European gambling restrictions doomed to fall

A BATTLE is unfolding in courts across Europe for control of the multi-billion-euro gambling market, pitting gaming companies against governments anxious to safeguard revenues from national lotteries.

At stake is the European gambler’s euro in a rapidly-growing market with turnover of over $100 billion per year.

Experts say governments will not be able to protect their lotteries for long, and barriers to cross-border gambling will crumble under a growing wave of legal challenges.

“It’s no longer a case of ‘will the barriers come down’, but more a question of timing,” Belgian lawyer Ewout Keuleers said.

Between 1992 and July 2004 the restrictions were challenged five times in European courts, said Keuleers. But they have been challenged four more times in the last year alone, he added.

Although European Union law allows cross-border trade by gambling companies, many individual states prevent it, claiming they are protecting the public from gambling addiction. However, critics note these same states run equally addictive national lotteries and accuse them of hypocrisy.

“Our view is a lot of state laws are in breach of EU law,” said John O’Reilly, managing director of Internet and telephone gaming at Ladbrokes, the gaming division of Hilton Group.

Labrokes has been fighting legal battles over access to several European states, the most recent of which saw Finland’s Supreme Administrative Court overturn a government decision blocking Ladbrokes from operating there.

Britain’s Stanleybet has also been involved in litigation, a notorious case known as the Gambelli case involving Italy’s 13 billion-a-year state lottery CONI.

“They’ve got to take their heads out of the sand,” Stanleybet finance director Adrian Morris said of European governments and the state-backed monopolies.

Unlike its internet competitors, British-licensed Stanleybet is trying the bricks and mortar approach, with agents on the ground in Croatia, Romania, Belgium and Italy.

“If they regulate cross-border gambling, they can control and tax it, but if they don’t they’ll gain no employment, no tax, and gambling is more likely to attract a criminal element,” said Morris.

The European gambling market has turnover of more than $135 billion per year and growing, according to gaming consultancy GBGC.

National lotteries don’t need defending as they should be able to co-exist with new forms of gambling, said Morris.

“They’re trying to defend something that’s not even under attack.”

But Dr David Forrest at Britain’s Salford University says that opening gambling markets can impact on lottery sales. “All the vices go together,” he told Reuters. “Machine gaming has affected the lottery in Australia, and when there’s a lottery rollover in the UK, other forms of gambling such as betting suffer.”

Regardless of the impact, many including lawyer Keuleers, say the restrictions are doomed. “In two or three years, part of the market will be opened up for more socially acceptable forms of gambling such as sports betting,” he said.

Keuleers also sees openings for poker, a big money-spinner for Internet gambling companies, which estimate the world internet gambling market at between $7bn and $12bn per year.

“Politically it’s an uphill battle,” said Mr O’Reilly. “The UK, Irish and Malta are supportive of a free market for gambling, and we see signs of movement in Germany.”

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