THE FUTURE OF REMOTE GAMING

Contributed by By Denitza Dimitrova (LL.B, LL.M, Mag. Jur), EMD Advocates [www.emd.com.mt]

Governments are often encouraged to explore the option of prohibition of gaming because they are lobbied by monopolies that wish to avoid competition, or by those who are opposed, in principle, to any form of legalized gambling. The primary reason for wanting stricter regulation on remote gaming is to minimize any problems that may result because of the potential of high-stakes gambling, continuously available via remote gaming channels.

In spite of the recent proposals for free movement of gaming services within the European Union (EU), the reality is that online gaming operators continue to face prohibitions, constraints and conditions in many EU Member States. There have been requests by the gaming industry to the competent organs of the EU for more clarity, harmonisation and guidelines, due to the fact that gaming services in the EU are set aside from other industries that are governed by the European Union principles of harmonisation. The Services Directive (2006/123/EC) aiming at establishing a single market and the free movement of services within the EU, excludes online gaming, and does not permit online gaming operators to apply the principles of the Directive in relation to their gaming operations.

Most Member States have established exclusive monopolies so that only a single entity in the respective Member State is legally authorised to offer a particular type of gaming service. This is often justified on the basis that protection of players, and on the fact that implementation and enforcement of local laws would be more consistent if having a single vendor of a gambling service. None of the legal battles fought before the European Court of Justice by certain operators against national monopolies have achieved much success.

Currently some of the EU Member States are adopting an approach requiring a remote gaming operator to have a licence in each EU jurisdiction in which the operator wishes to offer its games. This approach is accepted by the European Commission, however, it does not comply with basic EU law principles. This current legal uncertainty has brought about concerns amongst small and start-up operators as to the cost of regulatory compliance, gaming tax and profit generation in the increasingly crowded marketplace.

Most Member States are now working on developing their own regulations. The United Kingdom is in the process of introducing legislation where a foreign online gaming operator who wishes to apply for a remote gaming licence from the UK does not need to be in possession of a remote gaming licence granted by another EU jurisdiction. Furthermore, online operators currently licensed outside the UK will have to apply for a licence from the UK Gambling Commission if they wish to advertise their gaming services. Although Italy has successfully completed its regulation, it is not clear on what basis and what tax rate this regulation will come into force. Germany is working on abolishing the severe online gambling restrictions, and in France new gaming legislation has been introduced in order to legalize and regulate remote gaming, but which seem to make it extremely difficult for gaming operators to get a remote gaming licence.

Malta is the first EU Member State to provide jurisdictional services to interactive gambling companies. Prior to 2004, Malta licenced only online betting, however, in 2004, the Remote Gaming Regulations came into force allowing gaming operators to obtain remote gaming licences for the operation of casinos, lottery, slots, bingo, poker and sports betting. The island's entry into the EU has given the added advantage of being the only EU country to offer such all-encompassing regulated licensing facilities.

Malta has become the European hub of i-Gaming, licensing hundreds of gaming companies and service providers, including some of the largest and most profitable operators in the gaming industry. The Malta Lotteries and Gaming Authority (LGA), the remote gaming regulatory authority, issues licences to gaming operators engaged in the online gaming business, offering games through distance communication, such as, casino games, poker, sports betting, P2P, lotteries, as well as, gaming platforms.

Over the past six years, the LGA has issued more than in excess of 330 Remote Gaming Licences to date, with others still going through the process. Malta’s online gaming revenues have reached 19 million Euros in 2009, up nearly 20% from 15.9 million Euros generated during the previous year. Malta’s stable political and economic climate is also a contributing factor towards the rapid intensification of the gaming industry.

Malta’s Remote Gaming Regulations have been harmonised in accordance with the European Union legislation requirements and have been amended from time to time to reflect the requirements of the market. It would appear to be the Government incentive to continue to amend such legislation as and when required for such purpose in such a fast growing and evolving industry.

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