Cyprus: Online gambling framework imminent

Cyprus has been attempting to implement an online gambling framework for some time but the extremely protracted process began to crystallise on 6 July 2012 when the Cypriot Government unanimously approved its online gambling bill.

The importance of the country’s elections and continued reunification talks meant that online gambling developments Cyprus have been on the back-burner for some time. The European Commission, Malta and the UK all commented on the draft bill and concerns were raised as to its purported discriminatory nature and compatibility with EU law. Despite this, the government officials universally passed the draft bill on Friday and it will enter into force as soon as it is published in the Official Government Gazette of the Republic of Cyprus, which we understand will be this Friday 13 July.

The prohibition of online casino (including poker) and betting exchanges is the most fundamental feature of the bill, having financial ramifications for certain operators that target Cypriot customers. Therefore, only sports betting (other than exchanges) will be permitted. It will be illegal to offer online casino or betting exchanges in Cyprus as soon as the bill is published and some operators have already experienced a dip in share prices following Friday’s announcement. However, legal challenges are anticipated given the concerns expressed by the European Commission.

A betting duty of 13% of gross profits has been set after extensive lobbying by stakeholders against a turnover based tax. It has been suggested that the additional revenue the Island will obtain from licensing online gambling incentivised the Cypriot government to fast-track the legislation, especially in light of the recent financial turmoil Cyprus has suffered and the forced bailout of its banks. It is thought that 10% of the collected duty will go to government with the remaining 3% being used for social responsibility measures and local sports groups.

A timeline for implementation of a licensing framework is unclear but the bill does create a new betting regulator, the National Betting Authority, to oversee the transition and deal with all licence applications.

If you would like any further information please contact Ash Averill at ashley.averill@dlapiper.com