EU Gambling Study: A Case for Change

14 November 2006

To obtain a detailed overview of the legal and economic aspects of gambling and games of chance, EU Commissioner for the Internal Market and Services Charlie McCreevy, responsible for the European Union's policy on the functioning of the internal market of 450 million people across 25 member states, asked the Swiss Institute of Comparative Law to carry out a study into the gambling sector.

A product of close to two years of work, the study provides an analysis of the legal regimes governing gambling and games of chance in the European Union. It also attempts to provide indications of the economic development of the sector.

The research confirms, according to McCreevy, that in all member states, the sector is subject to rules and regulations aimed at safeguarding public-interest objectives. While pursuing broadly similar aims, the national laws and regulations vary considerably and often lead to barriers to the freedom to provide services and to the freedom of establishment--making them incompatible with Community law.

The European Betting Association (EBA) and the Remote Gambling Association (RGA) welcomed the final publication by the European Commission on Oct. 12, 2006 of the Study of Gambling Services in the Internal Market of the European Union, commissioned in November 2004 to the Swiss Institute of Comparative Law.

This study sheds significant light on the EU gambling market. It reveals the market's fragmented nature, the inconsistency of the monopoly restrictions with the EU Treaty and the growth potential of this industry whether in the EU or overseas.

Expansion in the EU provides the opportunity for regulations and supervision of all EU operators, high product quality assurance, increased tax returns and consumer protection. On the other hand, if the industry is driven out of Europe, it may lead to the offer of dubious gambling products in an uncontrolled manner by operators who are outside the scope of EU regulation.

This is an outcome that members of the EBA and the RGA wish to avoid.

The study also outlines in the most authoritative manner the current legal chaos prevailing in various EU member states with legal restrictions and state monopolies, which often do not adhere to the criteria established by the settled ECJ case law.

Moreover, in many cases, member states do not provide data or statistics justifying the restrictions in place or proving their proportionality.

"The European Commission has already initiated infringement proceedings to examine these restrictions," Didier Dewyn, secretary general of the EBA explained, "Although the findings of this study confirm what we have witnessed and suffered in our daily business for years by these restrictions, the European Commission has yet to announce any next steps based on this study."

The EBA and the RGA have consistently called on the EU to ensure that there is a level playing field for EU-based private operators to compete alongside state-owned entities or state-sponsored monopolies and that for all forms of gambling, there are appropriate levels of consumer protection and measures to minimize any potentially negative effects of gambling.

"These goals can be achieved at either member state or EU level, but there must be a proper debate and not one determined by misinformation or by those with a vested interest in maintaining the status quo," Clive Hawkswood, chief executive of the RGA, said. "Now that it has this study, the European Commission can lead that debate.

"Both we and the EBA would be more than willing to sit down with the Commission and stakeholders from any member state with a view to addressing all of the issues of apparent concern."

This study was launched against a background of significant evolution of European Court of Justice (ECJ) case law, which has since 2003 has required member states in the market with restrictions on gambling to demonstrate that they have genuine and consistent commitments to reduce gaming opportunities. Furthermore, the ECJ has made it clear that these restrictions must be strictly proportionate and non-discriminatory.

The study also reveals the lack of data and of transparency on how the gaming market is regulated and structured in the 25 member states and covers technological developments leading to fast growth of new forms of gambling (interactive TV, mobile phones, online, etc.)

There was, therefore, an urgent need to collect information, not only to analyze the restrictions and legislation in place in the various member states, but also to assess the real size and structure of this sector, as well as its true potential.

Main Findings of the Study

The study makes an extensive review of the legislative framework of every EU member state and descriptively addresses the economic aspects and implications of the gambling market:

  • Revenue amounted to more than 51 billion euros in 2003 alone, of which approximately 45 percent belonged to lotteries, while about 17 percent amounted to betting services.

  • Gambling amounts to 3 percent of EU GDP in total, approximately the same value as the mobile telecommunications sector.

  • Monopoly restrictions in gambling are contrary to the Treaty of the European Union.

  • Current monopoly restrictions in member states may aim at capturing economic rents (i.e. financial gains) for public revenue and social causes at the expense of the consumer. In online gambling in particular, the market will continue to evolve even without EU companies, as offshore gambling is rapidly growing.

  • Member states claim that monopoly restrictions serve to protect the consumer and public in general from gambling-related adverse effects, particularly problem gambling.

  • The enormous differences between the gambling taxation levels of various member states create significant market distortions.




Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.