EU Bytes

The summer break is over, and the European Parliament is back in session. The EU quarter is bustling again with Commission officials, Members of the European Parliament, and people like me, chasing all the leads to find out about all the political and policy trends.

The areas surrounding the EU institutions during the month of August are a reminder of the difference the EU makes to the local economy. But, the lights have still been on in many of the buildings. Quite a few decision- makers and interest representatives have decided to stay, not least because of the Brexit negotiations.

Everyone knows that time is ticking as the deadline for negotiations (March 2019) is quickly approaching. Industry is concerned. Politicians are concerned. Civil society is concerned. Watching the negotiations unravel is fascinating, not least because there is no precedent of this kind, at least not when the counterparts have been so intrinsically linked at all levels of governance, law and society.

I would like to dedicate this second edition of EU Bytes primarily to the ongoing Brexit negotiations, not only to tell you about what is being said, but to give you a feeling about the dynamics and what can be expected. Of course, gambling-specific developments at EU level haven’t been subject to a moratorium.

The Next Bricks of Brexit

With the third round of negotiations just having passed, and the fourth round starting mid-September, it is evident that significant common ground is still to be found. And, pressure is building up. The EU-27 negotiating team led by Michel Barnier has emphasised that the first phase of negotiations will only end once the issues of the (1) financial settlement, (2) the question of the island of Ireland and the border (Good Friday agreement), and (3) EU citizen’s rights are settled. The second phase will be on temporary and permanent structures of EU- UK relations.

UK chief negotiator David Davis’ attempt to move forward on the issues and initiate early debate on the second phase has fallen on deaf ears. The UK has published a series of position papers to this end, but Barnier and the EU-27 are not reacting, except with concern that things are not moving on.

So where lies the problem for the UK? It seems, the government is avoiding any money offer to the EU for the financial settlement, especially with hardliners in the UK waiting to react. Whilst the EU-27 state that the amount (calculated in some cases up to EUR 100 billion) is a legal obligation, the UK sends mixed messages about this obligation. Maybe only once the Conservative Party Conference in October is over and Prime Minister Theresa May retains her position, will a counter offer be submitted.

Furthermore, in light of the question of citizens’ rights, the EU suggests that the European Court of Justice should have jurisdictional power in the UK to protect those rights. The UK believes its courts are more than sufficient and does not want to sacrifice its sovereignty, a (if not the) key motivator for Brexit. There is important agreement though, such as the necessity to uphold the Good Friday agreement for the island of Ireland.

Furthermore, nobody wants a hard border between Northern Ireland and Ireland, but goods and services will need to be tracked, not least because of taxation and standards. No one knows how that can really happen, but most seem quite assured someone will come up with an imaginative, maybe even high-tech solution.

Interesting for the skilled workforce inherent to the gambling sector, whether as an expatriate or highly mobile, are the rights of UK citizens and EU citizens in each other’s jurisdiction. No one is sure what the conditions will be post-Brexit for workforce mobility between the jurisdictions. There are already fears of brain drains from the UK, not only because of citizens’ status, but also because of issues such as EU funding and projects which might no longer be accessible in the UK. Applications to become a national of one of the EU-27 deriving from the UK are already on all-time highs.

The pressure is piling on for both sides of the negotiating table. Members of the European Parliament are pushing for certainty, as are industry due to the high volume of trade between the counterparts. Banks have already started to move out of the UK, and Japan is only looking to formalise post-Brexit trade ties with the UK once it better understands what deal might be established between the EU and UK. Indeed, the UK cannot enter a trade agreement with another country until it leaves the EU. At the same time, the EU wants its budgetary commitment safeguarded, as well as guaranteeing that the UK doesn’t unfairly benefit from the EU, whilst others would have to commit to its ideals and rules for the same benefits. It is also labelled as a deterrent to avoid other EU Member States wanting to leave the EU.

So, what are the options for the EU and UK? And will new arrangements be transitional? Some have hinted towards a Norwegian model based on the European Economic Area and European Free Trade Association membership – i.e. watered-down variation of the EU. All in all, it is clear that both parties are looking for certainty. The question is, will progress happen quickly enough? The EU-27’s aim is to have Phase 2 start in October. Very few are confident it will.

Tackling Illegal Operations

Debate has always been rife at EU level between operators, regulators, enforcement agencies and the EU institutions about what constitutes a legal or licenced operator. Some believe the Internal Market applies to the extent that a licence in any EU Member State allows you to operate freely within the EU. Others argue that you need a licence for the national jurisdiction to be able to target customers therein. These are just a few of the perceptions.

In 2010, the Spanish Presidency’s report on gambling and betting acknowledged that there is no common definition for illegal gambling, in light of its appreciation for the subsidiarity principle for the gambling sector across the EU. Nonetheless, a common criterion is identified: “on-line gambling and betting should always be performed by operators with a licence granted by the competent national body”. This report is not legally binding but is an indicator of the political perception of what illegal gambling entails in general terms.

Interesting is, how it reflects in the development of tools by national bodies to tackle illegal gambling. These tools vary from IP blocking to payment blocking, to the creation of information tools such as white and black lists. Blacklists are particularly interesting as they can be used in a variety of ways. The Italian Regulator for gambling lists all the sites that are encountered to offer their services illegally, making it more of an information tool. This is similarly the case in the recently introduced blacklist in Slovakia. In Belgium, a black list has another role. Making the list takes a lot more audacity in the eyes of the regulator. The brevity makes it a more powerful PR tool as it focuses on naming and shaming individual operators.

Of course, the effectiveness of any of the tools can always be questioned, also in light of legal and judicial capacities that might be permissive or inhibitive of IP and payment blocking mechanisms. Other tools include proper advertisement and the provision of a legal offer to channel players away from illegal online and offline platforms.

Therefore, earlier this year, the European Commission launched a tender for a study titled: “Evaluation of regulatory tools for enforcing online gambling rules and channelling demand towards controlled offers”. The results of the study are expected next year. It will be interesting to see how the various individual tools and combinations thereof used by each Member State will be evaluated.

Gambling Reporting Standardisation

The European Committee for Standardisation has decided to create a standard for online gambling. It is officially recognised by the EU and is in essence the European version of the International Organisation for Standardisation. The technical committee is called CEN/TC 456: “Reporting in Support of Online Gambling Supervision”. Seeded in the 2012 European Commission’s Communication on online gambling, it will be the second time CEN visits the sector in recent years. In 2011, it provided the platform for the contentious CEN Workshop Agreement on “Responsible Remote Gambling Measures”.

Commission Online Gambling Recommendation Re-visited

In the last edition, I spoke to you about Belgium taking the European Commission to court over its “Recommendation on principles for the protection of consumers and players of online gambling services and for the prevention of minors from gambling online” as the Member State along with the support of Greece and Portugal saw the measure as eroding the subsidiarity principle (i.e. the ability to determine one’s own national regulation). As the hearing was on 26th June 2017, the General Court has announced its opinion for 26th September. The opinion is not a ruling but is followed in most cases by the Court’s final decision. If the court decides to take the Belgian view, it could have resounding effects on the “governance” of gambling at EU level, but for other sectors as well.

Greetings from Brussels.

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