EU Commission Decision To Accept Gambling Monopolies May Take Big Online Poker Operators Out Of Picture
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Online Poker Operators May Be Excluded From Finland, Sweden, And Poland After EU Lets State Monopolies Go Unchallenged

online poker operators excluded EU
Finland and Sweden submitted gambling law amendments to the EU Commission earlier this year. Both sets of proposals have not been challenged by the Commission, despite the fact that gambling in each country is provided by a state monopoly.

The decision not to challenge the new laws could have negative consequences for commercial poker operators, and may indicate that Poland’s new laws which restrict online poker to the state monopoly will also be approved.

Finland is merging three state operators into one

Under the Finnish regulatory system, Raha-automaattiyhdistys (RAY) took responsibility for casinos and online poker, Veikkaus Oy provided local sports betting and the national lottery, and Fintoto Oy provided pari-mutuel betting.

In 2015, RAY extended its contract with Playtech to twenty years. Playtech provides RAY’s online poker platform, but Finnish players do not have access to the iPoker liquidity pool.

Finland is now merging all three into a single state owned operator called Veikkaus, which will launch with a new consolidated brand on January 1, 2017.

CEO Juha Koponen said:

“We think that establishing a new gambling operator is a rational reform. The decision to merge provides an explicit ground for ensuring the efficiency and competitiveness of the Finnish gambling system. We consider this important in order that we can offer the best possible customer service and prevent the harms of gambling efficiently. We are ready for the change and hope that it is implemented as quickly as possible.”

Sweden is making relatively minor changes to its lottery licensing

The gambling law changes that Sweden submitted were extremely disappointing from several respects.

They dealt with small changes to the operation of lotteries, such as ensuring that under-18s are not able to buy tickets, but did not address the larger issues that have led the EU Commission to bring legal action against the country.

The amendment text refers to the three legal cases that have been brought, but states that:

“Sweden argues that the Swedish legislation is consistent with the TFEU and that on an overall assessment shows that the regulatory framework is appropriate and consistent and meets the aims of the regulation. Sweden further submits that the restrictions that occur in rules are necessary and proportionate to ensure the level of protection applicable in the country.”

The cases claim that Sweden’s state gambling monopoly breaches article 56 of the Treaty for European Union (TFEU).

Malta raised an objection to the Swedish gambling law amendments, but it was not strong enough to cause the EU Commission to prevent the new laws taking immediate effect.

Impact on online poker operators is uncertain

At the moment, operators licensed in any EU country have been operating freely in Sweden. The state operator Svenska Spel has complained for several years that this has reduced its profits, and damaged customer protection.

However, the courts have been unable to prevent foreign operators from offering services to Swedish players, or from advertising in Swedish media.

Figures released this week, by media consultants Mediavision, and quoted in an article on CalvinAyre.com, show that Unibet is now a bigger spender on Swedish advertising than Svenska Spel.

Both the Swedish constitution and the TFEU have been held responsible for the courts’ inability to enforce the gaming monopoly.

So long as the operators could claim that the monopoly was illegal under EU law, they could operate and advertise freely.

The UK Gambling Commission demands that its licensees provide a justification for all their operations in countries where they don’t have a national license. If more than 3 percent of revenues come from an unlicensed market, then that justification must have solid legal backing.

Until now that justification was based on the fact that the Swedish monopoly breached EU treaties. The EU Commission’s failure to challenge the Swedish amendments makes that a harder argument to make.

Sweden has a population of 9.5 million people, with a GDP per capita of over $60,000. It is a lucrative gambling market, and any withdrawal would hit operators such as Amaya, GVC and Unibet noticeably.

Acceptance of state gambling monopolies doesn’t bode well for Poland online poker

New laws in Poland have recently been sent to the EU Commission for approval. The addition of a regulatory framework for online poker looked to be a positive change, but the final text indicated that the only permitted provider would be the new state monopoly.

The major poker rooms will be working their lobbyists hard to try to get the EU Commission to reject the new monopoly, but the example of Finland and Sweden suggests that the Commission is not particularly concerned with the concept of gambling monopolies.

There is always an element of politics in EU Commission decisions. The Commissioners are, after all, former politicians from the member states.

When Greece was in the early stages of its financial crisis, it was required to privatize the state monopoly OPAP. This it did, but to find buyers prepared to pay a reasonable price, it had to change the gambling laws, reversing previous laws which opened the market to offshore operators.

At the time, recognizing that Greece was desperate for cash, the EU Commission allowed new laws to pass which gave OPAP an even stronger monopoly. The Commission noted that the laws might be challenged in court, but did not itself raise any objections.

The EU Court of Justice may provide hope for online poker

While the Commission and the EU Parliament are comfortable with state gambling monopolies, the EU Court of Justice (CJEU) is less sanguine.

It has ruled that proposals to restrict trade by establishing a state monopoly have to be extensively justified (paywall) with evidence that a state monopoly is the minimal solution to the problem of providing consumer protection.

A recent ruling added that not only must states prove that the arguments for their gambling laws are valid when they make them, they must re-visit those arguments to ensure that they remain valid in the future.

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Joss Wood
- A former editor of Poker Industry Pro, Joss Wood is a graduate in English from the University of Birmingham. Joss also holds a master’s degree in Organisational Development from the University of Manchester. His career path has taken him from the British Army, through business and finance to seven years as a successful professional poker player.