The Digital Single Market for Europe and the regulation of online gambling services

On 6 May 2015 the European Commission has adopted the Digital Single Market Strategy, aimed to break down barriers for citizens and businesses and to create opportunities for new startups and existing companies.

Gambling has been identified as one of the gaps that need to be addressed, so that the regulatory and technical challenges, posed by the enhanced use of Internet technologies, are met. According to the Commission “All Member States are wrestling with similar problems but on a national basis which is too limited to allow them to seize all the opportunities and deal with all the challenges of this transformational change”.[1]

Currently, the supply of online gambling services is not subject to sector-specific regulation at EU level, but to a number of EU acts instead, such as the Unfair Commercial Practices Directive, the Anti-Money Laundering Directive, the Data Protection Directive, the e-commerce Directive, the Directive on the common system of value added tax, etc.

Moreover, the national legislation of EU Member States is diverse and strongly fragmented:

    • administrative cooperation hardly takes place and when this happens, it is often on an ad-hoc basis;
    • EU multi-licensed gambling operators incur significant costs, which eventually leads to higher prices for the consumers;
    • advertising and marketing restrictions differ between Member States, which results in unequal protection of players.

In its recent case law the CJEU has ruled out that various Member States do not necessarily have the same technical means available for controlling online games of chance, nor at present a duty mutually to recognize authorizations issued by the various Member States can exist, given the margin of discretion recognized to Member States and the absence of any EU harmonization in this matter.

Nonetheless, over the years the European Commission has repeatedly requested for a number of Member States to ensure compliance of their national regulatory frameworks with the fundamental freedoms of the Treaty on the Functioning of the EU.

Therecently adopted Digital Single Market Strategy is built on three pillars:

1. Better access for consumers and businesses to digital goods and services across Europe– i.e. rapid removal of key differences between the online and offline worlds to break down barriers to cross-border online activity;

2. Creating the right conditions for digital networks and services to flourish– i.e. high-speed, secure and trustworthy infrastructures and content services, supported by the right regulatory conditions for innovation, investment and fair competition;

3. Maximising the growth potential of the Digital Economy – via investment in ICT infrastructures and technologies, as well as research and innovation to boost industrial competiveness.

As part of the initiatives, outlined into the Digital Single Market Strategy, it is expected that:

    • the Commission will review the e-Privacy Directive;
    • legislative proposals will follow, namely proposals which are aimed to reduce the administrative burden on businesses arising from different VAT regimes, etc.

Although a common EU regulation in the gambling sector can be hardly anticipated, the Strategy can serve as a good starting point for thinking about the benefits from the EU Single Market, so that both the businesses and players can make better use of the rapidly developing digital technologies.