EU Action Plan: Sans Eyes, Sans Teeth, Sans Plan EU Action Plan: Sans Eyes, Sans Teeth, Sans Plan

Last month saw the publication of The EU Action Plan for Online Gambling. The eagerly awaited document was the result of a three-year process of consultation with the industry, and many hoped it would lay the foundations of a unified regulatory framework for EU Member States in the increasingly fragmented European industry.

Such a policy is needed now more than ever. There are dozens of ongoing legal disputes among operators and Member States, as countries increasingly flout EU Trade Law to protect the incumbent brick-and-mortar industry, under the guise of player protection and safety.

Although the plan was initially greeted positively by the media and industry groups, it was clear from the preamble that the Action Plan contained shockingly little action.

When the actual plan was published—days after the initial press release and media coverage—the preamble leaves little doubt to its lack of bite: “it does not appear appropriate at this stage to propose sector specific EU legislation.”

This introductory conclusion looks schizophrenic when the next paragraph firmly announces that “it is not possible for Member States to effectively address these challenges [of developing online gambling] alone and to provide individually a properly regulated and sufficiently safe offer of online gambling services.”

So, The EU Commission is telling countries that they are incapable of creating a competent regulatory system—and simultaneously announcing that there won’t be any EU wide legislation to fix the problem either.

Instead, we have an Action Plan.

The first section of the plan is all about individual countries complying with EU treaties:

National rules which prohibit the provision of gambling services authorised in other Member States were found to restrict the freedom of national residents to receive, over the internet, services offered in other Member States. They also restrict the freedom of operators established in other Member States to provide gambling services.

The language here is clear: Any national regulations which don’t allow operators based in other EU countries to offer services, or don’t allow players to play at sites regulated in other countries, are illegal.

So under EU law, French, Italian and Spanish players must be allowed to play on because it is regulated by Denmark (among other countries). Belgian players must be allowed to play on Operators outside of Belgium should be able to apply for a Belgian license.

The industry has reacted extremely favorably to this explicit statement of the legal position. And the action plan goes further, stating that the usual get-out clauses are unlikely to apply:

While Member States usually offer legitimate reasons for the restriction of crossborder gambling services, they must nonetheless demonstrate the suitability and necessity of the measure in question, in particular the existence of a problem linked to the public interest objective at stake and the consistency of the regulatory system.

So far, so good. So what does the plan say about the action that will be taken to stop these nations from breaking the law?

The EU Commission will “accelerate completion of its assessment of national provisions in the pending infringements cases and complaints and take enforcement action wherever necessary.”

Note the word “pending.” There is no commitment to treating reports of new infringements in the same way. Existing infringements include Finland, Greece, Hungary, the Netherlands, Sweden and Germany. There are no pending cases against France, Spain, Italy and Belgium.

The executive words used for almost every element of the plan are feeble:

  • The Commission is encouraging the development of better age-verification tools
  • the Commission will promote faster information exchange, whistle-blowing mechanisms, and overall cooperation at national and international level
  • Member States are also urged, for example, to carry out surveys and data collection on gambling disorders

Encourage, promote and urge. Member states are not even being urged take action, they are being urged to collect data and “to promote the training of the judiciary on fraud and money laundering.”

There are only two real actions in this plan. The first is to establish an “expert group” this year to “facilitate exchanges of experience on regulation” between States.

In the EU structure, such groups have no formal power. But this online gaming expert group “will help to develop a well-regulated, safer online gambling sector in the EU, which will help turn consumers away from unregulated sites.”

The second is a commitment to increase the scope of anti-money laundering regulations. Since all this will boil down to is a requirement for sites to conduct better identity checks on real money players it is a trivial measure at best and at this stage of the industry’s development, unnecessary.

Sigrid Ligné, Secretary General of EGBA, lamented just a few weeks ago:

We deplore the situation today where we see 27 ‘mini-markets’ for gambling in Europe. We are calling for the introduction of European rules to ensure proper protection for consumers and maintain a crime-free environment throughout the EU, while affording open, fair and transparent licensing conditions for EU-regulated operators.

The EGBA’s call has been ignored. This Action Plan is a two-year can-kicking exercise. A single regulatory framework for the EU countries has been put on the back burner until after the EU financial crisis is resolved.

This “Lack of Action Plan” should be seen as a temporary measure, not a solution, which means that EU gaming regulations and online poker rooms are set to remain fragmented for the foreseeable future.