5. The Philippines bring clarity to gambling laws
In 2016 the Philippines was thrown into a state of confusion when Rodrigo Duterte was sworn in as President and immediately announced a crackdown on gambling. Duterte claimed that there was too much gambling taking place and it was making Philippine residents unproductive, since they were focused too much on gambling. Consequently, he announced that he wanted an end to all "illegal" gambling in the country. The news had the more than 100 offshore gambling companies operating in the Cagayan Economic Authority Zone (CEZA) quaking but the Philippine Amusement and Gaming Corporation (PAGCOR), which regulates all gambling in the country, clarified that Duterte was not referring to offshore companies. At the same time PAGCOR told these licensees that there CEZA licenses were invalid and they had to apply for a PAGCOR license at a higher cost. The new license would be called a Philippine Offshore Gaming Operator (POGO) license and it would allow those with a license to operate anywhere in the country. CEZA not only appealed to the government for clarification but they also decided to try and fight back by telling operators not to leave because their licenses were cheaper and that they would improve their technology infrastructure thereby giving more reason to stay in the CEZA zone. Until that announcement many CEZA license holders set up much of their operations outside the CEZA zone because of poor technology and other restrictions.
Early in 2017 Duterte tried to quench the fire he set by issuing an executive order which clarified that all gambling jurisdictions had their own mandate (including PAGCOR) and that regulators must act within the boundaries of their own mandates. That directive seemed to be a warning shot to PAGCOR to stop trying to poach licensees at CEZA and the other economic authority zones. At the same time, Duterte also demanded that all illegal numbers game operators stop immediately and he told all eGaming cafes to shut down at once.
While the clarification by Duterte and the promise of better technology by CEZA has provided some relief to operators there, it seems that many companies (particularly larger ones) have applied for a POGO license since they realize that Duterte is unpredictable and can change his mind again at a heartbeat and they like the idea of being able to operate anywhere in the country. One thing is certain, however, the Philippines is a great gateway for gambling operators to reach the Asian market but it is quite difficult for foreign operators to feel comfortable operating in a country controlled by a semi dictator who changes directions without notice as well as operating in a country that has a history of corruption and a high crime rate including murders.
4. The move by Brazil to open up gambling
Gambling in Brazil has largely been unregulated, but that is about to change. A law created in 1941 called the Criminal Convention Act prohibited all forms of gambling in the country except for horse racing and dog racing. For a brief period, slot and bingo parlors operated legally as well, but those laws were changed, and legal operations were shut down. And just prior to 1970 the CCA was amended to allow lotteries to operate, with a national lottery provider being the only legal entity that can run the games. A state controlled bank provided all financing for the lottery. Despite the law, gambling has been prevalent in Brazil. Along with the legal forms of gambling, bingo halls, slot parlors, poker rooms and Jogo de bicho (a lottery style animal game) are available underground and citizens gamble with each other on sports, (mostly soccer) without and recourse.
Realizing that they are fighting a losing cause, the government has decided to look at legalizing gambling to not only face reality, but also to help raise money for government coffers, which can be used for infrastructure and to promote sports teams. The country's president, Michel Temer expressed a hope to keep all control of betting in the hands of the government by promoting a state run monopoly operated by the lottery provider, but the Senate and Chamber had their own visions of gambling and the Senate passed a bill to liberalize gambling in the country, which they believed would bring in around $6 billion in taxes to the country's coffers. While the Chamber's bill was not finalized, the Senate's bill was geared to open everything including sports, casino games, poker and online gambling. Only lotteries and bingo would be left under control of the lottery provider. The move included a tax of 10% on land-based gaming and 15% for online gambling. Not surprisingly, the move attracted the large gambling operators like MGM and Caesars as well as companies like William Hill and PokerStars, who believe they can make a fortune with resort casinos aimed at the more than 200 million Brazilians. At last report, Temer has relinquished his fight to keep gambling as a state run monopoly.
The big potential stumbling block to the new legislation is the Catholic church (2/3 of all Brazilians are Catholic) who has urged the government not to expand gambling in the country since it will harm people and families. The Catholic church noted that those in poverty in Brazil will only become worse off and that the ones who gamble the most are those who can least afford it. But unlike many other highly religious countries, the church has no say in the laws of the land, so their pleas will likely fall on deaf ears.
The Chamber needs to work with the Senate to iron out any differences between their vision of legalized gambling and rules will have to be written to address issues like gambling by minors, addressing gambling addiction, money laundering provisions and combatting corruption. The law will likely be voted on in 2018 and, if passed, Brazil could become one of the largest gambling destinations in the world.
3. The rising number of problem gamblers in the UK
It's not surprising that a country with the longest liberal gambling laws would have a large number of problem gamblers, but reports by the UK Gambling Commission released in 2017 have sent shock waves across the United Kingdom. A report into problem gambling was conducted in 2015 and was released this year. According to UKGC reports, more than 2 million residents are either addicted to gambling or at risk of addiction. The report also indicated that the highest level of gambling addiction was those involved in spread betting, exchange wagering and sports betting, which contradicted most of the prior reports which suggested sports betting had the lowest addiction potential. The report also indicated that the number of problem gamblers over 16 years of age in Britain alone grew by almost one third in three years.
The report highlighted fixed odds betting terminals (FOBT) which are located in betting shops throughout the UK and indicated they are one of the biggest culprits for gambling addiction. In fact, these machines have been dubbed "the crack cocaine of the high street" because they enable customers to bet up to £100 (approximately 145 U.S. dollars) every 20 seconds on digital casino games like roulette or blackjack, as well as sports. The ease with which people can place bets and the lack of human interaction which took place in the old-style shops has exacerbated the problem. According to the report over 11% of people using the FOBT machines in 2015 were addicts compared to only 7% in 2012. As a result, there has been calls by the Department for Culture, Media and Sport to consider cutting limits on the terminals to as little as £2. They have also been examining the option of limiting advertising for both FOBTs and spread betting.
Not surprisingly the bookmaking industry has claimed b.s., and are lobbying the government not to make any rash decisions. According to reports the FOBT revenue is almost £2 billion and accounts for nearly half of their revenue. If plans to curb it take effect the bookmakers claim it will cost almost 20,000 industry jobs and will eat into the country's revenue via taxes as well. Moreover, bookmakers claim blaming an avenue for betting doesn't address the issue of problem gambling and bettors will simply shift their methods for betting without changing their actual bets. On the other side of the coin, anti-gambling groups in the UK have berated the bookmakers for not having done enough to identify and address problem gambling and have only themselves to blame if their revenues are cut. They even claim that the FOBTs are being installed in the poorest areas of Britain and enticing those with little money to use them to turn their lives around. As well the Guardian, a popular publication that has been critical of the liberalization of gambling in the UK, has made sure to publish messages about gambling addiction at every opportunity.
The Remote Gambling Association acknowledged there is a problem with some bettors in Great Britain and it is up to the industry to address the issue. At the same time, they claim betting is well regulated.
It's almost certain that some measures will be taken in 2018 to cut the amount that can be bet on FOBTs and it's also likely that advertising will be cut back as well. But as the bookmaking industry acknowledged the solution to problem gambling is education, resources for addicts such as Gamblers Anonymous and putting more tax dollars in to address the issue. But simply banning a means for betting will not solve the underlying reason why people become addicted.
2. Poland's changing gambling laws
One country that will be affected by the EU's decision not to enforce gambling laws is Poland.
Under communist rule gambling was illegal in Poland, but the Solidarity Party changed that in 1992 when it decriminalized gambling as a freedom of choice issue. Yet the laws relating to gambling have constantly changed in Poland, particularly when it came to other countries offering online gambling services. At first online gambling was unregulated, but the Polish government tried to change that in 2009 by forcing companies in other countries to get a license from the government and headquarter themselves in Poland. They also demanded companies apply for and use a .pol extension. Companies located outside Poland appealed to the EU for breaching gambling rules under the free trade agreement, so Poland lifted the rule requiring a company to be in Poland, but still required the companies to obtain a license at a hefty fee. Very few companies adhered to the rules, so Poland, realizing it had little enforcement capabilities against companies operating in other jurisdictions, announced it would arrest and fine citizens of Poland who were gambling with companies that didn't have a Polish license. The companies again appealed to the EU and Poland revised the rules again in 2016 allowing poker and sports betting to take place from unregistered companies, but any casino games had to be placed via the state-owned lottery operator Totalizator Sportowy. In addition, all sports bets were subject to a 12% tax on betting turnover and the companies still needed to obtain a sports betting license. Poland decided the best way to ensure companies complied was by blocking domains of sites that didn't have a license and forcing banks to block any financial transactions to these companies.
That new law took effect in April 2017 and it became clear that the EU was no longer going to go to bat for the offshore sites that didn't have a Polish license, so many of those companies began pulling out. Pinnacle was the first to leave Poland, but they were quickly followed by Bet365, William Hill, 888, Paddy Power-Betfair, Ladbrokes and Party Gaming. In fact, most companies have either left the market or are planning on leaving as Poland started implementing its domain blocking plan.
The RGA noted that it never had faith in the EU to stop Poland and other countries from their plans and instead were relying on local lobbying efforts, but even those have waned out. Even comments by Poland's finance minister expressing concerns about trying to block ISPs fell on deaf ears. Since the announcement neighboring countries, the Czech Republic and Slovakia have implemented similar ISP blocking provisions and the fine to any country caught violating the rule is 500,000 Euros. At last check there were almost 400 companies on Poland's blacklist (i.e. the sites given to ISPs which they must block Polish residents from accessing).
1. Decision by the EU to stop enforcing gambling breaches
The EU is different from much of the world since, in Europe, gambling has been considered a normal good or service that are subject to free trade rules. While several countries like the United States, Australia or Singapore have very strict rules regarding gambling that is controlled by the national governments, the rules set by the EU state, that if a country legalizes gambling in their country, they must open it up to all the other EU members as well. Because of the treaty and enforcement by the European Commission (Ec), countries like France, Germany and Spain (which tried to create a monopoly on gambling) have been thwarted and were forced to at least partially open their markets to companies based in the UK, Austria, Sweden, etc.
In December of this year, however, all that changed when the Ec announced it would no longer enforce rules. In a press release the EU announced that it wanted to promote more leeway for member states to modernize their gambling and they were satisfied with measures by all states to prevent minors from betting and addressing problem gambling. They also inferred they no longer have the resources to enforce the rules. Consequently, the Ec stated the following:
"It is not a priority for the Commission to use its infringement powers to promote an EU Single Market in the area of online gambling services."
Several pro-gambling groups including the Remote Gambling Association expressed regret at this decision, since it would almost certainly convince member countries to enact more protectionist measures realizing the threat of action has diminished and according to Clive Hawkswood at the RGA there were approximately 30 cases before the EU whose outcome is now uncertain. Hawkswood did note, however, that the decision by the EU has nothing to do with Brexit and is simply a cost cutting measure.
The decision by the EU will likely have the biggest effect on large UK based companies like Bet365, William Hill, Party Gaming and Ladbrokes who have been the biggest benefactors of Ec action in the past. This will most certainly convince those companies to speed up their plans to move into new jurisdictions like the United States and Brazil which are moving the other way in the area of gambling and are planning to create more legalization to tap into the multi billion-dollar offshore market.
Find the top stories in North America in Part 1 of Hartley's 2017 recap of the Top 10 gaming stories in North America.
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