Betting on the future of online gaming

Editorial Times of Malta September 16,2009
(Note: The remote gaming industry is of particular significance to the maltese property letting sector.)

The future of the online remote gaming industry has been seriously threatened by a recent European Court of Justice ruling in favour of the Portuguese government's gaming monopoly and against Bwin, a major online Austrian gaming group that has a subsidiary in Malta.

The case was based on the contention on whether state gaming monopolies, in their pursuit to prevent crime, breach the EU's provisions on free trade in goods and services.

The judgement against Bwin confirms a previous sentence given by the ECJ in 2003 in the Gambelli case confirming that gaming state monopolies "can be justified only for reasons of public health or the prevention of crimes, like money laundering, fraud and game fixing". There are six other similar pending cases in EU courts. The outcomes of these cases are awaited with some trepidation by the online gaming industry.

Where does this leave the fledging and successful online gaming industry in Malta?
Malta accounts for 10 per cent of the online remote betting business. Employment in this sector is estimated to have reached 2,100 and is constantly growing, attracting many young professionals qualified in accountancy, risk management, IT and communications. It is indeed the rising star of the new economy industries that this country wants to foster.

The Achilles' heel of this industry is the lack of regulation that upsets many EU
state governments. In fact, Bwin has already lost a number of lawsuits in countries like Germany where the state and federal governments defend their monopolistic gaming rights with ardour. Whether this is done out of moral conviction to protect the perceived victims of gambling from exploitation and abuse by criminals is, of course, very debatable. What is certain is that this latest decision is likely to encourage more EU countries to invoke the ECJ judgement to protect their own betting industries as a matter of economic expediency.

However, the court's decision may not be the final word that determines the future of the remote online gaming industry. In fact, after giving judgement on this case, the ECJ invited delegates of other EU member states to make representations on a number of aspects that may lead to a compromise between state monopolistic rights and the promoters of the liberalisation of online gaming.

The proper regulation of this industry by the EU Commission would go a long way to ease the tensions brought about by this case. Governments do have legitimate rights to defend their citizens from criminals. But business entrepreneurs too have rights to provide a legitimate service to EU citizens who opt for such a service.
The main challenge facing Malta's online gaming industry will be the uncertainty that is likely to surround the business from now on. Getting EU states to agree on proper legislation to regulate the industry will not be easy because every state will defend its own vested interests.

Moreover, as the judgments in the pending lawsuits start to be pronounced, any further confirmation of the right of governments to defend their monopolistic gaming rights is bound to dampen any desire for further investment. The fact that the anti-gaming liberalisation lobby includes influential countries like France, Germany and the Netherlands makes the task of dispelling uncertainty even more daunting.
Malta's representatives in the EU governing bodies need to start preparing the country's case for the defence of this important industry.

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