All-in November

Overview of the top gambling regulatory developments in November.


The prohibitive tax regime put in place by the Bulgarian government of 15% of turnover is the main reason offshore operators have not sought a local licence in the jurisdiction and is also why over 150 operators are currently on Bulgaria’s black list.  However, the authorities have recently introduced a draft bill (“Bill“) which would see the tax replaced with a 20% tax on gross gaining revenue rather than turnover, and also a one-time licensing fee of 100,000 Leva (circa €50,000).  The Bill should have received its first reading at the end of November, but Bulgaria’s parliament decided to postpone the vote until the first week of December.  If the Bill is able to move through the various legislative processes quickly, it could be that the changes would take effect as early as 1 January 2014.

The Bill has been criticised however.  First, given the Bill removes a provision relating to licensing requirements for importers and overseas manufacturers, the trade body for local manufacturers has argued that it could jeopardise local business and provides no incentive for such companies to remain locally.  Further, given that operators applying for a licence have to declare their revenues to the Gambling Commission rather than the National Revenue Agency, it has been argued that it would be easier for operators to declare lower revenues as the Commission does not have the same capacity to monitor transactional data.

Should the Bill be introduced in January 2014, given the concessions that have been made to bring the legislation more in line with other regulated markets, it is thought that there will be a greater influx of licence applications to supplement the sole licence currently held in the jurisdiction by Eurofootball Malta.


On 20 November, the European Commission published a press release in which a number of Member States were identified as needing to ensure their national regulatory frameworks for gambling services complied with the Treaty of the Functioning of the European Union (“TFEU“).  Failing to do so, would leave the Commission with no option but to launch fresh infringement proceedings.

Of note, the Commission has:

  • requested Sweden to comply with EU rules on the free movement of services with regard to the regulation and supervision of its gambling monopoly;
  • closed the infringement case against Finland, which has been open since 2006 in relation to the compliance of its national provisions which established exclusive rights to the operation of gambling services; and
  • decided to send Belgium, Cyprus, Czech Republic, Lithuania, Poland and Romania an official request for information on national legislation restricting the supply of gambling services.

Interestingly, both Germany and Greece, two Member States that have probably received the most criticism in 2013 were not mentioned in the Commission’s press release.  However, subsequent statements from Michelle Barnier has confirmed that these Member States have not been ignored and the European Commission will take appropriate action in due course.

After the Fox Report was significantly paired back this year, removing most of the provisions relating to enforcement against infringing Member States in favour of the principle of subsidiarity, it felt as if the EU’s Action Plan was not going to be implemented.  However, the recent announcement by the Commission is good news for operators and supports the argument that certain national regimes are incompatible with European law.  However, we understand that certain regulators, such as the Belgium Gaming Commission, see no threat from the Commission’s latest action and believe that its regulations will stand any scrutiny at a European level.  However, it remains to be seen other jurisdictions will have the same approach or if it will seek to amend its national legislation before infringement action begins.  This may be difficult for the Czech Republic, however, given it currently does not have a government in place.


On 14 November 2013, the Ministry of the Interior in Hessen sent a letter to all applicants that applied for one of the 20 sports betting licences in the jurisdiction to inform them that they all failed to meet the minimum requirements to obtain a licence.  This announcement came as somewhat of a surprise to the industry, especially those operators that were invited to the second phase in May of this year, as it was anticipated that the first batch of licences would be granted by now rather than an essential dismissal of all applications.

Although these developments may be good news for the operators who were not invited to the second licensing phase, because the licences are only valid until 30 June 2019, they are becoming less valuable by the day.

The motivation for the Ministry’s actions is unclear at this time.  As stressed above, it was unexpected not to see Germany on the European Commission’s list of infringing Member States.  The recent action by the Ministry of the Interior in Hessen may therefore be a result of pending decisions from the European Court of Justice as to the legality of the gambling regulatory regime in general (one federal regime and one in Schleswig Holstein), or it could be due to the concerns expressed by many as to the legality of the tender process  It will be interesting to see how the position develops, and whether or not a revised tender process will commence prior to any decision from the European Court of Justice or indeed, enforcement action by the European Commission.


Following a “soft” five-day trial period, New Jersey opened its doors to six Atlantic City casinos on 26 November 2013.  The five-day trial period allowed the Division of Gaming Enforcement (“DGE“) to test the robustness of operators operational and reporting systems to a limited number of players.  Given there were no significant problems unearthed during the soft launch, internet gambling went state-wide on 26 November, as planned.  It is understood the major concern for the DGE was operators geo-location software and whether or not it could effectively keep gambling within New Jersey borders.  However, it proved too effective, even blocking players within New Jersey; from towns near the borders of Pennsylvania and New York.

Payments are still an issue however, as a number of banks and payment processors are refusing to process transactions.  Credit card issuers such as the Bank of America Corp., Wells Fargo & Co., American Express and PayPal are not permitting gambling transactions.  It is also understood that Visa and MasterCard have concerns over potential liability for underage wagering or other violations and as a result some customers have experienced problems with these payment methods too.

It is understandable the scepticism of some payment providers following the 2006 Unlawful Internet Gambling Enforcement Act but if such concerns continue, one wonders whether this will stifle the growth of the sector in New Jersey.


Developments to the Gambling (Licensing and Advertising) Bill (“Bill“) have kicked-on and it was unanimously approved by the House of Commons on 26 November 2013.  Despite its rapid progression through the legislative process, with a second reading in the House of Lords scheduled for 17 December, as a result of the parliamentary recess over the Christmas period, the Bill will not be able to passed before the New Year, possibly delaying Royal Ascent until March 2014, and therefore the start of the licensing process.  From an operator’s perspective, the news is welcomed as it may give them slightly longer to get their affairs in order. 

The Licence Conditions and Codes of Practice (“LCCP“) and the customer funds consultations have also been trundling along during November, with the Gambling Commission hosting a number of meetings in order to allow stakeholders and interested parties to share their views before written responses are submitted (deadline for which is 4 December 2013).  There are a number of matters that are of concern to the industry in which further guidance may have to be issued by the Commission in the coming months.  However, one area where there remains a clear disconnect is between the licensing position and the tax position. 

During the Bill’s second reading in the House of Commons, the general consensus from the industry was a tax rate of 15% was too high.  The draft Finance Bill clearly sets the rate at 15% and despite any lobbying from industry stakeholders, it does not appear that there will be any movement on this rate in December 2014 when it will be implemented.