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Commission urged to clarify gambling's EU legal status

Published 04 March 2009
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The European Parliament and the EU Council of Ministers called on the European Commission yesterday (3 March) to initiate a dialogue in view of reaching political agreement on the legal status of gambling in Europe. 

As gambling activities are regarded as essentially national, the European Commission has never proposed any common rules for their regulation in Europe. 

Meanwhile, both the European Parliament and the Council have taken non-legislative initiatives in recent months on this highly sensitive issue, which touches upon both taxation and state-owned monopolies. 

In December last year, the French EU Presidency presented an overview of the legal framework and policies adopted in EU member states on gambling and betting, in view of initiating EU-level political discussion on related cross-border issues. Shortly after, the Parliament's internal market and consumer protection committee adopted, in February, an own-initiative report on the integrity of online gambling (EurActiv 16/02/09). 

Once the Parliament adopts its report in plenary next week, the Commission will have received two political signals over the past three months urging it to act on the issue. "A smart listener will act accordingly," Finnish permanent representation counsellor Harri Syväsalmi told EurActiv. 

A press officer for Commissioner Charlie McCreevy, the EU's internal market commissioner, told EurActiv that the only initiative related to gambling she knew of was "the next round of infringement cases".

Only way forward is political

In a debate on the future of gambling in Europe yesterday, lawyer Philippe Vlaemminck of Vlaemminck & Partners also underlined that the only way forward on gambling is political. "Even the European Court of Justice has said it does not want to rule on something that is political," he argued. 

According to Vlaemminck, the way forward could be to first recognise that "gambling is an economic activity of a particular nature" and that member states must be able to maintain their own objective crietria about what is acceptable and, while respecting EU law, decide upon a taxation and operational structure: be that prohibition, monopoly or licenses.

The political solution to gambling, he said, should be based upon the four fundamental principles of the European architecture: subsidiarity, solidarity, integrity and precaution. "These principles need to be taken into account so that a political solution can be found," Vlaemminck argued. 

Positions: 

While the EU Council and the European Parliament are urging the EU executive to take the initiative on gambling, Malta and the UK  are  opposed to any EU discussion or initiatives on the issue. Both member states argue that gambling is an economic activity like any other, and therefore internal market rules on freedom of services need to apply. 

Malta and the UK both have inexpensive online gambling licences and favourable tax rates for gambling operators based on their territories, and in a country of the size of Malta, tax revenues from online gambling represent an important amount. Another such 'online gambling haven' is Gibraltar. 

Currently, online gambling operators pay their taxes to the country in which they are based, even though their services are 'consumed' elsewhere. The main host countries of cross-border online gambling service providers are thus heavily opposed to any move towards taxing gambling activities in the country where it takes place.

France will shortly present a legislative proposal for "controlled opening" of its gambling market. This will include allowing foreign gambling operators to propose services in France, provided that they pay taxes in France. 

Next steps: 
  • 10 March 2009: Parliament plenary vote on integrity of online gambling. 
  • By July 2009: Czech EU Presidency may hold an expert meeting on gambling. 
  • After June 2009: Swedish EU Presidency may put gambling on its agenda.
Background: 

While gambling activities have traditionally been strictly regulated at national level to protect consumers against addiction, fraud, money-laundering and fixed games, the exclusion of gambling activities from the EU's Services Directive has triggered numerous complaints from the gambling industry regarding access to national markets.

This led to a number of European Court of Justice (ECJ) rulings on the issue (EurActiv 08/03/07) and several Commission infringement procedures (EurActiv 05/04/06) against member states to verify whether national measures limiting the cross-border supply of online gambling services are compatible with Article 49 of the EC Treaty, which guarantees the free movement of services.

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