State of European iGambling Regulatory Landscape in 2015

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Monday, January 18th, 2016 | Written by Charles Washington

With the official close of 2015, many industry experts are taking the time to review what took place last year in the world of online gaming. Often, the European online gaming market is discussed as a single entity, but a close examination shows that there is very little unity between different European countries, and that the EU market is like a mosaic made up of many distinct pieces that don’t always fit together to form a cohesive picture.

A Fragmented Industry

Throughout the European Union, the state of iGaming differs dramatically. Online gambling operators are treated differently in every country, leading to major variations in how they are taxed. Player pool sizes are also very different from one country to the next due to population sizes and income levels and a lack of international pooling of players in smaller countries. One thing was universal throughout the industry, though; operators in all EU member nations now must pay a tax on digital services, meaning that throughout Europe, operators are seeing their margins squeezed.

Here is a look at what happened last year in iGaming in a number of key EU nations:

Portugal

Portugal has been facing the threat of a financial meltdown for several years and has been struggling to find sources of revenue to support its struggling government. In June, the country then passed an online gambling bill allowing operators to legally launch sites and accept wagers within Portugal’s borders. Portuguese lawmakers are hoping this will generate revenue and pad the country’s coffers, but operators have been hesitant to jump on board due to the hefty taxation rate, which is between 15 and 30 percent based on operator income.

In addition, Portugal’s gaming regulator, Regulação Inspeção de Jogos (SRIJ), surprised the country’s online poker players by announcing its intention to ring-fence Portugal’s iPoker market, at least until it sorts out several technical regulatory issues with the EU. Needless to say, Portuguese iPoker players have reacted badly to the news, and have now announced their intention to boycott regulated sites until they are allowed to pool with other international players.

Italy

In Italy, online gaming operators received some tax relief in the hope of stimulating the industry. The country passed reforms that now allow operators to calculate the amount owed on the basis of their gross profits rather than their revenue, a move that the industry supports. Italy is also hoping to enter into a liquidity sharing program with France and Spain to increase player pools, and as DLA Piper gaming lawyer Giulio Coraggio explains:

“The online poker market is facing considerable difficulties worldwide and in countries like Italy, Spain, and France the impact of such crisis might even be higher given that they are closed loop markets. But if international liquidity sharing will be allowed, the scenario might change considerably.”

Not all lawmakers are supporting pro-iGaming legislation, though. Some conservative lawmakers are now pushing for a ban on Internet gambling advertising.

Holland

In Holland, the focus of 2015 was passing legislation to put an end to an industry monopoly held by Holland Casino. The year closed out without a signed bill, but analysts expect the law to be passed sometime in 2016. There are hopes that the new law will encourage new operators to establish sites in the country.

Germany

The German iGaming market continues to be a confusing landscape, as only one state has legalized online casinos and sports betting. The other 15 states in Germany reportedly allow for legal online sports betting, but no licenses have been issued to operators to establish sites in the country during 2015.

Norway

In 2015, Norway passed a law allowing legal poker tournaments to take place in the country for the first time. In November, the Norwegian Poker Championships then hosted its series at the Thon Hotel in Oslo, with Felix Stephensen winning the 5,000 NOK ($580) buy-in main event for 1,405,150 NOK ($162,497). The country has also pledged to review all of their laws regarding gambling sometime in 2016.

The UK online gambling market is one of the most lucrative and progressive in the whole industry, with even its online players able to compete against those from other international locations. In December 2014, however, the country’s Gambling (Licensing and Advertising) Act was amended to allow a 15% “point of consumption tax” to be levied on operators. This subsequently lead to a number of companies either abandoning the UK market, or forming mergers with other operators to better cope with the higher cost of doing business. In 2015, the UK Gambling Commission (UKGC) subsequently recommended that the government implements a tax rate reduction for online gambling operators so as to maintain the UK market’s buoyancy. As a UKGC statement explains:

“The purpose of this discussion document is to explain our approach to recovering costs through licence fees, our current thinking on how the fees structure can be improved, and the implications of the 2014 Act on our costs, income and therefore on the fees needed to recover those costs; and to invite comments to help us prepare our advice on these issues to government.”

How these suggestions will play out in 2016 has yet to be seen, but here at toppokersites.com we will endeavor to chart their progress throughout 2016.