request was refused, though online gaming regulations were then passed in 2016, and the market opened in 2017. The refusal prompted Casino Kartáč to file a lawsuit against the Ministry, demanding it repay CZK6.9bn (£227.7m/€270.3m/$299.4m) in estimated lost revenue, plus interest. The case had previously been dismissed by the District Court, noting that the lost revenue was totally hypothetical.

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Denmark: Government raises igaming tax in 2020 budget

The Danish government is to increase the tax paid by the country’s licensed igaming operators to 28% of gross gaming revenue, claiming that this will ultimately raise DKK150m (£17.1m/€20.1m/$22.3m) in new tax revenue. The tax hike, which will become effective from 2021, will see the tax rate increased from 20% of GGR, which has been in place since the Danish regulated online gambling market opened in 2012. For betting and gaming, the government noted that the online tax for betting and gaming was lower than that imposed on land-based casinos and gaming machines. Casinos pay a 45% GGR tax, and a further 30% on revenue above DKK4m. Gaming machines, meanwhile, are taxed at 41% of GGR, plus 30% on revenue over DKK4,000 for restaurant-based machines, and the same levy on revenue over DKK250,000 in gaming machine halls.

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Denmark: Regulator to enforce deposit limits from January 2020

Danish gambling regulator Spillemyndigheden has announced a series of updates to its online casino certification, with deposit limits set to become mandatory from 1 January, 2020. From that date, it will become mandatory for customers to set a monthly, weekly or daily deposit limit before they can gamble. These changes were first put forward in a draft executive order published in January this year. Alongside a range of new controls related to gambling advertising, namely limits on how much a player may spend and wager to be eligible for a bonus offer, licensees were also required to provide information on help for problem gamblers, and link to the country’s self-exclusion database ROFUS.

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France: Senate approves shift to GGR tax for gambling

France’s Senate has passed a budget bill for 2020, including an amendment to calculate gambling tax based on gross gaming revenue (GGR) rather than turnover. The bill will now be passed to the National Assembly, where the amendments must be ratified before the budget can become law. Due to shift away from the turnover-based model, the tax rates will change. The tax on horse race betting will come to 19.9% of GGR, for sports betting the rate will be 33.8%, and for online poker 36.7%. In addition, social security payments will also be based on revenue rather than turnover, resulting further changes to rates. For horse racing, this will become a 6.8% GGR levy, for sports betting, 10.7% and for online poker, 4.1%.

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Germany: European Commission opens state aide investigations into possible advantages for public casinos operators in Germany

The European Commission has opened an in-depth investigation to assess whether the special tax treatment of public casinos operators in Germany is in line with EU State aid rules. In a separate decision, the Commission has also opened an in-depth investigation into specific measures adopted in North Rhine-Westphalia with regard to the public casinos operator active in that region. In Germany, public casinos operators (Spielbankunternehmen) are subject to a specific tax regime that replaces a series of otherwise applicable general taxes, in particular corporate, income and trade taxes. The Commission has received several complaints from companies active in the gambling sector in relation to certain aspects of this specific tax regime as well as an alleged guarantee for public casinos operators to remain profitable. The formal investigation aims at clarifying whether this specific tax regime entails an unjustified economic advantage for the public casinos operators in the form of a lower tax burden in comparison with the normal tax rules.

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Germany: Hesse say no sports betting licence applications received

The Minister for the Interior in the German state of Hesse has claimed no operator has filed an application for a federal sports betting licence, warning that companies will face immediate action if they continue to operate without certification. Minister Peter Beuth said that operators would be expected to temporarily cease offering sports betting until their licence application has been processed by the Regional Council of Darmstadt, the state body that will oversee the process. While Beuth pointed out that the Council has been accepting permits “for months”, no operator has filed its application to date. Operators have until the end of the year to file these applications. “I therefore urgently warn operators that from January 2020, sports betting is subject to authorisation, and there will be no more toleration [of unlicensed offerings],” Beuth said.

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Ireland: Bingo backdown – Government changes its new gambling laws after protests outside Dáil

The Government has been forced to change its new gambling laws to allow bingo hall operators pay bigger prize money. The new legislation had proposed that prize money should not exceed 50pc of the proceeds from entry fees. However, the Government was forced into an embarrassing climb down – and last night supported an Opposition amendment to the legislation that will allow prize money to be up to 75pc of takings. The amendment was tabled by Sinn Féin TD Martin Kenny and supported by Independent TD Denis Naughten. The vote came after Minister of State David Stanton had insisted he would not change the legislation. However, the Government ultimately supported Mr Kenny’s amendment. The key aim of the legislation was to ensure bingo operators, which are operating on behalf charities, give a minimum of 25pc of their proceeds to the charitable organisations.

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Latvia: Online gambling operators to get protectionist help in 2020

Latvia’s regulated online gambling market continues to enjoy double-digit growth as the government prepares to implement payment-blocking of unauthorized online competition. Figures recently released by the Lotteries and Gambling Supervisory Inspection of Latvia (IAUI) show state-licensed gambling operators generated combined revenue of €237.1m in the nine months ending September 30, a 12.2% rise over the same period last year. Over €171m of this sum came via gambling machines, a 9% rise over the same period last year, while gaming tables were up less than 3% to €12.7m. Both verticals are facing significant tax hikes comes January 1 as the government puts the squeeze on the sector.

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Malta: Gaming industry looks forward to the ‘swift’ implementation of the Moneyval report

Despite remaining committed to Malta the iGaming European Network (iGen) said it looked forward to the swift implementation of the Moneyval report, the recommendations from the Council of Europe and the “satisfactory conclusion” of the independent investigation into the murder of journalist Daphne Caruana Galizia. In a statement on Monday iGen said that the extraordinary events happening in Malta over the last few years, accumulating in the turbulent past two weeks were of “grave and growing concern for the iGaming industry operating internationally and based in Malta.” “Like many others, our Industry thrives on stability and demands high standards in rule of law of the institutions that govern the countries in which we operate,” Network said.

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Netherlands: Dutch Lower House adopts motion banning pre-watershed gambling advertising

The Dutch Lower House has today adopted a motion calling for a ban on broadcasted gambling ads between 06:00 and 21:00. Lottery advertising and simple mentions of sponsorships during broadcasts will be exempt from this rule. A motion intended to give sports associations a veto over which of their sporting events operators can offer bets on has been amended and will be voted on this Thursday. Similarly, a motion requesting that no role models and influencers under 25 are allowed to be featured in gambling advertising has been temporarily withdrawn and may – after being amended – also receive a vote on Thursday. At this point, it appears all but certain that both of these motions will be able to find majority support in their amended forms.

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Netherlands: Speech by KSA’s René Jansen at Gaming in Holland event, 17 December 2019

Ladies and gentlemen, Let me start by thanking Willem van Oort for inviting me to speak here today and congratulate him with his great sense of timing as this afternoon there will be a vote on ten Parliamentary motions concerning gambling legislation. In my opinion we could expect a majority for the motion concerning the extension of the timeslot for commercials. The Kansspelautoriteit, or Ksa, aims to be a visible and transparent organisation, so I’m always happy to make use of opportunities like this breakfast meeting here in Amsterdam. I’ll be filling you in on the latest developments surrounding the implementation of the Remote Gambling Act, particularly regarding the licence application many of you will be submitting.

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Netherlands: Regulator to prioritise age verification

Operators in the Netherlands who fail to verify the age of players risk being added to a ‘bad actor’ list ahead of the introduction of the country’s licensed gambling framework in 2021. The KSA, the Dutch gaming authority, said that from the start of 2020, online gambling operators who do not visibly confirm the age of participants before the registration process is completed will be dealt with as a priority. They risk being handed a fine and effectively being black-listed when the country’s online gambling sector is opened up starting in January 2021. The KSA said only an objective means of proof can be used for age verification. “Failure to verify age before the registration process has been completed also has consequences in the longer term,” the KSA said in a statement.

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Norway: Amended payment ban to come into effect in January

Norway’s gambling regulator Lotteritilsynet has confirmed that amendments to the country’s ban on payments to unlicensed operators will come into effect on 1 January, 2020. A ban on payments to gambling operators that do not hold a Norwegian licence was introduced in 2010, but Lotteritilsynet has estimated that approximately NOK6bn (£501.5m/€592.8m/$659.9m) is still spent each year with such companies. Lotteritilsynet said that though Norwegian banks have systems in place to block such transactions, unlicensed operators are able to avoid such measures by using other parties for transfers and mask the identity of payments.

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Sweden: Gambling participation drops to 60% in 2019

The latest edition of Sweden’s annual survey on gambling participation has revealed that the percentage of the country’s adult population has dropped six percentage points in the past year. The study, carried out by polling specialist Novus on behalf of the country’s regulatory body (Spelinspektionen), revealed that 60% of adults said they had gambled in the past 12 months. This marks a decline from 66% in the 2018 edition, and a 16% drop since the survey was first carried out in 2013. Novus conducted 1,600 web interviews with Swedish adults during October, with 45% saying they had gambled in the past month, of which 31% had done so in the past week. A further 21% said they had gambled more than a year ago, with 17% saying they never gambled and 2% unsure whether they had done so.

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Sweden: Regulator sets out illegal gambling strategy

The Swedish Gaming Authority (Spelinspektionen) has published details of its strategy for tackling unlicensed gambling activity as it prepares to ramp up preventative efforts against illegal operators. Spelinspektionen said that unlicensed activity had serious consequences for both players and the state, with illegal operator not necessarily offering the same standards of player protection required of licensees, and the state liable to lose out on tax revenue. Going forward, it will therefore prioritise measures that will ensure gambling in Sweden is channelled towards legal options. While the regulator admitted that determining which brands were actively targeting Swedish players was not an exact science, it has developed a criteria for assessing each potential breach.

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Sweden: Regulator says most Swedish penalties still unpaid

The Swedish Gaming Authority (Spelinspektionen) has revealed that despite issuing sanctions to licensees on 21 occasions in 2019, Åland Islands-based Paf is the only operator to have paid the sum owed. Paf was fined SEK100,000 (£7,962/€9,469/$10,494) in March 2019, for allowing self-excluded players to access its site. It did not appeal the decision, and has since paid the sum demanded by the regulator. However, none of the other licensees have done so. The first year under the new Swedish Gaming Act has seen Spelinspektionen take action against a number of operators for a range of offences. These run from from failing to integrate with the country’s self-exclusion database Spelpaus to serious deficiencies with anti-money laundering and social responsibility controls – to the extent that Global Gaming had its licence revoked over such issues.

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Switzerland: Comlot adds more unlicensed operators to Swiss blacklist

Swiss gambling regulator the Inter-Cantonal Lotteries and Betting Commission (Comlot) has expanded its blacklist of unlicensed operators with the addition of 10 more websites. First published in September following implementation of the country’s Federal Act on Real-Money Gaming (Geldspielgesetz), the list now contains a total of 87 websites that have been deemed illegal in Switzerland. Under Article 86 of the Geldspielgesetz, Comlot can request internet service providers to block access to platforms that are accessible in Switzerland but not licensed, using a domain name server (DNS) lock.

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United Kingdom: Consultation on Regulation of Gambling in Northern Ireland

This consultation paper has been drafted to seek public opinion on the current gambling law in Northern Ireland, and to seek views on whether changes are now necessary to ensure Northern Ireland has a more flexible and modern licensing framework capable of responding to the many societal and technical changes which have occurred in the industry. We are keen to hear the views of all parties with an interest in gambling in Northern Ireland, so that relevant views and evidence can be taken into account in any future policy decisions. Closing date: 21 February.

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United Kingdom: French gaming giant makes play for National Lottery

France’s newly privatised bookmaker is making a play for the National Lottery, further raising the stakes in the race to seize control of the prized contract from Camelot. Representatives for Française des Jeux (FDJ), one of Europe’s most powerful gaming firms, are understood to have held talks with Rothschild, the investment bank leading the hunt for the next National Lottery operator. Industry sources confirmed the discussions as FDJ last week celebrated Frances’s biggest stock market float for almost 15 years. Its privatisation has been a coup for the economic reform programme of Emmanuel Macron, the president. He enjoyed a successful career with Rothschild before entering politics and is spearheading the sell-off of a string of state-owned companies to raise cash to fund innovation and revitalise French markets.

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Market News

Portugal iGaming revenue grows to €54.1m in Q3
Spain Online gambling sector grows to €812m in 2018
UK Revenue and profit continues to climb for Bet365 in 2018-19
UK Online gaming yield declines in 2018-19

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