Online gambling is already a big thing all around the world. With millennials soon to become the main demographic of gaming customers, gambling operators have been looking for ways to attract that particular part of the population and online offering will certainly appeal to them more than traditional brick-and-mortar casino experience.
Although the popularity of iGaming products and services is growing on a global scale, it is important to take into account the fact that in the US the provision of this type of gambling offering is only limited within three states – Nevada, Delaware, and New Jersey. With that said, Europe is currently the biggest contributor to the overall revenue generated from online gambling.
In 2011, online gaming and sports betting products generated the total amount of €9.3 billion within the borders of the European Union. According to official information, the overall figure to be reported for 2015 is expected to exceed €13 billion. The more than 40% increase is indicative enough of the growing importance of the online gambling industry and of Europe, and the EU, as the core-market for the provision of Internet gambling offering.
Although the online gambling industry seems to be in full bloom, it is not that easy for operators to provide their services across Europe. One of the reasons for this hides behind the fact that a great number of both EU member states and other European countries have not regulated their markets or have regulated them by introducing laws and regulations that are just too stringent and hard to fully comply with.
Generally speaking, jurisdictions within the European Union are allowed to introduce their own regulations and to regulate their iGaming markets in the manner they find most appropriate. However, on a broader note, these regulations need to comply with what could be described as a uniform regulatory framework. There have been member states that have not complied with the EU laws and have, therefore, been heavily scolded for this.
An important challenge for international gambling operators is the fact that a number of countries still prefer the state-held monopoly approach towards the provision of Internet gambling services to opening their markets to private gaming companies. To explain the monopoly model in short words, a state-run organization in a given country is appointed to take charge of both online and land-based operations and this prevents privately-held operators from legally offering their products to gambling customers from that particular country.
Jurisdictions within the EU have been criticized by officials for not introducing regulations that would authorize the establishment of expanded local remote gambling markets, markets that provide room for all interested parties. However, despite the heavy criticism, there still are countries that do not seem willing to oblige to EU’s call for universal gambling regulations and full compliance with those.
Promotion of responsible gambling behavior has always been among the main goals of regulators and legislators. The EU and officials from the separate member states as well as from ones that have not joined the EU have been calling for operators to make sure that their products and services are provided and advertised in a manner that would not put the health and overall well-being of gambling customers at risk. Particular attention has been paid on how such products and services are presented to the vulnerable part of the population.
Different countries across Europe have different ways to cope with gambling advertising content that may have any negative effects on residents. For instance, the UK has the Advertising Standards Authority, an independent organization whose main goal is to watchdog the marketing campaigns that are carried out within the country’s borders. The regulator is also expected to make sure that anything that fails to comply with the general advertising regulations is removed from customers’ reach in due time and manner.
When speaking about the challenges remote gambling operators have been facing in Europe, taxation is a topic that just cannot be avoided. And when speaking about taxation in Europe, the recently introduced EU VAT and UK Point of Consumption tax are the two regulatory changes that first pop into everyone’s mind.
The two taxes came into effect at approximately the same time and cost online gambling operators millions of dollars as a result. The EU VAT became effective on January 1, 2015. Prior to its introduction, gaming companies were subjected to VAT rules in the countries they were based. Since the beginning of 2015, they have been expected to pay EU VAT based on the countries where their products and services have been provided.
In other words, the newly introduced tax should not necessarily be seen as a bad thing for each and every online gambling operator. The reason behind this statement is the fact that it all depends on the regulations in the jurisdictions Internet gaming offering is provided. After all, there are VAT-free zones and there are countries that do not collect taxes on gambling.
Unlike the ubiquitous EU VAT, the Point of Consumption tax concerns only operators that provide their services in the United Kingdom. The tax regulation came into effect in December 2014 as part of the United Kingdom Gambling (Licensing and Advertising) Act 2014. Following PoC tax’s introduction, overseas gambling companies offering their products in the UK were supposed to pay 15% on their revenue. Quite expectedly, the new regulation was not something most operators became instantly fond of. However, as experts have pointed out, the PoC tax seems to be there to stay, despite the general protests against it and the fact that it makes doing business in the UK a costly endeavor.
The online gambling industry is big, indispensable part of the entire gambling sector and its significance will only grow in the years to come. It will take time before countries adopt effective regulatory frameworks in order to maximize the benefits that can be reaped from the Internet gaming market. And while efforts are undertaken towards the successful implementation of the best possible such frameworks, operators will have to adapt to the ever-changing and immensely challenging environment in Europe.
This requires and will keep on requiring their full attention. It will be particularly hard for operators that provide products and services in a number of different jurisdictions as they will have to make sure that their operations are fully compliant with all existing regulations. The good news is that the industry seems to be headed towards a continued growth and popularization, which will probably help most operators offset losses resulting from regulatory challenges.
