Online Gambling Operators Start Exiting International Grey Markets

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Friday, October 10th, 2014 | Written by Adam Brown

At the start of October, the Amaya Gaming owned sites of PokerStars and Full Tilt Poker had both withdrawn their products from more than 30 countries across the world on a day labeled as “Black Tuesday”. The move is believed part of a wider policy by Amaya Gaming to withdraw from “grey markets” jurisdictions in order to be considered for online licensing in both the UK and the USA. As Head of Corp Communications for PokerStars, Eric Hollreiser, tweeted at the time:

“Re Qs about our withdrawal from some markets: This action aligns PokerStars and Full Tilt with Amaya’s global market policies. These markets represent a tiny fraction of our global revenues and our global customer base.”

One week later, and now the OnGame Poker Network, which was purchased by Amaya for €25 million back in 2012, has also decided to end its real-money operations in the same 30+ unregulated markets as PokerStars and Full Tilt, together with Betsson, Poker Heaven, Paf, RedKings and RedBet, while PKR has announced its exit from Italy’s regulated iGambling market, and Bet365 has announced its withdrawal from Romania.

Clear and up-to-date gambling legislation

These recent events herald an unprecedented development in the online gambling world in which international gaming operators are seeking to become more transparent and only operate in those regulated jurisdictions with unambiguous gambling legislation in place. Nevertheless, while countries such as Spain, Italy, and France would satisfy that criteria, they are in the minority with EU countries such as Germany, Poland, and Romania continuing to be the norm with their ‘shady’ borderline markets which may or may not be legal.

Romania for example?

The southeastern European nation of Romania, for instance, provides a perfect example of the ambiguity of these grey markets as it is against the law to participate in gambling activities organized by unlicensed operators, and since no international gambling operator holds a Romanian gambling license, online poker has now become a crime punishable by jail time.

Apparently, the worrying situation has been further compounded by the actions of a number of worldwide companies which continue to operate inside Romania, whilst openly flaunting the demands made by the Romanian authorities. As Mihai Manoi from the Romanian Poker Players’ Association, explains:

“There is a big problem with the online operators who defy the national gambling commission and force it to take drastic measures, instead of being cooperative. There are operators that even had national TV ads and sent to the commission unbelievable replies such as ’You know, we don’t operate in Romania and we don’t have any representatives there.”

Asia similar to grey zones in Europe

Over the past few years iGaming has been sweeping across Asia, providing a burgeoning source of revenue for illegal gambling market operators, as well as the more legitimate ones. Currently, illegal online gambling markets spread out across Japan, China, Korea, Singapore, Hong Kong, the Philippines, Indonesia, and Malaysia are roughly three and a half times the size of the continent’s legal market. However, the exit of companies such as Amaya, which recently withdrew from 18 Asian unregulated markets, will be welcome news for these countries’ authorities, although the only real pressure being applied to these operators has come inadvertently from the West.

And then there’s China

Its the draw of entering the US and UK iGaming markets which has persuaded Amaya to quit Asia, while for bet365 which in 2013 derived half its £1.3 billion revenues from unregulated markets, exiting China could prove fatal. In addition, China does not have extradition treaties in place with most western countries, and so the law then becomes enforceable only for local players, such as the recent case involving four bet365 customers in Jiangxi province who were jailed for gambling on bet365’s web site, or the case of two men in Zhejiang who were sent to prison for advertising bet365 on their blogs.

As bet365 explained, recently: “There is no legislation that expressly prohibits the supply of remote gambling services into China by operators who are based outside China. Bet365 has no people, assets or infrastructure in China and does not engage any agent, aggregators or intermediaries, for any purpose, in China. In the view of bet365 and its lawyers, Chinese law does not extend to the provision of services into China by gambling operators and service providers who themselves have no nexus with the territory. Any allegation of illegality on the part of bet 365 is therefore untrue.”