“A transparent licensed regime is key for the success of emerging gaming markets”

How can EGBA help emerging gaming markets develop more reliable digital environments for players?

A well-functioning digital environment requires regulation that provides a high level of consumer protection and takes into account the reality of the digital economy and consumer demand. It must also be ensured that responsible gambling rules for consumers are effective and proportionate, without creating unnecessary administrative burdens.Most importantly, the regulated offer should be attractive enough in order to channel a maximum number of players away from unregulated offers.

It is for governments to create the conditions for a modern and appropriate regulation, where consumers can make a choice between offers provided by regulated EU online gambling operators, where adequate consumer protection is safeguarded.

Are you in regular contact with Eastern European authorities?

Yes, especially with those that are in the process of amending their online gambling legislative framework. The vast majority of European countries are introducing licensing regimes in response to the increasing consumer demand for online gambling services. This may ensure, if regulated under the appropriate conditions, a safe and attractive offer that actually draws consumers towards the regulated offer and at the same time creates a robust regulatory framework that provides a high level of consumer protection, tax return and regulatory oversight. With the unregulated offer from Asia, darknet and elsewhere just one click away on the internet, the key is to channel the consumer to the regulated equivalent offer.

The European Gaming and Betting Association (EGBA) is the Brussels-based industry body representing the leading online gaming and betting operators established, licensed and regulated within the EU. EGBA works together with national authorities, EU authorities and other stakeholders towards a well-regulated and attractive offer for EU citizens.

Does the growth of online gaming markets in Eastern Europe represent a challenge for the regulated industry?

Foremost, national legislation should always comply with EU law and should pursue legitimate objectives that genuinely aim at consumer protection, without creating any restrictions to the freedom to provide services. Rather than introducing artificial barriers to online players, a better policy is to adopt a legislation that allows EU licensed operators to provide their services in the Member States where they are able to obtain license in a transparent manner. Further, an effective licensing regime creates significant state revenue.

However, tax rates need to be balanced, to ensure that operators can offer a competitive product, which channels the consumer away from the black market. For instance, a sustainable taxation should ensure that the base for taxation of online gambling operators is on the amounts wagered or staked minus the amounts paid out as winnings (referred to in the industry as ‘Gross Gaming Revenue’).

Economic policy objectives such as ensuring continuity, financial stability or proper return of investments cannot be a reason for restricting services coming from foreign EU regulated online gambling operators. Only a well-regulated and diverse regime can ensure channeling and taxation flows for the state. These aspects should be taken into consideration by countries willing to re-regulate their markets.

Are those challenges any different from the ones that the industry has already faced in Western Europe?

We don’t consider there is a different challenge in Eastern Europe. The high demand for attractive and innovative digital gambling services has prompted a growing number of Member States to re-regulate their online gambling markets. Thus, Member States have adopted diverse approaches to re-regulation, which resulted in different compliance requirements across the EU.

For example, Italy, UK, Spain and Denmark have implemented sustainable licensing regimes in terms of channeling and consumer protection. In mature markets like Italy, for example, the channeling rate is much higher than in jurisdictions like Germany or the Netherlands, where the grey market is between 71% and 82% respectively, which is due to the fact that they do not have a functioning licensing system.

Can Eastern Europe become a successful online gaming market? What is EGBA's forecast for the region?

The most important recommendation is for countries to create an effective and proportionate regulatory environment, which is channeling consumers towards regulated offer. Restrictions introduced by Member States directed to EU regulated cross-border operators create a high risk that foreign operators are deterred from entering their national market.

This has a direct negative impact on channeling consumers towards the regulated offer, as consumers will turn to the offer provided by operators not licensed in the EU, not paying taxes and not offering a sufficient level of consumer or anti-money laundering protection.

Eastern Europe has shown increasing growth of the online gaming market. We expect governments to respect European law and ensure a safe playing experience based upon channeling consumer demand to a transparent and non-discriminatory licensed regime.