- Existing ban on online gambling will be lifted following extensive report recommending liberalization.
- Additionally, all online gambling winnings will be made excempt from income tax.
- Groundwork already begun, with new legislation from March last year establishing a framework for new laws.
Switzerland has announced a plan to introduce laws to regulate online gaming.
New laws will be drafted by the Department of Justice and Police in cooperation with the representatives of each Swiss Canton, The Federal Council announced last week.
The drafts will be available for consultation and review in the second half of 2013.
Gambling is very popular in Switzerland. With 19 land based casinos licensed under the existing law, including two new developments in Neuchâtel and Zurich, the existing gaming taxes yielded SFr360m ($390m) in 2011.
The government has for years opposed online gambling, concerned over the loss of potential revenue in established brick and mortar operations.
However, following an extensive report published in 2009, the Government decided that the lesser—or perhaps more lucrative—of two evils was to establish its own licensing and taxation system.
In the report, the Federal Gaming Board came to the conclusion that “virtual gambling should be liberalized, and apart from such liberalization, illegal operation of these games should be more effectively curtailed through further measures.”
Alongside the new regulatory framework will come an unusual and welcome change to the tax laws. Currently, winnings from lotteries and from sports betting are taxable but casino winnings are exempt. The Federal Council plans to end this unequal tax treatment by exempting all winnings from income taxes.
The current 1998 gaming law prohibits online poker and all online gambling. There is no enforcement capability in the law which means that Swiss poker players have had no difficulty playing at the “dot.com” sites of all the major operators.
In a move preparatory to introducing the new legislation, the Swiss Federal Constitution was amended after a popular vote in March last year. The amendment establishes a framework for the new gambling laws which includes levying “a revenue-related tax on casinos; this tax must not exceed 80 per cent of the gross revenues from gambling.”
The tax must be hypothecated to “fund the Old-age, Survivors’ and Invalidity Insurance.”
The responsibility for granting licenses will fall to the 26 Cantons, the semi-autonomous regional governments. Licences may be issued for casino games, sports betting and games of skill.
Any revenues the cantons receive must also be used “in their entirety for charitable purposes, in particular in the fields of culture, social projects and sport.” The constitutional amendment specifically includes “telecommunications-based gambling” so online poker operators are included.
Switzerland is not a member of the EU, so has a free hand to determine its own laws. Historically, democracy has been widely decentralized in the nation of less than eight million people, with almost all serious issues decided by referenda.
The official Government consists of seven people, the Federal Council. The Swiss President serves only for one year and although chairing all Federal Council meetings, has no greater powers than the other six members.
The shape of the new licensing regulations is, therefore, not likely to be revolutionary. The Swiss will most probably permit international operators like PokerStars and bwin.party to apply for licenses, and there are no suggestions at present that Swiss players will be restricted to a national player pool only.
The introduction of licensing for online operators does look like it will be accompanied by some form of ISP blocking and/or black list system for operators who continue to offer services without one of the new licenses. Similarly, there is a strong emphasis on protecting minors and people with gambling problems.