You're the secretary-general of the European Gaming and Betting Association. Who are your members and what are the main goals of your association?
The European Gaming and Betting Association represents leading online gaming and betting operators that are all based and licensed within EU jurisdiction. The association promotes the development of fair regulations for the online gambling sector which are adapted to the Internet and the cross-border dimension of the sector.
It also promotes a high level of standards in terms of consumer protection and fair access to national markets for regulated operators.
Who are your members?
Our members are Bwin, Party Gaming, Unibet, BetClic, Expekt, Interwetten, Bet-at-Home and Digibet. They are all strictly regulated within the EU: some of them are publicly listed companies.
How big is the EU gambling market?
It's a successful market. The online Gross Gaming Revenue (GGR; stakes minus winnings) is expected to rise from €8.3bn in 2008 to €12.5bn by 2012.
It's important to stress, however, that the online segment remains a relatively small percentage of the total European gambling market: about 11% of the total gambling market today. The lion's share clearly remains with the traditional offline gambling market, with an expected 87% of the total gambling market in 2012.
The revenue of the offline gambling market is also expected to continue to grow from €79.6bn in 2008 to €83.7bn GGR by 2012.
Your association promotes industry self-regulation. Does this mean that you're keen to avoid legislation from Brussels?
No, on the contrary: self-regulation or standardisation is very complementary to regulation. Whether at national or EU level, we feel that online gambling is a sector that needs to be regulated: so we are favourable to regulation.
However, given that it's a technology environment with fast innovations, it's important that regulators promote self-regulatory efforts by industry to go beyond and develop best practice to ensure that customers can benefit from these innovations without necessarily waiting to be included in regulations that can sometimes take more time to develop and to adopt.
Is there a need for EU-wide legislation to regulate the online gambling market? Is there pressure from companies for EU action? At the moment there is a lot of litigation in this area and regulation is primarily at national level.
As already confirmed by Michel Barnier, online gambling is a cross-border market. Consumption is cross-border as well. Clearly there's a strong need for harmonised rules in the area. Obviously today we're facing regulatory approaches that are very different from one member state to another, although there has been a trend in the last few years to move from a prohibitive or monopolistic approach to the market to a regulated approach to the market, which is a positive trend.
However, we see national developments taking place that are going in different directions. Some of these rules are clearly conflicting with EU law and have triggered litigation from the European Commission.
[EU countries] are developing different requirements to achieve the same objectives. That's where we feel the EU has an important role to play in harmonising the rules, and setting common standards and a common EU framework.
Among other issues, the European Commission is planning to address the challenges posed by illicit and unlawful online gambling in its upcoming Green Paper on online gambling in the internal market. What issues would you like to see addressed in the consultation? What would you like to see come out of it?
We look forward to the consultation and the fact-based discussion announced. The Green Paper should focus on those questions where possible initiatives could be developed at EU level to improve the situation, be that the market situation or consumer protection aspects.
It should also shed light on the total fragmentation of the market and the need for the European Commission to take urgent action to curb a situation that is damaging for consumers, legitimate EU operators and state finances.
We feel it's a positive move, but we're still waiting to see the publication and adoption of the document. We hope and we expect that this process is ultimately going to deliver a consistent regulatory framework for the sector at EU level.
Meanwhile, it's important that the European Commission continues to act as the guardian of the Treaties, and fights the adoption or implementation of protectionist regulations in the member states.
Is there a competition issue here then, given that many of your companies trade across borders? Are you hoping that the Green Paper will result in more equal regulation from member state to member state?
Yes, absolutely. I think it's also a matter of having in place fair regulations and also regulations that work from a consumer protection perspective. It's important to ensure consistency and convergence in the solutions that are developed.
It's also important from an internal market perspective and a competition point of view that the restrictions that are enforced at national level are not hidden protectionist measures and are there to serve the people and not to preserve national incumbents. There must be a fair competitive approach in the sector.
CEN, the European Committee for Standardisation, has just published its Responsible Remote Gambling Measures, which set out policy objectives for protecting online players. Can you explain in detail what the CEN initiative is all about, and who is behind it?
The Internet offers unique opportunities to develop safe and secure protection tools for online gamblers, be that the accessibility or the availability of 24/7 support and help lines, the possibility for players to set themselves their own limits and self-exclude if they feel that is needed, the possibility to identify or verify the age and ID of players, the possibility to have fully traceable and transparent transactions thanks to electronic means of payment – all of these features of online gambling have been addressed in this initiative in order to define optimum rules that are workable today to make the online gambling sector safe and secure.
That's evidence that such workable solutions exist today, and we expect these to be the basis of discussion either at national level, for ongoing negotiations in member states that have decided to regulate the sector, or more interestingly in the context of the Green Paper and possible solutions at EU level.
Do you imagine, then, that the CEN guidelines will serve as the industry's contribution to the Green Paper?
It's more than just the industry's contribution, because there are a wider range of stakeholders that have contributed to defining these measures. You have academics, scientists, problem-gambler bodies, players, etc. which have also joined the effort.
So [the CEN guidelines] actually bridge the views and expertise of a wide range of stakeholders, including indeed the industry.
Where does the responsibility lie for ensuring that gambling is a responsible industry – with the companies themselves, or with regulators at national or EU level? Gambling can be a destructive addiction leading to all kinds of financial and social problems, and sometimes players are under age.
The European industry has a key role to play and is driving today a wide range of responsible initiatives, but we also need the support of regulators. Regarding the responsibility of the EU, what is needed right now is a fact-based assessment of all areas of discussion and concern to get a precise understanding of the situation, the facts and the figures.
Where is Internet technology raising new issues, and where is it providing new opportunities? That is a first important step.
Regarding the role of the EU, wherever there is an added value given the cross-border dimension, harmonised European solutions should be discussed. There is a lot that the EU could achieve, in relation for instance to the development of age verification tools to prevent under-age gambling and ensure that the workable solutions that exist today are promoted and implemented in all member states.
There are already a number of areas where harmonised rules apply to our sector, for example regarding data protection rules, unfair commercial practices, contract law – these are areas where there are already a number of harmonised rules applicable to the sector.
Anti-money laundering is another. Through their application at national level these rules are applicable to our sector, so this is underway and it needs to be complemented with specific rules.
What role can new technology play in reducing the risks posed by problem players?
The high traceability and transparency of the Internet provides unique tools to effectively address the risks through the implementation of self-limit and exclusion tools, the possibility for the players to access their account history or to have access to 24/7 online help lines.
Online gambling also provides a new medium for researchers. Instead of relying on people's self-testimonies, which has traditionally been the way to conduct research into problem gambling, online gambling offers researchers the opportunity to look into exact data on gambling behaviour, which is something new and opens the door to lots of possibilities in terms of research.
Do you see a role for the online gambling industry in boosting the EU single market and achieving the goals of the Digital Agenda? What about the role of cross-border companies in pushing for the completion of the single market?
Yes, definitely. Online gambling is profitable and one of the few e-commerce sectors where Europe is not only leading in terms of market shares with 45% of the revenues generated globally, but also clearly in terms of technology and innovation. Online gambling generates high skilled jobs within the EU. The number of transactions processed by a single operator is huge. Clearly it's a high-level technology area and therefore the policy challenges faced are a clear test case for the digital internal market.
Our industry is indeed confronted with issues that are common to the broader e-commerce sector, such as the completion of cross-border payments, which are not typical to our sector. We expect further rules to be developed in the context of the Digital Agenda to be of direct interest for our sector such as electronic ID and age verification systems.
The gambling industry makes a lot of its money from betting on sports results, for example on football matches. What would the industry like to see come out of the EU's new sports policy? Are there any opportunities for the industry that arise from the fact that Commissioner Androulla Vassiliou is in charge of the EU's sports portfolio?
Sports betting is a complementary entertainment which creates increased interest in sport events. Roughly a third of online gambling is related to sports betting, so it's not the majority but a very important proportion.
Regarding sports policy and the recent policy discussions at EU level, the question of integrity is important, especially the role of the regulated industry in Europe to provide early detection tools and prevent the risk of being used as vehicles for fraud. This is an important area on which the European industry is very active and committed.
There are also questions related to financial synergies between the world of sport and the world of sports betting. Gaming companies are among the top three sectors in sports sponsorship and we feel that the two sectors have a natural interest in collaborating and developing partnerships.
Returning to the issue of fraud, how big a problem is this in Europe? Is match-fixing a major issue in the European betting market?
For regulated European betting operators, fraud is not a major problem because of the tools they have implemented to prevent their websites from being abused by fraudsters or used for match-fixing purposes.
Regarding the risks for European sport, that's more for ESSA (the European Sports Security Association), because we don't have exact figures, but obviously the risk of corruption and match-fixing goes beyond the remit of betting.
There are lots of other threats to the integrity of sports, other possible sources. Illegal betting is one of them. The solutions to be developed need to take into account all forms of threat in order to develop a comprehensive response.
What measures do the companies themselves take when they suspect that fraud is taking place on their site? Obviously they have a financial interest in stopping it.
Absolutely. All the members of the European Gaming and Betting Association are obliged to subscribe to the early warning platform of the European Sports Security Association. We take this as a prerequisite of being a responsible operator.
There are other similar systems, but it is essential that European online operators are part of such a system to make sure that not only are they monitoring suspicious betting patterns, but can also alert the network of operators, and more importantly are able to provide raw evidence and data to sports bodies and the authorities.
The responsibility of operators is to detect those patterns, but then they pass the information on to those that have the power to investigate or sanction.
Do the sanctions come from sports federations, then? What happens once a suspicious betting pattern has been identified by ESSA?
That is up to the sports federations. They may decide to investigate themselves, or involve the public authorities. But clearly it is the role of the various sports bodies, according to their internal rules, to decide how to act next. The approach may be different from one sport to another.
What role to you see for the betting industry in helping the EU to achieve its long-term goals on growth and the digital economy, in particular the Europe 2020 strategy and the Digital Agenda?
We see clearly that there are lots of restrictions and barriers that still exist today in a number of member states. These are preventing our sector from achieving its full economic potential.
Clearly better enforcement of internal market and competition rules in our sector would allow it to contribute fully to the European economy.
More specifically, what are the biggest barriers that are preventing your companies from growing?
It differs from one member state to another. In Germany, for example, German law prohibits online gambling, so that's very straightforward, but that very legislation is considered by the European Court of Justice as being inconsistent with EU law and is subject to an infringement procedure from the European Commission. This is not a very sustainable approach and will hopefully change soon.
Then you have other situations in other member states where online gambling is accepted but subject to restrictions that we feel are not necessarily consistent because of the scope of the opening – for example, accepting certain products but not others, without really explaining why, or limiting the payback ratio for players.
So there are lots of restrictions that we feel are not necessarily governed by consumer protection and they are obviously limiting competition in the sector and the possibility for the sector to generate revenue.
Clearly there is quite a long way to go to achieve a fully-functioning single market.
Absolutely. And we think there is good momentum for the EU to assume strong leadership in this area. For years now the issue has been brought up by the European Court of Justice or discussed in the EU institutions, whether in the Council or the Parliament – clearly it's now time for decisions.
Do you think there is definitely a cross-border market for consumers using online betting websites? Don't people prefer to bet on domestic sports events, for example?
That's an important question. Clearly there is a cross-border market reality. Even in those countries that prohibit online gambling citizens are still playing online in those member states today, so the question is, who are they playing with?
Competition is a click away and players can virtually place bets on domestic event with any website in the world.
It's therefore important to provide a legal offer in Europe which is sufficiently attractive in terms of product, technology and gambling experience to avoid a situation where even in the context of an opening up, consumers may possibly be willing to continue to play with black market operators.
Smaller players from the sports world, like those representing grassroots sport and smaller sports like table tennis or badminton, for example, are worried that their voice is not being heard in Brussels. They often complain that debate on EU sports policy is overly dominated by large organisations like FIFA, UEFA or the International Olympic Committee, which can afford a permanent presence in Brussels. Would you agree that this is an issue?
I don't have specific comments to make about sports governance and representation in Brussels. It is important that all views and positions are heard.
What about EU sports policy more generally? Do you back its existence and expect it to prove a success?
Here again, I don't have any general statement to make about sports policy as a whole, because that's not our scope.
But regarding the areas in which we have an interest, I believe there are a lot of questions to be addressed today. There is already a study in the pipeline which will look at the sport funding aspects.
We're looking forward to having a fact-based discussion on the integrity side and on the financial side. We feel that online gambling raises opportunities to diversify revenue streams through sponsorship but also marketing, media, IT or financial services across the broader European economy, and these are aspects that we look forward to discuss in the context of the Green Paper.
What about funding streams for grassroots sport or sport for young people? Is there any money flowing from the gambling industry towards that?
There is. The Commission has launched a study to assess in more detail how sport is funded throughout the EU. It's important to put everything in context and assess what is being done today. Are existing revenue streams threatened in any way by the development of online gambling? What possible additions in terms of new revenue streams could this sector develop in relation to sport?
There's a broad scope for discussion and this is something that we expect to be also discussed in the context of the Green Paper.