Online gambling in Europe: the roller coaster ride continues

Back in January we wrote a post about the online gambling industry’s roller coaster regulatory ride over in Europe.

Well the ride continues to be a bumpy one for players and operators, and the chances of a unified and open market took a turn for the worse earlier this month following a European Court of Justice (“ECJ”) decision involving Ladbrokes and Betfair.

At issue was Ladbrokes’ and Betfair’s rights to operate within the Dutch market.  The Dutch government say they can’t and Dutch resident who want to place bets online have to do so with the local monopoly operator, de Lotto.  Ladbrokes and Betfair have since 2005 maintained that their UK online gambling licenses give them the right to accept Dutch players, consistent with the single market services policy pushed by the European Commission (“EC”).

The ECJ didn’t agree with the Ladbrokes/Betfair position, ruling that a local monopoly license and prohibition of foreign competitors was valid provided, “the objectives of consumer protection and the prevention of both fraud and incitement to squander money on gambling, as well as the need to preserve public order.”

A cynic might argue that the Dutch government’s motivation to close the I-gaming market to competition was based more on fiscal considerations than concerns over player protection.  This was certainly Ladbrokes’ read on the  situation.  A company spokesperson said, “this is about the Dutch protecting revenues, and not about protecting people from the negative issues of gambling.”

Of course the problem for Ladbrokes, Betfair and other major participants in the EU market  is that the notions of ‘preserving the public order’ and ‘objectives of consumer protection’ are both broad and open to interpretation and give other governments across Europe the opportunity to push for a protectionist approach.

And the irony of the situation is that where EU governments are given the OK by the ECJ to prohibit foreign competition in the interests of player protection then the outcome in practice will be something like this…

• a handful of large brand operators will decide to be good corporate citizens and honour the intent of any prohibition or regulatory regime that is in place and stop accepting players from that country; and
• hundreds of smaller operators will pay no notice to the regulations and continue accepting players from that country;
• players will continue gambling online at one of the hundreds of smaller operators, largely oblivious to any change in the regulatory landscape.

This scenario has played out time and time again.  The US is the obvious example, Australia another, and more recently the new French regulations.  Over the last month or so the likes of William Hill, Party Gaming, Ladbrokes, Unibet and 888.com have all stopped accepting French players, consistent with the newly introduced online gambling regulations there.

Meanwhile, smaller operators have no intention of changing their French player policy and are no doubt rubbing their hands together at the thought of all those players who used to play William Hill et al who are now searching for new playing options.