2018 was – to the most part – a year of assessment and planning for online casino operators but also for regulatory authorities. For the first time after a long period of back-to-back market launches, the gaming world didn’t observe a single new regulated market launching during 2018. There were of course lots of amendments to existing frameworks in a number of countries, however we had no new launch, a sign that the European online gaming scene is now entering a more mature stage.
It is rather interesting to observe how the online gaming world has evolved in the last 10 years, since the first two markets (France and Italy) launched within a more regulated environment. There are countries that thrive will year on year gaming revenues grow and a healthy corporate environment (e.g Spain, Denmark, Romania), there are countries that are currently changing their legal framework to become more attractive to foreign investment (e.g Italy, Belgium) and there are others that remain committed to protecting local monopolies and therefore operating under the wrong terms for remote operators (e.g France, Portugal, Greece etc).
We are monitoring carefully the developments in Europe and we are trying to provide extensive information on gaming regulation. In our text you can find information on the current situation in most European markets and what can someone expect for 2019. The country list below is provided in alphabetical order.
Belgium’s low gaming tax (only 15% on GGR) unfortunately requires that remote operators obtain the license based on a joint venture with a local casino group. Mainly due to the importance that offline institutions have played in the gaming scene in the past. This however didn’t stop many companies from entering the market and earning significant revenues. Despite the rather exhausting checks that are performed by the Belgian Gambling authorities, the market can be marked as safe and profitable for casinos that wish to enter. However, as of the beginning of 2019 the government will ban online casino ads on TV and will only approve them on certain websites. In addition, there will be restrictions also on sports betting ads, with the earliest that operators can air ads on TV set at 8pm. While at the same time there shall be on sports betting ads during live broadcast of sports events.
One of the really controversial cases that we have assessed in our global gaming regulatory research. Against its overall liberal economic thinking, the Cypriot gaming monopoly, that dominates in the market, has long been over-protected by the government. The presence of OPAP (the Greek gaming monopoly) on the island has pushed things behind, similarly to what happened with the Greek market. In 2017 the regulators decided that it was time to move on and provide a framework for big brands to enter the market. But what the local government probably neglected was that the size of the country itself is a barrier to entry. Even if the tax regime is favorable to foreign investment: 13% on GGR (which is indeed rather low) and aligns with the neo-liberal approach of the Cypriot governments. The fact however that only 6 licenses were up for grabs and also that there are annual fees and requirements for exhaustive paperwork in order to apply, led foreign investors to doubt if receiving a license is worth the effort required. As a result, only a handful of foreign providers rake serious profits in Cyprus, while there is a growing black list for those companies which did not comply and attempted to accept players without a license. The real question posed here is: Is the government of Cyprus happy with the money retrieved so far from gaming taxation? And if not, are there plans to revise the framework in favor of foreign investment? Questions that might not be answered in 2019 especially if you bear in mind that the plans for the construction of a mega casino in Limassol area have been approved and the government will seek to protect the newly approved gaming investment.
This is yet another market that suffers from bad planning of its gaming laws. While the government showed real excitement to initiate regulatory changes in 2016, the dream became a nightmare when certain controversial paragraphs were added to the gaming legislation. Tax on GGR is rather high for slots (35%) while the sports betting tax is a mere 23% which isn’t really that bad. However, the paragraph that describes how players need to verify their accounts at offline spots – which are run by the local authorities – makes things very difficult to implement, with big delays and confusion currently dominating the ID verification for players . In addition, companies that tried to apply before the Gaming Commission also reported huge delays with the application process – that requires significant amounts of red tape – that so far has proved impossible to over ride. That led many major operators from seizing operation, stating that they would only consider applying again if the state relaxes its position.
Although it was one of the first 3 markets to create a legal framework for online gambling in the beginning of the decade, the model has worked very well from its very first steps already. All sides are happy and regulatory bodies in other markets have used the Danish framework as example for their own regulatory initiatives. Year on year growth, reasonable taxation, happy players and remote operators, a strong but fair state owned company (Danske Spel) that competes openly with foreign casinos are all signs of health in this market.
Yet another year passed and Finland produced no news on the regulatory front. Its a very grey environment where many remote operators keep accepting wagers from Finnish players across all games (sports betting, casino, poker and bingo) but without taking a very aggressive approach in their marketing campaigns. Local media are dominated by the presence of the state owned monopoly while foreign companies can only be seen advertising online or via international TV channels such as Eurosport. There is currently no income for the government from online gaming something that the Finnish state has unsuccessfully tried to address in the last few years. We can’t see significant changes coming in the next 1 or 2 years, with Finland remaining a rather high – yield market for many high and medium profile operators that offer services without licenses.
No changes expected soon and the French government seems stuck to that piece of law that was produced in 2010 and still applies to remote gaming. A lack of casino games and high turnover tax killed competition in favor of the state monopolies in sports, horse racing and poker. French people enjoy really low odds when placing sports bets online and often resort to illegal providers that can still operate under the radar since there is no official black list published by the french government. All signs point to this becoming a permanent situation since big, remote casinos feel that they have no luck in bringing the matter before the European courts. French government is simply too strong to deal with and all efforts to change the current regime have fallen through. A typical case where the European Commission could not help they citizens of a country to enjoy the perks of open economy, while the French government protects strong local interests, harming at the same time the interests of the players.
Problems and uncertainty in Germany persisted for yet another year. German lawmakers simply show no intention of making things permanent. Schleswig-Holstein is still the back-door for foreign operators that offer their services to German players by using the tiny state’s license to claim federal . All the efforts to introduce a federal law in 2017 and 2018 fell through. Over 70% of all the wagers placed on sports and casino in Germany are offered by foreign companies that pay a 5% tax on turnover which – although not insignificant – can be rationalised with the introduction of an intra-state regulation. We expect little change in the next year and even in 2020 mainly because there is strong opposition in certain states that will block a federal movement.
Probably the most enigmatic regulated market in Europe. Greek governments have been talking about gaming regulation since 2008. In 2011 they finally introduced a temporary regime that would allow to – up to 24 – licensees to offer their services in Greece, in exchange for a 30% GGR tax rate and a number of other obligations to the local governing body (Hellenic Gaming Commission). Due to the political instability, the introduction of capital controls in 2015 and the enforcement of a black list for non-regulated operators the situation has changed dramatically since then. The market is currently running without the presence of many reputable operators while a local player, stoiximan, holds the biggest market share. While the Greek government raised the gaming tax to 35% on GGR in 2015, by late 2018 there was an effort to amend the details of the law and introduce unlimited licenses to applicants. These applicants however would become liable to a 4 million euro flat fee for sports betting (payable every 5 years) and 1 million euro for casino (again payable every 5 years). Topping this, another controversial article in the proposed law, would ban slots and RNG games from online casinos, making survival for most small and medium sized operators, rather impossible. At the moment it seems that the new law will get stuck due to the upcoming elections (in mid 2019) and the lack of time to finalise all the articles by then. Remote operators hoping that a change in government after the elections will scrap that piece of legislation. We can’t ignore that Greece, despite its small size and years of financial and political instability, remains a market with of Europe’s highest per capita spend for Gambling, hence many big brands are interesting in developments in it.
After several years of regulation, under the law that was passed in 2009, Italy entered a dual new phase in 2018. There were changes to the right direction that were agreed before the national election (that was held last summer) and changes to the wrong direction that were voted after the same election. The previous Italian government inherited a high gaming tax on turnover, however with a ground breaking decision they brought taxation levels down to a very reasonable 22% on GGR. The current government however, that won last summer’s national election, decided to make an important change to the way the gaming industry works, by cutting down on remote operators’ ads. From summer 2019 onward, remote companies will not be able to advertise in the Italian market, regardless of the advertising channel. A condition that was imposed by strong interests of the offline casinos and will have significant consequences on the finances of the local media and sports teams.
Probably the “hottest” country when we are assessing the gambling industry for 2019. Dutch regulators have promised the introduction of a proper legal framework already since 2014. However the first target, a launch by 2017, hasn’t been met with new promises made for 2019. A number of operators such as bet365, bwin and Unibet have already left the market voluntarily, to avoid a bad actor kind of prosecution by the government. The proposed GGR tax percentage that was suggested at first (29%) seems to get scrapped in favour of a more reasonable 25% which will encourage more companies to comply and offer their services to Dutch players. There are no plans to skip any games and the new law will allow wagers in all 4 major types: sports betting, casino, poker and lucky numbers such as bingo and keno.
The situation in Norway is pretty similar to that in Finland, which we covered earlier in our analysis. There is a well established local monopoly that holds a license to offer betting services while all other operators are marked as illegal. However, the state has indicated no intention of enforcing the monopoly’s exclusive rights so far and players can choose to bet on sports or play casino on any website they want. Remote operators’ advertising is clearly prohibited but this mostly applies to TV, Radio and Press. Fines for players or any other penalties haven’t been reported yet while there is not much expectation for the creation of a more permanent legal framework to be introduced during 2019.
Poland followed the example of markets such as Greece, France and Portugal, where high gaming taxes pushed most remote gaming corporations out of the market. The 12% tax on turnover has been heavily criticised by the relevant committees of the European Union and despite the promise given by the Polish government that a reform will come, little has been done towards this direction. Only a few remote bookmakers and casinos are in operation currently (mainly because it doesn’t make any financial sense to run a business under these conditions) and 2019 doesn’t look very promising either. Analysts expect little to no change in the current situation that clearly favors the state monopoly which still holds the biggest market share, with only a few brave foreign companies offering games in Poland, making little to no money.
Portugal has set an example to avoid for gambling lawmakers in other markets. Despite the unusually long consultation that led to the introduction of the Portuguese Gaming Act, the local government ignored the concerns raised by RGA (Remote Gaming Association) on the proposed levels of taxation. As a result, the 16% tax on Turnover that was voted by the Portuguese government has pushed almost every remote operator out of the market, with only 3 companies remaining to accept bets legally. Their odds and return rates however are so low that they can hardly be competitive. It is very peculiar that some international players are still looking to enter the market despite this unattractive framework. Perhaps they know something more about changes in the law that are likely to be introduced in 2019? We haven’t heard something yet and we are eager to find out where their optimism derives from.
There is little to write for the Balkan country that has introduced a gaming legislation in late 2015 and is currently considered a role model for other countries in this sector. Romania and Denmark have, tithout a doubt, set a good benchmark for what can be considered a fair gaming environment. Gaming tax has been defined at 16% on GGR with annual flat fees added to that, depending on the games offered by each operator. What Romania did better than most other markets was the formation of a gaming committee which includes stakeholders from different sides of the industry. The government, the social services and the operators could all have an equal say in decision making and this is why most provisions of the Romanian Gaming law are fair and balanced . The Romanian government was extremely anal with restricting and penalising those companies that did not respond to an invitation to discuss with the authorities, therefore companies like bwin, pokerstars and bet365 had a very hard time in the first couple of years. Two years after the law was introduced however, the market finally looks mature and all major brands are active in Romania, they promote above the line and they have contributed significantly to public finances and the creation of many new jobs.
White listed gaming jurisdictions, black lists, payment processing blocks and a few brave survivors describe the situation in Russia. The fact that the country doesn’t belong to the European Union and therefore has no obligation to follow any instructions or recommendations issued by the European Commission makes it almost impossible for anyone to hope that there will ever be normalization of the Russian gambling scene. With over 200m population Russia could have easily evolved into one of the biggest gaming markets in the world, however only a handful of operators, mostly Russian owned and focused ones, operate “legally” at the moment, without having to worry about potential penalties from the authorities.
Another puzzle in the regulated European Gaming scene will be added next year, when Slovakia will start with issuing licensing for operators based outside the country but inside the EU. Each Slovakian remote gaming license will cost three million Euros for each game segment (sports betting and casino) but if a company would like to acquire both then the total cost will be a whopping five million Euros. The license will not be granted for life but it will need to be renewed every 10 years and on top companies will have to pay annually 22% of their GGR to state taxes. What is really interesting though is that despite opening the application process in March 2019, the licenses won’t go live until July 2019 and July 2020 for casino and sports respectively. Some concerns have been raised over the one off fee required to get the 10 year license approval but so far the regulators don’t seem willing to move away from their initial position.
Spain is one of the markets that we don’t have much to write about. Spanish regulators have done some really good job in putting together a piece of legislation that will allow every serious company to claim a license under a rather reasonable 25% tax on GGR. Things have been running smoothly since that new regime was introduced in 2012 and despite a few bumps on the advertising side of things, all stakeholders are happy at the moment. No major developments are expected for 2019, although there have been rumors lately on a crackdown on gaming ads, similar to that in Italy.
The biggest Scandinavian market (in terms of gaming GGR) and home country to many gaming giants (such as betsson, mr green, microgaming, net ent, elk studios etc) has finally taken a big step towards legalising online gaming, with the introduction of the Gaming Act that will come into effect on January 1st 2019. A unified tax of 18% on GGR will make the market one of the most lucrative for remote operators and the additional flat fee payable every year (ranging between 5 thousand euros and 70 thousand euros) won’t be a big barrier for those gaming companies that would like to enter the market. However, only a few days before the theoretical launch date, out of the 70+ applicants for a Swedish license, only 15 of them have been granted with one. Industry stakeholders are keen to find out whether the Swedish government will block access to those that haven’t secured a license by January 1st 2019 or if a grace period will be offered to all companies until the application process is completed. We will keep all readers updated on the progress of this very interesting regulatory case.
Often considered as the most mature and wisely regulated gaming market in the world, United Kingdom proceeded with making two very important changes in 2018. With a move that shocked most operators (mainly those that are also running offline betting shops) the British government introduced wagering limits for playing on slots, while at the same time certain games and promotions have been banned as appealing the wrong messages to teenagers.
On a similar note, the ASA, the powerful committee that supervises advertisement in the UK, issued a record amount of fines and warnings over advertising messages that were used by gaming companies. Nowadays, even the most powerful and respected brands in the industry need to be very careful to avoid passing messages that appeal to teenagers and other sensitive social segments. Despite all the above, the 15% gaming tax on GGR is still the lowest in Europe and therefore UK is considered the Holly Grail in the industry.
United States of America
We decided to add a paragraph on the US market at the end of our analysis, mainly because the size of this jurisdiction is so big and its connections to the European gaming industry so tight (most companies that offer their services legally in US states still have their headquarters in Europe) that it would be unfair to say that the US affairs won’t affect the European gaming developments.
Another year of intense political fermentation led to very little progress when it comes to actual regulatory developments and especially if what everyone is waiting for is the opening of more states. What started in 2011 with the legalisation in New Jersey and promised to be the beginning of a federal regulatory framework, is still a slow transition that currently sees only four states officially allowing online gaming. In fact only three are actively collecting tax money from online casino and poker while Pennsylvania is planned for 2019.
The main gain from 2018 is the promise given by the New York State senate that during 2019 citizens of this fairly large state of US will be able to wager online on sports, casino and poker, after almost 13 years of online gaming ban. However, based on experience with regulation in other states , we are rather curious to find out whether this plan will become reality, especially if we consider that other states have also announced plans to legalise years ago and haven’t gone live yet. For some, a launch in Pennsylvania was pretty certain during 2018 but that also didn’t happen. When it comes to US, the largest single gambling market in the world, we would like to keep our expectation low, since everything that has been promised so far proved nothing but unsubstantiated hopes.