Europe deals gambling sector a strong hand

From MSNBC


Any day now the Italian government is expected to show its hand on gambling.
In a move viewed by many in the sector as the latest evidence of a shift towards the liberalisation of gambling in Europe, Rome will award new gaming licences to a range of national and international companies vying for the chance to run betting shops, kiosks, casinos and online services.

The closely watched decision comes as governments, which have traditionally viewed gambling as an activity on the margins of acceptablity, are taking a closer interest in the sector because of the wider access to gaming brought about by advances in technology. With the Spanish regions poised to follow Italy in licensing online and onshore gaming, and a critical decision in Germany also expected imminently, operators are increasingly bullish about the prospects of attracting new customers in undeveloped markets.

Europe's €50bn ($65bn) betting market has become even more critical to the sector since the end of September when the US shut its doors to online gaming and arrested UK executives connected with what was far and away the fastest-growing part of the industry.

The entire online gaming industry, which saw its value plunge by more than half virtually overnight after the US tightened its laws on online gaming, is now regrouping around Europe with new games offered in a variety of languages.

But even in Europe, company executives need to tread carefully. The two most senior executives of Bwin, the Austrian online gaming company, were arrested by French police at a press conference in September to mark its sponsorship of Monaco's football team, and charged with illegal promotion of gaming.

The UK is in the vanguard of liberalisation, implementing rules that will allow all forms of gaming. Under current regulations activities such as online gaming exist in a legal grey zone and there are heavy restrictions on the advertising of all types of gambling.

According to John O'Reilly of Ladbrokes, Europe's biggest betting company, the UK approach forms one of three camps across the continent. The first group of countries has opened its borders to foreign operators and accepted "advertising promotion pretty much anywhere", says Mr O'Reilly.

Next is a camp dominated by France, where countries have introduced laws to prevent foreign operators from entering tightly controlled domestic betting markets. The French parliament last month backed tougher measures to curb illegal gambling operators, signalling increasing political hostility to online gaming other than the state lottery, tote and licensed bricks and mortar casinos. "When it is not controlled, the offer of online gambling has the effect of supporting new forms of criminality and providing an important conduit for money laundering," said Philippe Houillon, the deputy proposing the amendments.

The third camp is occupied by those in the middle, debating the pros and cons of regulating gambling, but veering towards the former. "That is where Spain is going, and Belgium is heading the same way. At some stage they will create a domino effect, and Italy is the first of them," says Mr O'Reilly.

Interested spectators are, among others, Greece and Ireland, while slot machines are making a lot of noise in the Czech Republic, Hungary and Poland.

Across this patchwork quilt steps the European Union, whose executive body has battled for years to enforce internal market rules in the sector. According to a judgment by the EU's highest court, member states may place curbs on private gambling operators, but these must be "non-discriminatory, proportionate and consistent". Restrictions cannot be justified simply to protect revenue of national gambling and lottery monopolies.
The European Commission's view is that too many member states fall foul of this requirement.
Charlie McCreevy, internal market commissioner, has brought infringement proceedings against at least half a dozen countries for restrictions on betting markets.

But, whatever the outcome of Mr McCreevy's legal challenges, the prospects of Europe-wide legislation on internet gambling are non-existent. "Not a chance," Mr McCreevy told the European parliament last month.