Regulatory developments
As with many other areas of eCommerce, the online gaming industry is being shaped by an evolving landscape of government regulations and compliance requirements.
Our mantra is to ‘Let the World Play for Real’ and we have long advocated that when it comes to online gaming the best way to protect consumers is to license and regulate. There are many examples to prove that prohibition does not work and only serves to drive the activity underground. Regulation and licensing is the preferred route.
This is now being accepted by a number of governments and we are entering an unprecedented period of regulatory change. This is particularly true in Europe, where, as well responding to pressure from the European Commission to reduce trade barriers, an increasing number of countries are recognising the economic and consumer benefits that can be attained through implementing proper regulatory regimes for online gaming. Similar considerations are also taking place outside Europe in regions such as North and South America.
Europe
While there are differences in the regulatory regimes in Europe such as the UK, Italy, France, Gibraltar and Malta, our view is that they collectively project a positive attitude towards online gaming as a leisure pursuit. We remain of the view that our significant scale puts us in a position to seize significant business opportunities that will arise over the medium to longer term as more countries look to embrace the reality that online gaming is a popular economic activity.
The UK enacted the Gambling Act in 2005 and established a framework for online gaming regulation that covered all products. After initially opening its market for tournament poker only in 2009, Italy is expected to expand its framework to also include online poker cash games, bingo and some casino table games during 2011.
France opened its market for online sports betting and online poker in the summer of 2010 and Denmark is expected to introduce regulation in 2011 for poker, sports betting and casino games. Spain, Greece and Holland are among several European countries that are now also actively considering developing their own regulatory regimes.
While Belgium has enacted a law for the regulation of online gambling, the requirement to first have a land-based license is seen by many as being in breach of EU law although no action has yet been taken by the European Commission.
In Germany attempts by the 16 states or Länder to preserve the monopoly position for lotteries through a collective treaty has been rebuffed by the Court of Justice of the European Union (‘CJEU’). In summary, various judgments by the CJEU ruled that the German State Lottery Treaty was both “inconsistent” and “incoherent” and therefore could not be applied under EU law. On 6 April 2011, following a meeting of the Minister Presidents of the Länder, a proposal for the new state treaty was put forward. bwin.party does not believe that this proposal is consistent with EU law and is hopeful that any final legislation will comply with EU law and recognise the market reality of a large and popular online gaming market in Germany.
Other countries such as Greece, Spain and Holland are also advancing their plans to create regulatory frameworks and we expect other countries will follow. As a result of this ‘patchwork quilt’ of regulation that is beginning to emerge across Europe, the European Commission has published a ‘Green Paper’ on online gaming that marks the beginning of a lengthy consultation that could serve as a pre-cursor to any future community directive on online gaming. Establishing a common approach to regulation, including technical requirements and responsible gaming standards will reduce costs and help to ensure consumers are treated fairly.
United States
Although the United States passed the Unlawful Internet Gambling Enforcement Act in October 2006, it remained the world’s largest online gaming market, especially so for poker, until April 2011. On 15 April 2011 the US District Attorney’s Office for the Southern District of New York closed down several illegal gambling businesses, including US-facing poker sites. Eleven individuals face charges relating to several breaches of US law. bwin.party is unaffected by any of these developments, having withdrawn from the US market back in 2006.
Separately, a number of developments in recent months point towards the possibility of the introduction of online gaming regulation for poker at either a federal or state level.
At a federal level, while some progress was made with The Internet Gambling, Regulation Consumer Protection and Enforcement Act sponsored by Congressman Barney Frank, the focus of attention shifted towards the end of 2010 with the publication of a poker-only bill sponsored by Senator Harry Reid. Whilst this latest bill failed to get attached to any legislation before Congress ended in December 2010, the strong effort to do so may be a signal that a similar bill will be reintroduced at some point during the new Congress. Already in 2011 California’s Republican Congressman John Campbell has announced his intention to publish a new federal bill to regulate and license internet gambling in the United States. Congressman Barney Frank is expected to be the Democratic co-sponsor of the bill.
At a State level, several proposals to regulate and license intra-state online poker have been proposed in California, Florida, Iowa and New Jersey although none have yet to reach the statute book. As with any political process, the timing and prospects of any of these federal or state measures becoming law remains uncertain.