EU members struggling to combat unauthorised gambling

Europe is the world’s biggest online gambling market, but currently the rules and regulations employed by each EU member state vary wildly. In an effort to combat an ever growing number of unlicensed sites, the European Commission recently published a 165-page report detailing the current state of regulation across the European Economic Area (EEA) and how each method was performing.

The report, entitled ‘Evaluation of Regulatory Tools for Enforcing Online Gambling Rules and Channeling Demand towards Controlled Offers‘, explores each member state’s approach to online gambling regulation and enforcement in the current market and explains how this patchwork affects the licensed gaming industry in each country.

Currently, 18 of the 31 EEA member states use a variation of IP blocking or domain blocking or both, with the number of sites blocked ranging from over 7,000 domains (Italy) to just nine (Slovenia). An investigation by Estonian authorities into the efficacy of these blocks found that confronting gamblers with a relevant “landing page” pointing them to local licensed top online casino or betting site when they tried to access a blocked site was generally effective in channelling users away from the grey/black market. Nonetheless, they noted that a third of users that saw such a page did try and circumvent the block via a VPN or other method and still access the unlicensed site.

Importantly, neither IP blocking nor domain blocking impact the growing number of unlicensed app-based gambling services, and so some member states also use the financial tools at their disposal to block transactions with such unlicensed operators. As many as 16 EEA member states have the authority to use such measures against online gambling sites within their own legal system, but the report found only seven currently use them for enforcement.

The financial blocks are implemented via traditional payment networks like Visa and Mastercard, as well as online processors like PayPal and Skrill, but the growth of cryptocurrencies makes financial blocking much more difficult. It is impossible for a national regulator to block and unauthorised operator from receiving funds via Bitcoin or other cryptocurrencies, and this loophole is being increasingly exploited by unscrupulous gaming firms to grow their userbase in locations where they are unlicensed.

One might imagine that the difficulty in policing unlicensed gambling sites would have resulted in member states cooperating to sanction such firms, but the report found only 16% of regulators regularly exchanged information with their counterparts in other member states, with 42% of regulators admitting they never exchange such information.

Moreover, nearly two fifths of countries imposed no sanctions on unauthorised operators at all between 2015-2017, meaning that whilst unlicensed operators may have lost customers from blocking, a simple shift of domain and IP address would allow them to circumvent the issue completely, and they would suffer no legal repercussions.

Whilst larger, licensed operators may play by the rules, the online gambling market remains somewhat of a “wild west” and countries, even those that regularly cooperate as part of a political union, are a long way from finding the cooperation they need to address the issue satisfactorily.

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