DSM Said Little Help to Fragmented Internet Gambling Sector

The digital single market (DSM) strategy won't directly benefit the Internet gambling industry, said industry officials in interviews this week. It may signal a small political step forward, said European Gaming & Betting Association (EGBA) Secretary General Maarten Haijer. The DSM, announced by the European Commission May 6 (see 1505060038), won't bar geo-blocking of gambling websites, leaving the sector subject to national laws and with "limited expectations," said Remote Gambling Association CEO Clive Hawkswood. Any effort to get online gambling included in the services to be covered by the DSM will face strong resistance from EU governments, said Global Betting & Gaming Consultants CEO Warwick Bartlett.

One key goal of the DSM is creating better online access for consumers and businesses. The EC wants to make e-commerce as simple as possible throughout the EU, said K&L Gates (Brussels) public policy and law attorney Ignasi Guardans on a Tuesday webinar. The strategy addresses "unjustified" geo-blocking that results in discrimination based on residence, said K&L Gates (Paris) information technology and online services attorney Etienne Drouard. The EC used Internet gambling as one example of legal geo-blocking, said Guardans. The sector is covered by national law and the EC has no intention now to harmonize those rules, he said.

Bartlett predicted the trade associations will push for gambling to be included in the DSM, but said EU governments will resist. Europe "is still in recession" and governments with fiscal deficits will want to tap the revenue Internet gambling brings in, not open the industry up to cross-border trade, he said. The gambling industry wants cross-border services, as do consumers, but countries still want to protect their national industries, he said. A problem for operators is that each country requires them to have their games tested to ensure they play fairly for consumers, he said. There are no economies of scale for gambling companies, because they have to obtain licenses in many countries, said Bartlett. "The model is breaking down." It's hard for operators to make a profit without a huge volume of business, he said.

"We haven't given up hope on it completely but it's hard to see how the industry will benefit from [the DSM] directly," said Hawkswood. The EC made clear well before the strategy was released that changes in geo-blocking rules won't apply to the sector, "so we had limited expectations," he said. There are "very small steps toward minimal harmonisation but it's still very much words rather than action and tends to revolve around the Commission facilitating discussion between regulators," he emailed.

That the EC's political thrust is focused on digital is good for the online gambling sector, said EGBA's Haijer. The DSM identifies some issues, such as data protection, that will include the industry, he said. A European Parliament study on the cost of non-Europe concluded that a unified online gambling market would have annual multi-billion dollar benefits, and that the current absence of a single gambling market results in unequal consumer protections, he said. "Politically, things are moving forward."

The EC is working on some of the actions listed in its 2012 communication on Internet gambling, Haijer said. EGBA believes the commission will continue along that track before embarking on any new sector-specific rules, he said. Changes to online gambling regulation could happen in the future, depending on the action contemplated and the stakeholders, said Drouard. That might mean convincing governments that a pan-European approach would help protect consumers or hold other benefits, he said.