A Solid Approach towards Online Gambling; Addressing the Harmonisation Deficit
By Martina Briffa Student No. 12860646 martinabriff@gmail.com
Abstract
Online gambling has been on the rise for years, and despite many claiming it has reached its peak with a short period of decline, it is nowhere close to decreasing in growth or value, especially the value that is attached to it by consumers. The million-dollar question remains unanswered; When will the pieces of the regulatory fragmentation in the EU be put together? In answering this
fundamental question, it is important to first understand how the internal market and its competitive underlay are affected by the present fragmentation. Another core aspect to explore is the extent to which member states discretion is being contained and why the EU has shied away from adopting a consolidated regulation in this sector. Although not as essential on the outset, member state
discretion holds a very big role in the functioning of the economy and the European Commission’s plan for better regulation for its consumers. By addressing the CJEU’s approach to gambling, its interplay with the internal market, the EU’s policy attempts and the existent competitive barriers, a definitive answer to the question will befound.
Supervisor: Prof. Dr. Annette Schrauwen Final Word Count: 15,973
International and European Law: Competition and Regulation LLM Master Thesis
Research Question
Will a level of harmonisation solidify gambling’s place in the internal market once cross border and competitive restrictions are under control?
Table of Abbreviations
AG Attorney General
CJEU European Court of Justice
EU European Union
MGA Malta Gaming Authority
NRA National Regulatory Authority
TEU Treaty on European Union
TFEU Treaty on the Functioning of the
Table of Contents
Table of Abbreviations ... 3
Summary ... 6
Background for Research Methodology ... 6
Research Question ... 6 Sub Questions ... 6 Structure ... 7 Remarks ... 8 Introduction ... 9 Chapter 1 ... 12
Gambling then and now: How this New Decade is set to Bring About Changes to the EU Gambling Policy. ... 12
Chapter 2 ... 18
Relevant Case Law and the Fluctuating Court Approach; An Attempt to Restore Order ... 18
The Details of the Schindler Case ... 18
Läära v. Finnish State ... 19
Zenatti – The first of the Italian cases ... 19
Gambelli & Others ... 20
Placanica ... 21
Santa Casa ... 22
Analysing the CJEU’s Approach ... 23
What could the CJEU have done more? ... 25
Chapter 3 ... 26
A Comparative Analysis between the Two Extremes Finland and Malta: How different legal frameworks clash ... 26
Preliminary Observations ... 26
Malta ... 26
Background ... Error! Bookmark not defined. A system based on Licences ... 27
Finland ... 30
The Merger ... 32
The Structure of Gambling in the New Framework ... 32
Final Remarks ... 33
Chapter 4 ... 37
Streamlining the Competitive and Market Disharmony through Harmonisation ... 37
National frameworks as protectionist measures in disguise ... 37
The level of Competitive Disharmony and Unfair competition ... 38
Anti-competitive vs Competitive forms of Gambling ... 40
Balancing Competition and Consumer Protection ... 41
The CJEU’s Position and Impact ... 41
Mutual Recognition: The possible interim remedy that can lead towards solving the problem ... 43
Conclusion and Recommendations ... 45
Competences of EU in Gambling ... 46
The choice that must be made: Regulation VS Directive? ... 46
Summary
Background for Research Methodology
I developed my research question in order to capture the relationship between gambling, competition and the internal market exploring how harmonization can possibly be the solution for the existent competitive disharmony and widespread fragmentation between member states. As will be explained in more detail, I intend to tie my research together by making use of both a legal and comparative method. I chose to split the legal method in three different compartments namely by describing, evaluating and analyzing various legal documents, academic journals and case law.
The research will focus on describing the EU’s developments by tracing the Commission’s gambling policy and evaluating the fluctuating stages of its stand on gambling. Additionally, it will try to understand how this shaped the current state of fragmentation between member states. This paper will evaluate and analyse the case law of the European Court of Justice (CJEU) in order to understand its role in controlling the member states justified restrictions, whilst also acknowledging the nuanced nature of gambling in relation to the freedom of services in the internal market. The comparative method also goes hand in hand with the described legal method as it will allow me to use the differences between both the Maltese and Finnish system to measure the extent of the need of harmonisation.
Research Question
Will a level of harmonisation solidify gambling’s place in the internal market once cross border and competitive restrictions are under control?
Sub Questions
To add depth to the research question, I dissected it even further into separate sub questions in order to be able to cover all the important aspects I want to analyse;
1. What elements should the EU actually consider when faced with the big challenge of regulating gambling?
2. To what extent can member states be allowed to exploit protective measures to close off their markets from any threats that the sector brings about? Therefore, to what extent can they use the defence that they have “unlimited discretion”?
3. To what degree, if any, is there an existent deficit in the EU’s approach to harmonisation in the gambling sector?
4. How attainable is harmonisation in the EU right now and what will the member states be sacrificing if harmonisation materialises?
Structure
The core issue that I will be focusing on in my research is how the gambling sector has molded its way into the internal market which in its nature is a platform wherein the freedom of goods, services, capital and people are ensured. Whilst the EU policy forms a big part of my research, I will proceed with highlighting the plans that the EU has drawn up in light of the recent digital market plans. In tracking this development, I will dedicate the second chapter to focus on the case law of the CJEU which will go hand in hand with my analysis on the coherency (or lack thereof) of regulation in gambling. In particular I will analyse the approach of the court and how the pattern in each of its landmark judgements had an effect on how member states developed their gambling laws.
The third chapter of my research is set to take a comparative legal approach in evaluating and assessing both Malta and Finland’s current gambling framework. My aim is to have a more tangible rather than a theoretical outlook to delineate the effects of having an important sector such as gambling not being harmonised. This will be coupled with the way member states take the lack of harmonisation to their advantage by using their discretion to come up with various interesting and largely different legal frameworks. By using this method, I will be able to filter the constituents of two different systems and showcase both the efficiencies and inefficiences created by utilising monopolies and other licensing regimes. By analysing this matter, my aim is to uncover and discuss the obstacles that should be made clear in a possible future regulation. Consequently, my findings will attempt to pin down a set of recommendations that can help in transforming this sector into an efficient cross-border service that all member states can exploit and benefit from in the long run. The fourth chapter will generate more detailed information on how harmonisation can tackle issues related to competitive distortion and market disharmony. I will emphasise how competition matters
also form an intrinsic part of the internal market since this widespread fragmentation not only taints the image of the internal market on its own merits, but also makes it competitively less attractive. This will tie in the fact that with the member states having a carte blanche in controlling their market and the way the fragmentation interacts with other sectors. This ultimately creates severe competitive constraints. My aim is to prove how harmonisation efforts can straighten out these loose ends.
Remarks
This structure reflects the need to shift the focus back to gambling by creating an effective policy framework that mirrors long-standing objectives. This research is also set to materialise in a time where the EU has come to terms with the dynamic world of digital technologies. There is a need to not only speak of breaking the barriers for a free internal market, but to make it happen by means of policies that support it rather than tarnish it.
Harmonisaton in the gambling sector has not been wholly supported by the Commission and other institutional bodies. However, it has become increasingly difficult for the EU to control the continuous legislative breakthroughs of each and every member state without having the internal market at stake.
Introduction
The internal market has been established as one of the founding objectives of the European Union since the 1950s. It was economic strength that bonded the EU; however, the interests of the Union are dynamic and adapt to developments through time. It was in 1992 that the member states first addressed the gambling sector and its place in the internal market.1 Due to the fact that gambling in
its very nature is widely frowned upon, it was bound to be a challenge to tangibly fit it into the structure of the internal market immediately. Despite that, the EU could not seem to avoid the economic benefits generated from this market with figures rising up to 22.2 billion euro with an estimated growth of 10% per year.2 It was something far more than mere leisure and entertainment.
Even with such a large economic presence, the Commission decided that harmonisation of the gambling market on the European stage was not set to materialise.
The idea of a digital market and the need to create one pool within which all digital technologies fit, ranging from e-commerce to telecommunications, sparked a discussion on the gambling sector once again. This shows that its continuous growth could not be ignored even when the EU tried to put it aside. Incidentally, gambling fits into the digital technology threshold, however, consumers face a lot of challenges whilst making use of online mechanisms. Due to the barriers imposed on a daily basis, this widespread legal fragmentation needed to be addressed by improving the access to the digital world.3 The process that kicked off in 2015 is not yet finalised, and no policies surrounding gambling
have been set. Whilst various priorities where pinpointed, the nature of the online market versus the offline market is more problematic even more so when member states have the discretion to create gambling laws in almost any shape or form. This is what creates various barriers that restrict the full enjoyment of digitisation and the use of these services.4
Apart from economic circumstances that can arise, rather than protecting the consumers within their national territory, certain member states still purport stringent licensing conditions repelling other competitors from entry. Customers will end up looking elsewhere for what they cannot get from the EU elsewhere, and as a result, end up being subject to more risk and shady gambling practices
1 Katherine A.Lovejoy, ‘A Busted Flush: Regulation of Online Gambling in the European Union, (2014) 37 Fordham
Int'l LJ 1529 < https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=2352&context=ilj>
2 The European Gaming and Betting Association, ‘EU Market’, (2019)
<https://www.egba.eu/eu-market/>
3 Dr.Salvatore Casabona, ‘The EU’s Online Gambling Regulatory Approach and the Crisis of Legal Modernity’, EU
Centre in Singapore, Working Paper No.19 [2014]
elsewhere.5 For online gambling to really reach its potential in its business capacity, it needs to be
backed up by fair competition in order to attract the consumers across the EU. As the situation currently stands, both competition and fairness are non-existent, since there is no incentive for economic operators to innovate and boost their product quality. This is because of the trade barriers that impede the competitive process from flowing from one-member state to another. This leads to a situation where economic operators continue to raise their prices and the consumer is either compelled to use the service due to lack of choice, or resort to ‘blacklisted’ third countries as indicated above. This in itself confirms that if there have been efforts to eliminate barriers to the internal market, the barriers to competition should also be considered as a priority.
The responsibility is shifted upon the CJEU in making sure that national courts interpret their distinct law in the light of EU law. Gambling was no exception, and the CJEU focused on keeping a close watch on the way member states regulate in order to maintain the smooth running of the internal market.6 In some ways, the CJEU was and still is the voice of reason within this form of organised
chaos, in others it seems to lean towards favoring the member states whilst leaving the internal market interests lagging behind. The CJEU has one of the hardest roles in keeping both the interests of the internal market and the member states public interest at heart. This has created a lot of controversy which continued to contribute to the uncertainty of how the gambling policy should unfold.7
As a consequence, gambling law remained on the EU’s agenda awaiting regulation, however, various attempts have proved to be futile and the existing EU policies still do not contribute to any sort of coherency. This is still considered to be a start and the EU is not yet convinced that sector specific regulation in the form of exhaustive harmonization is worthwhile.8 Improvements have been made
from the 2011 Commission Green Paper highlighting consumer protection and responsible gaming and more importantly the plan to have a digitised single market in 2015.9 This year the Commission
confirmed the launch of new initiatives that are aimed at shaping this digital single market in their work program for 2020. The European Gambling and Betting Association confirmed the
5Julia Hornle, ‘Online Gambling in the European Union: A Tug of War without a Winner?”, Queen Mary School of
Law Legal Studies Research Paper No. 48/2010, [2010]
6 Gabor Koos,‘Online Gambling In The Case Law Of The European Court Of Justice’ [2013]
<https://docplayer.net/11838901-Online-gambling-in-the-case-law-of-the-gabor-koos.html>
7 Ibid
8 Margaret Devaney, ‘Online gambling and international regulation: an outside bet’ 18, Information & Communications
Technology LJ (2009) 274-283
Commissions intentions to shift into making the digital side of the market more fruitful for consumers, especially with the new digital services act that will hopefully materialise this year.10 Still, these
efforts do not solve the blank space that exists, especially in the online remit. This commitment given by the Commission to improve matters in 2020 does give hope that priorities will shift, but this has not been the first time that promises were made and not honored.
Until then, the situation remains blurry and the issue of the extent of lack of harmonisation will remain my prime objective in order to answer my main research question. In doing so, I will also consider some of the challenges the Commission has faced through the years in acknowledging this regulatory blackhole and elements that should be taken into account when creating a backbone for a solid gambling policy. These are issues that need to be addressed now more than ever since talks about advancing technologies are even more prominent. This brings a certain innovative relevance to my research when considering the priority that gambling policy holds in the Commission’s 2020 plans11.
It is my intention to keep on emphasising that without concrete care and attention, the internal market, being one of the longest and most important established goals of the EU, will continue to be at stake. The purpose of this research is not only to scrutinise the state of affairs of gambling regulation but to also provide recommendations for suitable regulation choices that can hopefully start to be achieved. The results of my analysis will lead to the creation of a set of recommendations for the choice of legal act and type of harmonisation that would potentially be the best fit within the EU legal order. Alongside these recommendations, I will also attempt to boost the significance of mutual recognition. Ultimately, I intend to bring about more awareness and understanding towards the interplay of competition implications in relation to the internal market, and how harmonisation has the potential to be the catalyst needed for both components to flourish.
10 European Gaming and Betting Association, ‘A EU Framework for Online Gambling 2.0’ Manifesto (2 December
2018) https://www.egba.eu/uploads/2018/12/Manifesto-A-EU-Framework-for-Online-Gambling-2.0.pdf
11 Secretariat General, ‘2020 Commission Work Programme’ (Initially published on 29 January 2020)
Chapter 1
Gambling then and now: How this New Decade is set to Bring About Changes to the EU Gambling Policy.
Although many developments on the EU gambling policy can be traced, one thing has remained constant, and that is how popular gambling remained amongst Europeans. The problem is the way in which EU citizens gamble has shifted dramatically and this reflects the changes the sector has experienced. The online world is not only known for being in a state of constant change and innovation, but it is also known for controlling and changing people’s choices and behavior.12 In
proving that it is capable of doing so, the concern that emerged is how this innovative limb is going to be properly regulated in order to avoid risks both on consumers and ultimately on the stability of the market.
It has been settled that EU law is supreme over national law and in describing the differing gambling laws across Europe, this principle remained the same. Therefore, before delving into the issue of gambling itself, the European Commission stressed that “national regulatory frameworks have to comply with EU law and internal market principles and rules” which in itself shows that there is to be no derogation from the EU Treaties.13 What emerged from the public consultation was the
communication published in 2012 entitled “Towards a comprehensive European Framework for Online Gambling”. This sought to tackle the issues that emerged both from the consultation and also from an expert group that the Commission itself had set up in June of the same year. This advised the Commission on how to create and prepare an effective policy for gambling taking into account the numerous developments that were occurring at a national level in each member state.14
12Anastasios Kaburakis, ‘European Union Law, Gambling, and Sport Betting. European Court of Justice Jurisprudence,
Member States Case Law, and Policy’, Anderson et al. (eds) Sports Betting: Law and Policy p. 27-97 [2012]
13 European Commission Communication,‘ Towards a comprehensive European framework for online gambling,
(COM(2012) 596 final)
Apart from the adherence of EU law, National Regulatory Authorities are also needed in order to ensure the proper implementation and application of EU law alongside the national law itself. Without this mechanism of enforcement, no legal instrument will be efficiently monitored.15 This will also
ensure the cooperation with other member states which is one of the main objectives that will overturn this fragmentation into coherency. This ties in with the protection of the public interest which has been a recurring theme in gambling matters as will be seen in the CJEU judgements. Given that these national authorities are sector specific, the Commission wants to ensure that they are equipped with enough knowledge and resources to deal with a dynamic sector with full supervisory competences to meet with the demands of applicability, enforcement and cooperation.16
These competences also ensure that on an administrative level, the national authorities can guarantee that domestic law is enforced equally as EU law. The Commission vouched to facilitate the administrative tasks of the member states and make cooperation easier with regards to exchange of information and enforcement mechanisms. The Commission was also needed to provide more clarity about how unauthorised online gambling content was to be detected and notified across the EU. This was one of the many commitments that the Commission had made. One of the main objectives was also a high level of protection for the EU citizens.17 The Commission often commends the member
states for their regulatory frameworks which put consumer protection and responsible gaming at the forefront, however, it would prove to be more effective if this was also endorsed on the EU platform. The aim would be to lead the consumers to authorised websites rather than those which are unauthorised. National regulatory authorities had a big role to play because creating mechanisms such as self-exclusion takes a lot of regulatory efforts.
In this communication, the Commission set out an action plan with main measures to be taken by the member states as well. It was the preliminary foundation block paving its way towards the start of this regulatory process. It made sure that this was an effort between both the Commission and the member states securing the administrative, enforcement and overall protection of its citizens across the whole of the EU. That being said, this communication soon became out of date, and the Commission needed to take the next step to put its commitments into effect and work towards the regulation.
15 Commission, ‘Towards a comprehensive European framework on online gambling’, (n12) 7 16 Ibid, 8
In 2014, the Commission published a recommendation which tackled the hot topic that surrounded all the gambling policy, the protection of consumers and vulnerable persons. This recommendation was a cry for attention aimed towards the member states to make sure that their national laws are protecting the social aspect of online gambling.18 This was not the first time that this so-called social
aspect was reinforced. The CJEU, in Zenatti and Laara (1990s), and in recent decisions such as Placanica in 2007, it had repeatedly stated that it is in the member states interest and overall duty to protect its public interests due to the delicate factors surrounding gambling. Even though these cases will be analysed in the following chapter, it is appropriate to introduce the CJEU’s involvement and how its decisions are reflected in the existent gambling policy.
The CJEU embarked on its long stream of cases in 1994, and the way policies took shape definately took a step forward once the CJEU started to develop its decisions. The idea of consumer protection as the prime justification and other risks associated with gambling were constantly discussed in cases starting with Schindler (1994)19. The Commission followed the train of thought of the CJEU by
prioritising consumers and risk management in the aforementioned communication and recommendations. Public interest was often brought up in the same context as a justification to the freedom of services. This was one of the objectives that the CJEU treated with a lot of care since member states feel very strongly about instilling order into their society, especially when gambling could have the potential of being a strong force of disruption. The Commission also chose the same route. It acknowledged that targeting areas that require more protection such as the control and proper oversight over money laundering and fraudulent activties is worthwhile.
This fear about gambling affecting both the social and economic aspect of the Union is indeed justified. Nevertheless, the situation still remained the same. Member states could choose to adopt a full system based on player protection or nothing at all, since no EU institution nor member state had any power to enforce against this.20 Interestingly, the Commission acknowledged the effects that the
lack of harmonisation can have on gambling but the recommendation on its own is not a binding instrument of secondary legislation.21 It is true that the Commission alone does not have the 18 Commission Recommendation, ‘on principles for the protection of consumers and players of online gambling
services and for the prevention of minors from gambling online’ [2014] OJ L 2014
19 C-275/92, ‘Her Majesty’s Customs and Excise v. Schindler’ [1994] ECR I-1078 20 Ibid,1
21Dr. Margaret Carran, European Gaming and Betting Association, Report, ’Consumer Protection in EU Online
Gambling’, (6 December 2018) <https://www.egba.eu/uploads/2018/12/181206-Consumer-Protection-in-EU-Online-Gambling-EBGA-Report-December-2018.pdf>
competence or the power to change the laws or impinge on the member states right to legislate, but in building the foundations, it failed to use the appropriate force needed to escalate the matter of regulation.
At the stage of the recommendation, the direction gambling was taking was still very unclear. Even if the Commission’s efforts were not leading to initiating the process of harmonisation, the division between the member states was partially remedied in 2015 (and then again as amended in 2019) with the cooperation arrangement between the gambling regulatory authorities of the EEA member states22. This agreement was a steppingstone that formalised the intention of the Commission’s
communication back in 2012. This agreement marked the continuation of the cooperation between the national regulatory authorities with regards to information sharing, reduction of administrative burdens and best practices. The cross-border issue of online gambling has to be looked at from an unbiased lens and this arrangement gave hope that within the lack of harmonisation between all member states there was one arrangement pulling all the Union together. The arrangement consolidated all the interests of the member states into one document. This was one of the instances where member states acknowledged the cooperation incentive that the Commission was introducing in gambling. As an example of this acknowledgment, Joseph Cuschieri the then CEO of the Malta Gaming Authority stated;
“This agreement is a result of various discussions and debates between the various national gaming authorities and credit goes to the officials working in DG-GROW as well as to the representative officials of the various regulatory bodies who collectively worked towards this significant multilateral achievement”.23
The process of gambling policy was far from complete and satisfactory, cooperation between member states is still a work in process, however, these small milestones continued to shape the way they interacted with each other in the remit of online gambling.
In 2019, the Commission roped in the European Committee for Standardisation by issuing a decision requiring the said Committee to draft the “European Standard on reporting in support of supervision
22 European Commission, ‘Cooperation Arrangement between the gambling regulatory authorities of the EEA Member
States concerning online gambling services’, (GROW DDG2.E.2 Updated in 2019)
23Christopher Formosa, ‘MGA signs multilateral cooperation arrangement with EU/EEA gaming regulators’ (28
November 2018) <https://www.mga.org.mt/mga-signs-multilateral-cooperation-arrangement-with-eueea-gaming-regulators/>
of online gambling services”. This was a kind of continuation from the previous cooperation efforts the EU had published and focused on.24 Nationally, supervision is carried out by the national
regulatory authorities by feeding off information it compiles from the business to customer operators and via the software operators which operate on a business to business level. Each member state uses a different reporting standard when it comes to monitoring gaming conduct and fair terms even though the end goal is the same.25The Commissions thought process when creating this committee was to
have one set of standards regarding the reporting of online gambling services to operate simultaneously without duplicating information. This standard was purposely drawn up to clarify what the operators and suppliers should actually report. The idea is to have all the pertinent information and do away with the trivial material.26 This was bound to improve the efficiency and
content being reported. Although the standard did not legally bind the national regulators, this still counts as an objective guide for the shape, form and content of reporting systems.
The developments by the Commission focused on creating a strong platform upon which national regulatory authorities can effectively operate and carry out checks and balances. Ultimately, it also wanted to make sure that the structure upon which they operate, ticks all the boxes for an efficient gambling platform. This was seen as an important step before the national regulatory authorities could deal with an EU gambling framework over and above their own.27
This goes hand in hand with the “high level of protection for consumers” the Commission had envisaged. The mistake was that the Commission made tangible improvements but then started to decline in its enthusiasm to fulfil its aims in an efficient and expedient manner. This decline meant that the high level of protection was not fully respected because the difference in implementation that member states adopted conflicted with the Commissions desired end result. Due to this lack of supervision and enforcement, some member states have treated consumer protection as a top priority, whilst others lagged behind.28
24 Commission Implementing Decision, ‘on reporting in support of supervision of online gambling services’ C(2018)
1815 (4 April 2018)
25 Ibid, 1 26 Ibid, Annex 1
27 Julia Hornle and Brigitte Zammit, ‘Cross-border Online Gambling Law and Policy’, (Published by Edward Elgar
Publishing Ltd 2010)
28 Dr.Margaret Carran, ‘Consumer Protection in EU Online Gambling’, (European Gaming and Betting Association, 1
December 2018) <https://www.egba.eu/uploads/2018/12/181206-Consumer-Protection-in-EU-Online-Gambling-EBGA-Report-December-2018.pdf>
The actions taken by member states also failed to fully consider the internal market’s current position amidst the growth of the online market and fell short in coming up with a new policy to deal with developments such as the very recent blockchain technology that took the EU by storm. The impact is hard to ignore since the blockcahin technology made it easier,yet much safer, for consumers to perform online gambling activities such as placing bets and depositing funds. This technology also reinstated transparency on the economic operator’s side. Player management, verification and an overall fair outcome of games was also brought about by the advanced algorithmic technology.29
Moreover, ever since the digitisation of the market was announced this loophole has not been addressed, thus, the online gambling market cannot fully reach its potential within the EU as things stand.30 Had all these proposals, recommendations and decisions manifested some development into
an actual legislative proposal, some of the policy goals would have been fulfilled or be in the process of being completed.
With the start of the new decade and the escalation of the digital single market, the longstanding issue that has populated the online gambling industry, especially in the judgements of the CJEU, is the proper enforcement of EU law. In the last two years, the Commission started to get a lot of pressure regarding this issue mainly because it has been the main cause of fragmentation between all the member states and the application of their legal frameworks. With that being said, the proper enforcement of EU law is also a commitment that the member states themselves vow to take up when they join the EU31. Hence, the member states have a duty to help the Commission with this task.
Given that online gambling is one of the most effective non-harmonised sectors, stronger EU law enforcement should be given the priority in the next policy move. Although both the member states and the Commission need to push further, the truth of the matter is that the Commission still has a more influential role here.
29 Prof. Dr. Robby Houben & Alexander Snyers, ‘Crypto Currencies and Blockchain’, PE 619.024 (2018) 15-19
<https://www.europarl.europa.eu/cmsdata/150761/TAX3%20Study%20on%20cryptocurrencies%20and%20blockchain. pdf >
30 Ibid
31Julia Hornle and Alan Littler, ‘Evaluation of Regulatory Tools for Enforcing Online Gambling Rules and Channeling
Demand Towards Controlled Offers: An Overview of the Report Completed for the European Commission’, (2019) 23, Gambling Law Review 395-404
Chapter 2
Relevant Case Law and the Fluctuating Court Approach; An Attempt to Restore Order
In the absence of a regulation for online gambling, the CJEU had one of the most important roles of establishing the right amount of clarity that the member states were looking for. The CJEU’s approach has had a make or break character in the absence of an EU wide gambling regulation. However, it is debatable whether it has actually lived up to this indirect mandate, that of being the main actor that instills the clarity that the member states wanted. The CJEU’s main involvement was to assess the compatibility of the member states national laws with the general principles and EU primary law. However, the peculiar and innovative nature of online gambling required the CJEU to take an equally innovative and tailor-made approach.32
The Details of the Schindler Case
This was the first case the CJEU touched upon gambling, and even though the issue pertained a British law that imposed a ban on any imports of lottery games, the underlying rationale applied back then continued to be observed in subsequent judgements. The Court started off by establishing that lotteries did constitute services (as opposed to goods) and went on to assess the extent to which the cross-border element was impeded since other economic operators, in this case from Germany, could not provide or even have lottery services advertised in the United Kingdom.33 Even though article 56 on
the freedom of services, expressly prohibits such action, there was a channel through which this restriction could be justified. This channel is also known as the claim of public interest.
It is understandable that the prime aim for member states is to protect the consumer. The chance of having gambling disrupt the general functioning of the public order was not a compromise they were willing to make.34 Not to mention that although games of chance were picking up speed in various
counties across the EU, they were still a novelty in the CJEU’s assessment. In this process, the CJEU started to expand the definition of gambling in the realm of games of chance. Having said that, public
32 Lovejoy, (n1), p.1545-1547 33 C-275/92, (n19) 11-12
34Marco Bassini, ‘ECJ case law on gambling: how technology thwarts regulatory barriers’, ( Media Law,14 December
2010) < http://www.medialaws.eu/how-technology-thwarts-regulatory-barriers-the-ecj-case-law-on-gambling-and-internet/ >
interest is not an unfettered claim, and the principles of non-discrimination and proportionality play a big role here. In Schindler, the CJEU gave a very wide narrative on the nature of gambling and acknowledged its surrounding factors that can be harmful to consumers ranging from the social impacts such as crime and fraud, to economic abuses.35
The CJEU showed that it wanted to stick to its roots in promoting the internal market objectives as embedded in the treaties, whilst also balancing these interests with those of the member states and their urge to protect their citizens. The CJEU set itself to stick to this theme in judgements that followed.
Läära v. Finnish State
In Läärä, the involvement of a monopoly within the gambling sector was assessed and with its rationale, the CJEU did not treat it differently from the lottery game in Schindler.36 A British company
was involved in supplying a particular Finnish operator with gambling devices, and as a result of this arrangement, the Finnish company was penalised. Firstly, Finnish law prescribed that games of chance should only be organised for social causes and charities. The incentive of making personal economic profit was ruled out of the law purposefully. Moreover, due to the monopolistic nature of the Finnish gambling sector, the distribution of the gambling devices was deemed to be illegal because such devices were only allowed to be supplied internally by a specific state affiliated body. The monopoly on gambling devices in itself was a restriction but the law did not discriminate operators by nationality. The restriction was justified due to satisfying the proportionality and non-discrimination test. The CJEU rightly stated that although on the outset the law questioned was deemed to be stricter than that of other member states, this discrepancy does not automatically render it to be disproportionate. As was already confirmed in Schindler, it was up to the member states to decide what constitutes their public interest. The CJEU allowed them the facility to decide on how to safeguard it as long as they are not in breach of the treaty rules.
Zenatti
Gambling related cases were accelerating in the 1990s, and with that so was the refinement in the CJEU’s judgement. In Zenatti, the CJEU was dealing with the skill game element rather than a game
35 C-275/92, (n19) 56-59
of chance and it concluded that under the capping of an economic activity, skill games should still be assessed in the same way as games of chance. The CJEU was dealing with a more complex license prohibition under Italian law, and so it started to step up its approach.37The defendant, Zenatti, acted
as an intermediary for sports betting events for SSP Overseas Betting Ltd established in the United Kingdom. He placed bets and transported the information over to the said company. Betting was closely supervised by an Italian committee that only allowed funds generated from such betting to be used for promotion purposes to avoid any private profit. Due to this strict license framework, only a limited number of approved persons could take up such bets to avoid abuses. Zenatti was not one of these authorized persons and was precluded from acting as intermediary.38
The CJEU did not deny that this stringent provision was a restriction to the freedom of services, but it rested on the fact that it was not discriminatory and both foreign and Italian agents were treated in a similar way. The CJEU could not blatantly state that Italy could not impose such law because as previously acknowledged, member states had complete discretion on the structure of their law. What remained a constant was making sure that the provision in question was in line with proportionality and that it did not exceed what was necessary to attain the objective envisioned. Up until this point, in all the cases, the CJEU thought it was too soon to go beyond the ‘obvious’ and scrutinize further than just proportionality and non-discrimination.39
Gambelli & Others
The first real step towards a liberal approach started with the subsequent Italian case referred to as Gambelli. This was monumental because the CJEU actually did take time to dig deep into Italian law and dissect it rather than merely validate it based on the justifications the defendant proposed as the ‘easy way out’. The factual background of both Zennatti and Gambelli is inherently the same with sports betting as the focal point. The most groundbreaking thing here is that the CJEU took a sudden turn in its approach.40
37 Niall O’Connor, ‘An overview of European Gambling Law: Disharmony Rules OK’ (Bettingmarket 2019)
< https://www.bettingmarket.com/eurolaw222428.htm>
38 C-67/98, ‘Questore di Verona v. Zenatti’, [1999] ECR I-7340, para 6-7
39 Janja Hojnik, ‘Online Gambling under EU Law: Strolling Between Controlled Expansion and Genuine Diminution of
Gambling Opportunities’, (2018) 10, No.2 67-102
Instead of shielding the member states discretion, it assessed the possibilities of how the various constrictive provisions could actually breach the internal market provisions. Prior to the CJEU, Advocate General Alber had already concluded that the Italian provisions vis-à-vis sports betting could not be justified for public interest reasons because it went contrary to the general principles the CJEU had repeated in its previous dictum. Furthermore, the AG saw that the issue goes beyond what the other cases mainly, Läära and Zenatti, pointed out and concluded. The AG took matters into his own hands by explicitly stating that the Italians way of trying to liberalise their own market was not proportionate and justifiable at all. Alber directly called upon Italy’s inconsistency without holding back and stated that Italy’s stance to advertise gambling in a very overt fashion could not then be covered by justifying blatant discrimination on other companies in tender process for obtaining a license.
The CJEU did agree with AG Alber but it took a more complicated route.41 It referred the case back
to the national court because it was in a better position to rule on the proportionality of the legal provisions in question. After Gambelli, the CJEU was not going to allow the Italian court or any other national court to take a lenient approach when interpreting these restrictive measures. The CJEU wanted national courts to really streamline what constitutes public policy and apply proportionality and non-discrimination in an objective way to avoid having discretion get in the way again.42 This is
the first time that the CJEU conditioned the member states. In its judgement it stated that in order to justify the restrictions on the basis of the freedom of services the restrictions applied must be strictly necessary to reach the general interest they are set out to meet and they must not go beyond what is essential in order to achieve the desired objective.43
Placanica
Post Gambelli, a more assertive yet careful approach was observed in Placanica. The CJEU had already laid down the basis on how sport betting activities should be dealt with but further clarity on the requirements was needed. The CJEU did not want national courts to deviate from the requirements it laid down in Gambelli and recited them in its judgement as the basis of examining the restrictive measures especially with emphasising proportionality44. This was definitely done in order to avoid
41 C-243/01, Gambelli and Others, Opinion of Advocate General Alber, [2003] 42 C-243/01, ‘Gambelli and Others’, [2003] ECR I-13076, para.40
43 Ibid, para.65
the aftermath that followed Gambelli with member states still lagging behind and going their own way without taking into account the CJEU’s decisions and the general principles.45 The intention of
the CJEU was not to impinge on the freedom member states had vis a vis the form and structure of their gambling frameworks. The CJEU also did not want to overstep in national matters, rather it merely gave its interpretation of how EU law should be applied within national legislation.
Santa Casa
The CJEU had come a long way but in Santa Casa it regressed when it overturned all that it had established in the previously mentioned cases. Santa Casa held the exclusive rights to provide games of chance ranging from lotteries to sports betting in Portugal. The other company involved in the proceedings, Bwin, was also offering the same kind of games. The issue arose when Liga Portuguesa (the top ranked football league in Portugal) entered into a sponsorship agreement with Bwin which stipulated that it would be the main sponsor of the event. Santa Casa acted on this immediately due to the fact that they held the exclusive right in Portugal with no option of competition. This lead Bwin to incur a hefty fine.46
The question referred to the Court required it to assess whether Portuguese law (which hindered this cross-border offering of games) was against the freedom of services, which in reality, was no novelty to the CJEU by now. Whilst this was obviously an affirmative answer, the most interesting aspect was how the CJEU was forced to introduce the principle of mutual recognition into its assessment. In its traditional form, mutual recognition is applicable in the free movement of goods and represents situations which allow goods which are legally circulated within one-member state to be treated without differentiation and subject to the same conditions in other member states. For the purposes of online gambling, the CJEU shrugged off the idea of applying mutual recognition due to the ‘risky’ nature of offering games via the internet which can easily lead to bigger implications even more so in the absence of harmonisation.47 This approach is unfortunate for online gambling, because in other
45 C-338/04, C-359/04, C-360/04, (n44):
Michal Koscik,’ The Gambling on Internet - A True Challenge for Fundamental Freedoms' (2010) 4 Masaryk U JL & Tech 129
46 C-42/07, ‘Liga Portugesa de Futebol Profissional & Bwin International (Santa Casa)’, [2009] ECR I-7698, para.26 47 Hojnik, (n39) 83-86
areas such as medicinal services48, the CJEU did not blatantly reject the idea. In fact, in their
submission both the Portuguese government and Santa Casa themselves pleaded that the objective behind the restrictive provisions was to protect their consumers from the grips of fraudulent activity and the many avenues of cybercrime. Due to this public policy objective the CJEU found it plausible for the restriction to be justified.
This kind of ruling shows that in a lucrative sector such as online gambling, a ruling of this nature has significant implications, not only on legal grounds, but also on businesses which are immediately impacted with big financial losses. This ripple effect infiltrates the rest of the national economies too. Nevertheless, this greatly favors state monopolies and their fruition. Even though in previous cases the CJEU accepted gambling as an economic activity and widened its definition, the fear attached to online gambling resurfaced and the CJEU shrugged off all responsibility back to the national courts. It is true that there is nothing that stops member states from creating their own rules, however, the CJEU decided to discard the proportionality-based approach. In addition, the fact that mutual recognition was not afforded the attention it deserved shows that the CJEU does not condone the lack of respect that certain member states have towards other member states and their legal frameworks.49
This is an unfortunate situation to have between member states because the frameworks often have the same basis and end objective.
Analysing the CJEU’s Approach
The underlying principles remained the same for each case, but with every differing element, the CJEU moved further away from its original approach. The CJEU also started to apply its standard reasoning as a whole to almost every case and did not take into account small yet impactful differences.50 Ultimately, the CJEU did acknowledge the different nature of gambling but it did not
want to create an exceptional scenario and treat it differently from other markets that fall under the remit of the freedom of services.
48 C-42/07, ‘Liga Portugesa de Futebol Profissional & Bwin International (Santa Casa)’, Opinion of Advocate General
Bot (2008)
49 Ibid
50 Anastasios Kaburakis & Ryan M.Rodenburg, ‘European Union Gambling at the Intersection of Policy and
The CJEU’s role is not to make policy choices for the member states and it will never be called upon it to do so. Instead, the CJEU legitimately chose to uphold the public interest claims member states chose to enforce. This is because to some extent, the CJEU got used to justifying the member states reasoning for public interest on the same public policy basis. However, there was never complete transparency on the evidence backing up these claims except that the social and economic stigma called for this treatment.51 Having already established its approach on the claim of public interest, the
next step for the CJEU would be to apply a deeper analysis on what constitutes of proportionality when measuring member state gambling laws.
Another drawback is that national courts still find it hard to measure the compatibility of a national measure with the freedom of services, even though the CJEU allowed the national courts to rule with sufficient discretion. On the other hand, not all member states fall under this general presumption because there are instances were member states do not interpret national law lightly when ruling on EU internal market rules and often rule strictly against economic operators that try and evade the treaty provisions.
Ultimately, this fluctuating approach stalled matters and was not enough to convince the Commission to prepare its next course of action. In hindsight, the problems of legal and political certainty together with competition and national incoherency were not really solved. From this analysis, it is safe to say that even though the CJEU did soften the chaos in defining gambling, its applicability and limit to justifications, it failed from the perspective of instilling the transparency and the level of assurance needed.52 This has to be done if there is ever the chance of reducing the negative stigma that has been
created throughout the years and moving towards a more convincing approach for regulation. The timeline of these judgements shows the development the CJEU experienced as a whole. The CJEU’s position in this field was never to be the institution that lays down the whole backbone of principles upon which gambling should be moulded, however, the CJEU had no choice but to try and find some common ground where there was none. With this in mind, member states can never expect a hundred percent guarantee of accuracy and reliability from the CJEU but when it comes to weighing whether the CJEU did ‘restore the order’ in gambling, there still is a lot of refinement to be done. The CJEU did manage to set the general standards that member states should abide by when seeking new
51 C-42/07 Opinion of Advocate General Bot, (n48) 1781-1786
52 Anastasios Kaburakis, European Union Law, Gambling, and Sport Betting. European Court of Justice Jurisprudence,
ways to improve and innovate their frameworks. This is especially the case with weighing the proportionality threshold of each measure.
What could the CJEU have done more?
The involvement of the internet definitely challenged the CJEU’s adaptability. The CJEU was very critical about the exposure of risk on consumers, and rightly so, but it could have dedicated the same level of assertiveness when dealing with member states reasoning rather than continually accommodating their concerns on public policy grounds. As a result, the CJEU can never act or be perceived as an adequate substitute for harmonisation and as an accurate closing statement; in the words of Bwin CEO Manfred Bodner:
“Court rulings will not be able to fill in for a regulation in the medium and long run”53
53 Andrew Williams, ‘Commission eyes EU regulation of online gambling’, (Euractiv, 7 September 2011)
< https://www.euractiv.com/section/sports/news/commission-eyes-eu-regulation-of-online-gambling/> (accessed May 2020)
Chapter 3
A Comparative Analysis between the Two Extremes Finland and Malta: How different legal frameworks clash
Preliminary Observations
When looking at the EU from a wide angle, member states seem to be divided between either applying a licensing system regime or a monopolised system. Whilst gambling is legalised in Finland and Malta, this does not exclude the creative routes that the two member states chose to take in order to come up with a workable legal system.54 Using this comparative analysis, I aim to conclude the
lengths, or lack thereof, to which member states have gone over the last couple of years to implement and exercise the necessary steps expected by the Commission in their communication, recommendations and standards. In addition, I also aim at deducing whether a bias or balance exists between member states economic, social and political interests. Ultimately, by using Finland and Malta as examples, I will showcase how the process of harmonisation can start to simplify the complexities experienced by all member states for the benefit of its consumers.
Malta
In recent years, gambling has been constantly growing, and Malta was always at the forefront of the scene. It has often been referred to as one of the top gambling jurisdictions, attracting many operators and consumers alike. With the spirit of the latest consumer protection wave, Malta welcomed its gambling overhaul in 2018 in order to keep the governance and regulatory levels up to the standard of the fast-paced sector.55
The Malta Gaming Authority created a system which helps in obtaining a higher level of oversight and focused on matters that are more important and relevant to the industry. The approach sought to simplify and not over complicate the laws since the sector is already hard to navigate. Therefore, the national regulatory authority adopted this approach not only to cater for the present but also taking
54 Edison Investment Research, ‘Online Gaming Sector; Diversification and scale for online success’, (Edison Group,
July 2019)
55 Olga Finkel ‘The New Malta’s Gaming Regulatory Framework’ (WH Partners, 2018)
into account the future of gambling.56 In summing up the approach adopted, the MGA in its White
Paper entitled “To Future Proof Malta’s Gaming Legal Framework” stated that it is adopting a risk based approach when it comes to compliance matters together with an objective based approach in making sure the envisaged outcome of the law is attained.57 The ultimate goal is to create a legal
framework that encourages, rather than hinders, the main attributes of gambling to come together in a way that the system is still kept in check by creating a better platform on which the service can thrive by keeping the key players, mainly the operators and the players themselves safe and satisfied. The old framework was comprised of various acts of parliament which were very fragmented and often conflicted with each other. These were outdated and to repair the situation, the current framework is comprised of one comprehensive Gaming Act establishing the legal functioning of gambling services as a whole. Other surrounding subsidiary legislation and directives that have been issued by the MGA aim towards supporting the constituents of the main parent act.58 The overall
system I will be discussing and assessing is based on the issuing of two kinds of licences. First of all it should be noted that under the Maltese jurisdiction gambling is referred to as “Gaming” and the definition covers the both online and land based gaming services as follows; “means an activity
consisting in participating in a game, offering a gaming service or making a gaming supply”.59
A System Based on Licences
Any person who carries out a service in Malta is able to do so because they obtained a licence from the MGA by means of an application screening process. In the absence of a licence (or an exemption allowed by law), the service provider would be liable for a criminal offence. Therefore, from this definition alone it can be deduced that the licensing system for online gambling is split into two. The ‘Gaming Service Licence’ is a business to consumer ( B2C ), which covers the license to provide a gaming service to an end customer and the ‘Critical Gaming Supply Licence” which alternatively is a business to business to business (B2B) which as it name itself implies applies to the companies who provide or carry out a critical gaming supply.60 A critical gaming supply is defined in the act as a
56The Malta Gaming Authority, ‘A White Paper to Future Proof Malta’s Gaming Legal Framework ’July 2017, p. 2-3 57 Ibid
58 The Malta Chamber, ‘Malta’s New Gaming Act for Remote Operators’, (1st August 2018) 59 Chapter 583, Laws of Malta, “The Gaming Act” (2018) Article 2
material supply that is “ indispensable in determining the outcome of game or games forming part of the gaming service and, or an indispensable component in the processing and, or management of essential regulatory data”61 This element of indispensability is one of the novelties of the new law.
In order to represent a well-structured system, the Act expressly lays down four categories of games that fall under the B2C cap licensable by the MGA. The MGA has full discretion in categorising the gaming service under one of these four categories as it forms part of the application process.62 In
cutting down administrative burdens and avoiding the duplication of work and licences, the MGA also created the possibility of a ‘Corporate Group Licence’ which counts for both the B2C and B2B licences. This does not exclude the possibilities of obtaining separate licences especially pertaining to critical gaming supplies.63 Needless to say, the five step application process vets all the above
elements and ultimately it takes the MGA around six months to assess whether the operator, supplier and its personnel involved in the core activities of the gaming service are “ fit and proper” and fit all the criteria as per law.64
The rationale behind this structure was to make the MGA’s role more concrete and by having new powers and duties, the rigorous system could be better implemented, enforced and supervised. By taking advantage of improved technological platforms at their disposal, the MGA became more transparent and created online portals for licensees to send in their applications together with other important and confidential documentation. This was something the Commission had mentioned in their 2014 recommendation and also a way to reduce the inefficiency and risk of lost documents that hindered the license process in the past.65
61 Subsidiary Legislation 583.04 of the Laws of Malta, ‘Gaming Definitions Regulations’, (2018) p.3 62 The Gaming Authorisation Regulations, (n60) p.12
63 Ibid, (n60) Article 10, p.4
64Andrew J. Zammit & Others, ‘The Gambling Law Review, Malta 5th Edition’, (published May 2020)
< https://thelawreviews.co.uk/edition/the-gambling-law-review-edition-5/1226822/malta>
Efforts for Cross-Border Cooperation
With the success of the new licence system, the MGA’s overall credibility, and increase in customer and operator satisfaction, Malta has brought about new strategies to showcase the importance of having a cross-border friendly system. This has been proven not only by means of ensuring that the Maltese established gaming operators and suppliers are adequately licensed, but also by acknowledging other EU/EEA operators by issuing a ‘Recognition Notice’.66 Therefore, in
recognising the obstacles the gambling sector has been experiencing, the MGA does not exclude between gaming operations taking place in Malta or from Maltese territory.
This is as long as the operation is based on a valid licence or authorisation from another member state or other states that are deemed to be in accordance with the Maltese regulatory standards. This is an innovative take on the principle of mutual recognition which gives the opportunity to these economic operators to grow within a different jurisdiction under the same conditions as Maltese economic operators.67 Meaning that no additional requirements need to be shown except the license the operator
already holds coupled with information and approval of the games that will be offered. This recognition notice does not reduce the MGA’s regulatory hold on its operators, but it incentivizes companies who wish to establish a base in Malta to do so by means of a relatively simple process. Malta’s current position is clear, it supports a system where it can have a basis in which the internal market rules can flourish when faced with cross-border services.
Malta has also acknowledged the CJEU’s judgements and restrictions that were previously permitted when limiting the freedom of services with respect to the public interest. In coming up with a fair and efficient framework, the MGA has tried to balance this by giving due regard to its external relations and maintaining good collaboration with other member states.68 This is the epitome of the level of
cooperation the Commission envisaged in the 2012 Communication. This point of view especially works towards reducing administrative stress on member states to have some sort of authorised access to the market. Therefore, it tries to lose the grip on the effects of harmonisation by adopting a safe access approach.69
66 The Malta Gaming Authority, ‘Recognition Notice’, <https://www.mga.org.mt/recognition-notice/> 67 The Gaming Authorisation Regulations, (n60) Article 22
68 Chetcuti Cauchi Advocates Editor, ‘The Gaming Perspective - Malta’, (19 January 2019)
< https://www.cc-advocates.com/gaming-law/european-license-eu>
The Maltese government has been working tirelessly with the MGA in order to remain at the top of the list of the best gambling jurisdictions. It has particularly worked towards guaranteeing one of the best functioning systems in order to reach the peak of regulatory success both on a national and international level as the “home of gaming excellence”.70Undoubtedly, the described framework has
its downsides because often the theoretical reality does not meet the practical side of expectations. It is understandable that economic operators are drawn towards having less administrative hurdles and the least cost possible however, the process of obtaining a license and meeting all the related license eligibility and requirements is in itself a lengthy and rigorous process. On the flip side, economic operators are also attracted to Malta’s tax regime which is indeed positively reflected in the new gaming regulations, however, tax is something that fluctuates very quickly which rapidly change the way Malta’s over all system is perceived. The reality is that economies such a gaming change very quickly and although the regulatory framework as is is working very well, there is no guarantee that the system is prepared for any big unforseeable changes.71
Finland
As previously discussed, gambling’s popularity has been on the rise in the EU for a very long time, not only in terms of its economic benefits but also in terms of the value citizens put into it. Finland is a prime example of this since recent statistics have shown that its citizens do spend a big portion of their money in gambling and as a result, the government generates a good amount of revenue from such spending behavior.72 Many different member states are gradually realising that with the new
façade gambling is taking, change is needed and such member states have been opening their markets slowly and opting for a licensing regime. Finland remained set on their monopoly system which intrinsically means that competition is still impeded on their side. Finland’s decision to continue to strengthen and enhance the structure and operability of its monopoly first handedly shows that the balance between economic, social and political interests is by its very nature, a challenging balance to maintain. It is clear from this point onwards that Malta and Finland chose very different routes.
70 Gaming Malta, ‘Malta: The worlds iGaming capital’, (Country Profiler, January 2018)
< https://www.mga.org.mt/wp-content/uploads/Gaming-Malta-2018.pdf>
72 N.N ’ How Finland’s stat-led gambling sector is unintentionally creating a global model’, Helsinki Times, (Finland,
Constituents of the Framework
The Finnish gambling system is complex in its nature and the one legal instrument that has been governing its operation is the Lottery Act that was initially promulgated in 1965 with subsequent amendments in 1993 and 2002.73 The Act lays down the basis of every gambling law in that it secures
consumer protection from crime related activities in the sector and to control the natural risk that gambling brings about vis a vis addiction and overall mental health. With regards to the way that gambling activities are carried out, the system can be summed up into a “licence by exclusivity” system and whilst all types of games are legal without any per se prohibitions, licenses are not very easily given out which proves that the system is rigorously drawn up. This exclusive system prescribes that licenses are given for different gambling activities but for each activity, only one license can be given at a time.74 What characterizes the Finnish gambling scene is their monopoly
structure that’s well-known throughout the EU today.
Prior to 2017, Finland has three different monopolies covering different types of activities mainly; 1. Fintoto - specialised in horse betting
2. RAY - exclusively dedicated to traditions casino games, table type games and slots 3. Veikkaus - controlled everything that fell under the lotteries and betting capping
It is very clear that the right to offer gambling service in the country was completely vested in these monopolies and that the market was very much closed off. In 2014 talks about changing the monopolistic structure were ongoing and the aim was to come up with a solution that will save government more resources and to create and even tighter monopoly which generates even more revenue. In 2015, the proposal to merge the aforementioned monopolies started to solidify and was approved internally in the same year. This immediately launched the need to amend the Lottery Act to be able to implement the new merger.75
73Casino News Daily, Casinos by Country ‘Finland Online Casino Guide’, (Casino News Daily 2020)
<https://www.casinonewsdaily.com/finland>
74 Ibid
75 Delphine Chen, ‘Finland Country Report’, (GamblingCompliance, 28 February 2018)
The Merger
This merger was an unconventional turn which brought a lot of outside attention. In the beginning of 2017, the merged monopoly under the name of Veikkaus came to be and the difference was mainly that all the operations that were split into a tripartite structure were now consolidated. Over and above that, new games such as virtual betting started to be offered since there was no longer the fragmentation of gambling activities.76 This merger was not only meant to boost the operability of
gambling economically but also took into account the social aspect. The backlash that Finland received regarding the high rate of gambling addiction and other related causes needed to be tackled and amongst the various amendments of the Act, articles 17-22 explicitly lay down the intention of the legislator behind the proceeds and how the distribution of such money is to be decided.77 This is
not the first time that social aspects are seen to be included in gambling laws but Finland went to the extent of dedicating all the profits for social causes. This addition reflects well on Finland’s awareness to protect its consumers.78 Like every other framework, a lot of expertise and resources go into
creating an all rounding system that protects the economy of the state and the consumers contributing to it. However, it is fundamentally important for member states to prioritise the interplay of other jurisdictions and the benefits that cross-border trade in the remote sector can bring about. This will open up a window of opportunity for competition and a chance for economic operators to truely work their way into a level playing field.
The Structure of Gambling in the New Framework
Amidst these regulatory changes, online gambling remained under the remit of Veikkaus and whilst this enclosed market structure does not allow other offshore operators from infiltrating into the market, Finnish players were not restricted in so far as making use of other online services like online casino games. This system might be viewed as being counterproductive because in theory only Veikkaus is legally recognised as the online gambling haven. However, ancillary online casino websites have no problem poaching Finnish consumers because the reality is that the government has been trying to come up with restrictions to control or regulate the situation, but these measures have
76 Veikkaus Oy, ‘Veikkaus a Finnish gaming company with a special mission’(Veikkaus, 2020)
<https://www.veikkaus.fi/fi/yritys>
77The Lotteries Act, 23.11.2001/1047 (Finland), Article 17-22 78 Casino News Daily, (n73)
