European Regulators Unite To Tackle Illegal Online Gambling

Gambling regulators in the UK, Austria, France, Germany, Italy, Portugal, and Spain have issued a joint statement calling for stronger measures against illegal online gambling.

In the statement released by the UK Gambling Commission, the regulators cited the borderless nature of unregulated gambling, requiring a united front to tackle the problem.

The seven countries said they will work together to reduce the illegal sector by:

• sharing information on illegal operators among us
• calling on digital platforms and social media networks to strengthen their control mechanisms to prevent the dissemination of advertising content from unauthorised operators
• reaffirming our commitment to share knowledge and better practices in identifying, investigating, and sanctioning operators acting outside the law.

Unregulated and Regulated Sites Subject To Penalties

The countries have been stepping up enforcement action against gambling companies that violate rules, particularly around money laundering and player protection.

The UK Gambling Commission has issued fines of £18.5 million ($25 million) this year to operators falling foul of its rules, largely licensed companies. The biggest fine was issued to Platinum Gaming Limited, which operates unibet.co.uk and uk.bingo.com, in September. The Commission fined the company £10 million for social responsibility and anti-money laundering failures.

Spain’s gambling regulator, meanwhile, has issued penalties to several companies operating in the country without a valid license. Earlier this week, it announced fines of €30 million ($35 million) to six companies that were running illegal gambling platforms.

With a vow to share information across borders, the seven regulators aim to further clamp down on companies that are able to target users without valid gambling licenses. At the same time, those operating with licenses are often found not to be following regulations.

UK Tax Increases Are Massive Win For Black Markets, Says BGC CEO

Licensed gambling companies also want the regulators to take stronger action against the black market. However, they argue governments are incentivising users to play at unregulated sites through overregulation and increased taxes.

The announcement of a step up in efforts to tackle illegal gambling comes as the UK announced it will raise taxes on online casinos and sports betting.

The Betting and Gaming Council (BGC) said the tax increases will drive users to use unregulated platforms as licensed operators are forced to cut back on bonuses, promotions, and offering favorable odds to customers.

BGC CEO, Grainne Hurst, said, “The Government’s Budget is a massive win for the incredibly harmful, unsafe, unregulated gambling black market, which pays no tax and offers none of the protections that exist in the regulated sector. These decisions are bad for jobs, bad for customers, bad for sports – and bad for safer gambling”.

The BGC is made up of some of the biggest gambling companies in the UK. While arguing that tax increases will drive bettors offshore, the companies have also been moving offices offshore. Flutter relocated SkyBet’s headquarters to Malta, meaning it will pay no corporation tax or VAT in the UK.

Flutter’s other online brands have bases outside the UK, including Betfair in Gibraltar. Similarly, Entain’s brands Ladbrokes and Coral are based in Gibraltar, as are William Hill and 888.

What’s The Difference Between Regulated and Unregulated Gambling?

The difference between regulated and unregulated, unlicensed companies is that, although regulated companies may not pay all their tax in the UK, they have valid UK licenses. This means they are subject to enforcement action by regulators, while many unlicensed companies do not have to follow the same rules around player protection.

If companies do not offer players protection, they may quickly find customers stop using the sites, however. The ease with which users can find online reviews means they can quickly determine if a company is trustworthy or not. Licensed operators are also frequently subjected to penalties by regulators, indicating they are not necessarily safe to use for players.

Enforcement action against companies is often slow and requires legal challenges on the part of the player. For example, one UK gambler is suing Betfair over claims the company failed to prevent him from losing £1.5 million ($2 million) on the platform.

Last year, a judge dismissed his claims that Betfair was responsible, stating, “Mr Gibson was determined to gamble. If Betfair had stopped him gambling in 2015 or at any time I am quite satisfied that he would have gambled elsewhere and to the same extent.” If elsewhere had been an offshore, unlicensed site, would the result have been any different?

Similarly, Entain, licensed in the UK, was found to be running an illegal offshore operation in Turkey, and its former CEO is facing criminal prosecution.

An as-yet-unnamed licensed operator has recently been caught doing something similar. It may later be revealed to be part of the same Turkish operation, but details have not been revealed.

In the end, gamblers are taking a gamble wherever they place their bets. It appears to largely boil down to where the tax revenue is going, but with most licensed platforms moving as much of their operations offshore anyway, the battle between legal and illegal gambling is increasingly blurred.

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