EU PARLIAMENT CONSIDERS INTERNET GAMBLING

21 November 2008

Report by Danish MEP on the table

 

The European Parliament's Internal Market and Consumer Protection Committee met this week in Brussels to consider a draft report which seeks a European Parliament Resolution on 'the integrity of online gambling'. The report, by Danish Socialist MEP Christel Schaldemose, does not appear favourable to online gambling, and Parliament’s political groups have until mid-December to table amendments with a view to adopting a final version in plenary early next year.

Although the report is not binding on future European Commission action, it has the potential to re-ignite the issues of national sovereignty, moral justification for monopolies, cross-border gambling and EC enforcement.

As one European industry observer commented: "Once again we are to be protected from ourselves."

Schaldemose found that online gambling accounts for about 5 percent of overall gambling in the EU. Her self- appointed initiative focuses on the integrity of the industry, especially in the areas of fraud, money-laundering, addiction, underage gambling and rigged games. It puts forward the view that member States have a legitimate interest in monitoring and regulating individual national gambling markets in order to protect consumers and:

* Calls on the Commission to clarify the competences of the Member States and the EU in the field of online gambling

* Is of the opinion that the European Court of Justice should not define the European gambling market (The Gambelli findings that member nations should allow free passage of trade and services was a key development in the online gambling legal milieu) The report highlights the unsatisfactory position that 50 percent of all cases currently before the European Court of Justice relate to gambling.

* Considers that online gambling creates an increased potential for gambling addiction

* Is alarmed by technological convergence - the increasing cross-over between interactive television, mobile phones and internet websites in offering online gambling

* Expresses the opinion that Internet gambling is likely to generate risks to consumers and that Member States should therefore be allowed to legitimately restrict the freedom to provide online gambling services across borders in order to protect citizens. This is a particularly delicate point, as a number of EU member nations run lucrative gambling monopolies and want to exclude cross border competition; to do this the protection of citizenry is often cited as justification.

Schaldemose's report proposes the creation of a common code of conduct across the European Union, but suggests that this should only be a concurrent measure to regulation - she believes self-regulation is insufficient.

20 EU Member States allow online gambling, whereas seven Member States have prohibited the pastime. Thirteen Member States have a liberalised market, while six have state-owned monopolies and one Member State has licensed a private monopoly.

Schaldemose concludes that restrictions on online gambling may be justified if they are necessary for consumer protection, for the maintenance of public order (preventing of fraud and crime), for maintaining the social order (culture or morale) and for preventing gambling from being a source of private profit.

Committee members generally welcomed the report but Portuguese Socialist deputy Joel Hasse-Ferreira warned that increased regulation of the industry within the EU would not necessarily be matched by similar action outside the EU.

Earlier this month Schaldemose clashed with the European Commission over who should be responsible for regulating online gambling within the EU. The Danish MEP said that there is currently “great confusion” over whether the responsibility lies with member states or the EU.

“What is urgently needed is clarification on competence on gambling issues between the EU and member states,” Schaldemose said, adding that the issue of jurisdiction in regulating gambling across the EU has become a contentious one. Aggravating the situation, the growth of online gambling services across Europe’s borders, has resulted in numerous calls for Brussels to tackle the issue under the EU’s internal market remit.

Reference was made in the debate to the landmark Gambelli ruling in the European Court of Justice six years ago, which handed down a decision that enshrined the rights of EU gaming and betting operators operating in one member state to offer services across the EU’s borders. Despite this ruling from Europe's highest court, many EU governments continued to restrict access to their national markets, forcing the European Commission to initiate 10 infringement procedures in recent years, the debate revealed.

MEPs also considered a study, commissioned by parliament, on online gambling. The report said that underage gambling was a growing problem, although there was a “pressing” need for further studies on the issue.