SBC News Voice of the Sports Betting Industry
In the last five or six years the landscape of online betting has changed dramatically. But is the new one regulatory regime per country model likely to become the future for the gaming business?
The slightly Wild West model where gaming operators based themselves in “good guy” regulatory environments such as Gibraltar and Malta and then went into battle with the “bad guys” (governments trying to protect their monopolies) to ensure their product became available to punters throughout Europe now looks to have its days numbered.
Italy, a favorite of bookmakers even before the Internet age, was the first to regulate its online betting business in 2006, with a fairly complex regime that reflected its history of monopoly control but which gradually has turned into one of the more enlightened versions.
France has managed to show everyone how not to manage gaming. Even though they sought advice from the Italians, they managed to ignore every sensible suggestion and opt for a regime that has driven punters offshore and persuaded licensees to reverse out of the territory at top speed.
They did, however, manage to give favourable treatment to their two monopolies – PMU for horseracing and FdJ for sports betting and games – and unsurprisingly these two companies have thrived whilst everyone else has failed.
Denmark then came along and showed everyone how it should be done and the result has been a roaring success with offshore gaming almost eradicated and Danish punters able to bet on virtually every product available on .com sites. Even though the population is one tenth that of France, Denmark’s gaming business is larger. Sports betting GGR in 2012 amounted to €158m while the French operators clocked up GGR of €138m. And of course the taxman is more than happy with his 20% on operators’ margin (GGR).
Spain almost opted for the worst of all worlds but appears to have managed to ditch some things that would have damaged the country’s gaming business (such as control over the sports betting programme which is currently stunting Italy’s growth), but has retained high levels of tax (25% of GGR) which has made the country less attractive for operators.
Greece and Germany are possibles on the list of new regulated markets, although there is uncertainty in both territories for different reasons, and even the UK is ready to introduce a “point of consumption” law which will ensure that anyone taking bets from British punters will be required to pay 15% of GPT to the taxman. A number of Eastern European countries are either currently introducing gaming regulation, or have just passed laws to do so, which means that the options for gaming operators looking for new territories where a Maltese or Gibraltar licence will suffice are narrowing rapidly.
So, in effect, within the space of less than a decade, Europe’s online gaming business has been transformed from a .com model which, for well over a decade, promoted innovation and served operators and punters well, to a new fragmented costly nightmare where operators spend more and more on compliance and legal fees to ensure that they do not fall foul of the myriad regulations that exist in each regime.
Gone are the days when every operator worth his salt had a website with dozens of flags and the same number of language versions. Now, in fact, the “Big Boys” (Hills, Bwin etc) are actually pulling out of “grey” areas and looking further afield (Australia, US) for growth opportunities.
So how will the landscape look by the end of the decade? Is the current fragmentation the way of things to come or will there ever be a set of European rules to govern online gaming?
The prospects are not good. Every member state currently has its own rules and tax levels relating to the sale of alcohol or tobacco – two vices which are often compared with gaming. And anyone wishing to sell the products has to comply with the complex regulations that exist or choose a different business to be in.
If this truly is how the gaming world will look in five or six years from now then it looks like there will be an even greater concentration of the business into a very few hands. It seems the days of the small operator will be numbered as only larger firms will have the resources to pay the license fees and legal costs involved in trading in every territory, and punters will look back with affection at the good old days of the Wild West when there was a much greater number of operators to choose from, and some of them even got their odds wrong every now and then.
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Content contributed by Graham Wood – Director of iGaming Consultancy –
