This article has been updated 1st February 2019
The gaming industry has experienced mixed results from countries in relation to its regulation. The urgency for the harmonisation of EU iGaming laws is not new. That said, taking into account the current state of affairs, there are no indications that EU regulations specifically regulating gaming services will be issued any time soon.
Indeed, the EU Member States, along the years, have not managed to reach an agreement on the harmonization of gaming law. In principle, each Member State is free to regulate as it deems fit. However, this must be done in line with the fundamental principles of movement and services as held in the Treaty on the Functioning of the EU (TFEU). EU operators who offer their services within an EU member state will, therefore, be given the opportunity to offer such services in all EU member states. This has been the interpretation held by the Court of Justice of the EU so far.
Regulating iGaming in Malta
Countries such as Malta have taken an open-market approach to the issue of EU iGaming regulation and have always held that iGaming is a service in terms of the EU Treaty. Efforts have been made by the EU to ensure that iGaming activities within the EU follow the latest Anti-Money Laundering directive, with the aim of protecting the consumer, solving the current match-fixing problems the industry is facing as well as standardising gaming equipment used.
Through Malta’s 2018 Gaming Act, it is evident that the island has taken a bold yet unique approach towards establishing itself as the Gaming hub of Europe. Through its numerous tax incentives and initiatives, the Island has been experiencing unprecedented success within the industry. The new licensing system that has implemented is expected to bring further growth to the sector.
In 2017, the Malta Gaming Authority reported that the industry made a significant GDP Contribution of 10% to the Maltese economy, generating revenue of €700 million from online gaming in Malta. The Island has been making several efforts towards establishing itself as a leader within the rapidly-developing industry by adopting an avant-guard approach, embracing the latest innovations.
The Legal Challenges of Regulating iGaming within Europe
iGaming is a borderless activity - it is provided through remote means and hence, in principle, is not tied to a particular territory or jurisdiction. However, problems may arise in the case where iGaming services are offered over cross-jurisdictional borders since it would not be clear which jurisdiction will be responsible for regulating this activity.
Originally, national authorities sought to impose restrictions on iGaming activities involving their nationals to protect state monopolies. In this context, the jurisprudence of the European Court of Justice has sought to bring down these national limitations that hinder the fundamental principle of free movement of services. In the absence of a reached harmonised decision of the EU iGaming regulations, the European Court of Justice delivered a number of rulings upon the compatibility with European law of domestic laws in the field of EU iGaming activities, which allow limitations based on public interest.
In the recent years, the European iGaming scene has developed from one based on the protection of public interest to the regulation of iGaming in various member states based on the country of destination principle as opposed to the country of origin principle. Malta has decided to adopt the latter approach, providing regulation for the operators depending on the place of establishment of the operators themselves. Therefore, in order for gaming activity to be regulated by Maltese Gaming law, it must be established in Malta.
Other Challenges of Regulating iGaming in Europe
Having strived for a closer political and economic union within Europe, many opportunities have arisen for the involved society, entities and countries. Trade and mobility within Europe have been facilitated whilst singular economies have been made stronger.
As with all major regulated areas, the iGaming sector is constantly evolving within Europe. This makes it even more essential for iGaming operators in Europe to keep abreast of the constant developments taking place within this sector.
Technical Standards & Technological Evolution of iGaming Regulations
Recently, several jurisdictions within the European Union have introduced licensing regimes, thus moving the iGaming sector even closer to a regulated market. This has, in turn, increased the trust and confidence in the European iGaming industry over other jurisdictions located outside the EU.
In particular, operators located within the EU need to keep updated mostly with regard to the varying technical standards in each European jurisdiction, the shifting to cloud computing, enforcement by the various authorities involved and liquidity. Due to the continuously evolving nature of the technology, which plays a major role within this industry, the various rules and regulations governing the sector are also evolving. Malta, in fact, has adopted an avant-guarde law which not only regulates the latest developments but also creates an environment to foster further innovation within the industry.
It is within this context that iGaming operators need to fire up their game and constantly revise the regulatory situation within Europe, keeping up with evolving trends within a particular jurisdiction which might affect their operations.
Player Protection, Anti-Money Laundering, Crime Prevention
Arguably, the iGaming sector also involves an element of crime, corruption, money laundering, underage gambling, match-fixing, addiction or fraud, given the scale of the earnings and the potential large winnings on offer to gamers. This is countered by operators enforcing stringent compliance processes, ensuring that consumers are protected from these risks that are associated with iGaming, thereby increasing confidence in the industry. Most of the regulations involving player protection are brought about by the EU, most importantly the Anti-Money Laundering directive which has recently taken into consideration Gaming activities.
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Conclusion - Regulating iGaming within the EU
It is argued by many (and proven throughout the years) that whether iGaming is regulated or otherwise, it will still exist and people will still keep on playing online. Banning sites is, therefore, not an option, as people will still find a means of playing. The only solution is to properly regulate iGaming and provide the necessary protection that is required for such activities to be carried out legally. Malta has taken the bold step and done this since 2004, with numerous other countries following in its footsteps.
It is essential to provide consumers with a set of serious but reasonable regulations by which they will feel sufficiently protected. On these lines, harmonisation of EU iGaming regulations would establish mutual consumer protection rules regardless of where they play within the EU. This would definitely promote greater cooperation among EU countries, addressing any risks within the industry.
