Online Casino: a natural extension of the offline offer (click & mortar model)
The European Casino Association (ECA) calls on the EU institutions to fight online illegal gambling operators in synergies with the Member States.
The issue
With the Covid 19 crisis and its many health measures, the successive lockdowns put in place in most European countries have allowed an accelerated development of online gaming. Since then, more than half of the ECA members have taken advantage of this opportunity to provide their services both in their land-based casinos and online.As such, the ECA members apply to their online casinos (see Annex 2) the same level of security and safety as their land-based casinos, drawing on the industry’s decades of business experience, and in compliance with the national laws regulating the sector.
Gradually, some European states have begun to legalise online casino games. In many countries, however, numerous online platforms were already and continue to operate illegally (see Annex 3), without licenses, without taxation, without responsible gaming policies, and without any tools to fight money laundering and terrorist financing. A recent study by Yield Sec, commissioned by the ECA, reveals that, during the first half of 2024, approximately 70% of online gaming revenue in EU Member States, around €32 billion, was generated by illegal operators without the necessary gaming licenses.
From the best practices carried out by its members, the ECA strongly supports a strategy to legalise online casino gaming provided that:
- This activity is limited, supervised, taxed, and regulated with the same rigour as the activities of physical casinos;
- This activity is considered the natural evolution of the products of physical casinos – an online extension of the offline activity;
- The EU Member States follow the physical casinos with attention to the limitation of the offer to enforce the balance of the sectors and the protection of the players.
Our calls to EU policymakers
With respect to the principle of subsidiarity, Member States have the right to determine what gaming services can be provided in their jurisdiction as long as the measures are compatible with the EU Treaties and the interpretation given thereof by the Court of Justice of the European Union CJEU.
Nonetheless, the ECA calls on the EU policymakers to acknowledge and address the existence and negative impact of these illegal activities in Europe and to do their part to fight illegal online operators in synergies with the Member States.
1.
EU policymakers must reinforce Europol and support national competent authorities to tackle illegal online activities
Rationale
Europol has a mission to facilitate information exchange and provide operational support to EU Member States in preventing and combating all forms of serious international and organised crime, which often use illegal online gambling operations to maximize illicit revenues and launder money. With an overwhelming presence of unlicensed operators in the EU in the first half of 2024 (6,059 in total according to Yield Sec) operating cross-border, a strengthened Europol is instrumental to enhanced transnational cooperation and coordination among EU Member States’ authorities to effectively address this challenge.
The ECA welcomes the goals laid down in European Commissioners Brunner and Serafin’s mission letters to strengthen Europol’s capacity to tackle illegal profits and make it a truly operational police agency, and we look forward to supporting a reinforced Europol as a key partner in creating a safer, fairer, and more transparent European gaming landscape.
2.
EU policymakers must advocate for rigorous implementation of the Digital Services Act (DSA) (Regulation (EU) 2022/2065) to prevent legal social media platforms from inadvertently promoting illegal online gambling activities through their advertising channels
Rationale
The potential misuse of social media for illegal gambling ads is a critical concern for the ECA, as it attracts consumers away from regulated and legal gaming venues and outside the bounds of legal safeguards and regulatory oversight. The DSA offers several powerful instruments to tackle this issue and protect consumers. Firstly, the improved notice-and-action mechanism empowers any user to flag illegal content, including illegal gambling ads. This allows for wider community involvement in identifying and reporting violations, leading to faster takedown of such content.
More importantly, the introduction of the definition of “trusted flaggers”, entities whose reports are prioritized by platforms, presents a significant opportunity to tackle the issue of illegal online gambling activities and their advertisement. Organisations such as the ECA, and in particular its national members, with their expertise in identifying illegal gambling operations, should be concretely recognised as trusted flaggers under the DSA. Their involvement would ensure swifter action against illegal ads, significantly curtailing their reach and impact.
Finally, the DSA’s enhanced consumer protection and know-your-business-customer requirements can play a crucial role in prevention. By mandating stricter due diligence processes for platforms, the DSA would make it more difficult for illegal gambling operators to use these channels for advertising. Platforms would be obligated to verify their business partners, reducing the risk of unknowingly facilitating illegal activities. A robustly implemented DSA can significantly bolster efforts to curb illegal online gambling advertising, contributing to a safer and more responsible gaming environment in the EU.
3.
At the same time, the ECA encourages EU Member States to put in place strict and clear gaming regulations allowing different countries to:
- Limit the offer to strictly licensed games;
- Consider online casinos as the natural evolution of physical casinos;
- Regulate the supply and consumption of online gaming services;
- Control the operation of gaming by licensed operators;
- Make it clear that all gaming providers require national licenses from the countries in which they offer their services;
- Strongly fight illegal gambling.
Rationale
The ECA advocates for a comprehensive approach to regulating online gaming at national level in all EU Member States. Limiting online gaming to licensed games is paramount to achieving this objective. National licenses require operators to comply with regulations and responsible gaming practices, protecting players from potential harm and ensuring a safer gaming environment through measures such as age verification, self-exclusion options, and tools to promote responsible spending. At the same time, they help maintain market integrity and ensure fair competition among legal operators. Licensing processes involve rigorous checks (see Annex 4) on operators and their finances, helping to prevent money laundering and other criminal activities.
Moreover, national authorities have to make sure that all gaming providers (both online and offline) operate in the country where they receive their gambling license, so to ensure consumer protection, prevent fraud, and meet taxation and regulatory requirements. This is crucial considering the challenges regulators face in combating operators who actively try to circumvent these measures.
As such, the ECA strongly encourages Member States to consider regulated online casino offerings as a natural evolution of legally operating land-based casinos. Such an approach not only supports efforts to regulate and eliminate illegal online markets but also to create proper differentiation between illegal operators and those that operate with full respect to national legislation.
Regulating the supply and consumption of online gaming services addresses how online gaming services are advertised and placed on the market, ensuring that these practices are checked and regulated by national authorities and do not target vulnerable individuals or promote irresponsible behaviour.
Continuously controlling the operation of licensed operators ensures ongoing compliance and accountability. This involves regular audits and inspections to verify that operators consistently uphold responsible gaming practices, adhere to financial regulations, and maintain robust data security measures.
Fighting illegal gambling is a natural extension of these efforts. The ECA advocates for strong enforcement measures against unlicensed operators who attempt to operate outside of the regulated framework. This includes implementing tools such as IP blocking, reporting illegal gambling websites, payment blocking, and blacklisting to restrict access to their services (see Annex 5).
Annex
Annex 1 - About the ECA
The ECA represents 700 casinos, 70,000 employees and 29 European countries. The ECA’s membership comprises nationally licensed land-based casino operators, many of whom also hold licenses for online distribution channels, thus providing a natural extension of their offline offering.
ECA members adhere rigorously to a comprehensive regulatory framework for both their land-based and online services, encompassing national laws, European directives, and international standards such as the EU Anti-Money Laundering and Countering the Financing of Terrorism (EU AML/CFT) Package. In our commitment to maintaining industry integrity, the ECA and its members collaborate closely with local, national, European, and international authorities and regulators to combat criminal activities within the European gaming sector.
Annex 2 - Online casino: definition
The ECA strongly supports the definition that online casinos operating in Europe should be considered the natural evolution of the products of physical casinos – an online extension of the offline activity. Therefore, any game offered in legal, licensed, and regulated land-based casinos, should and can be offered in their online venue.
Annex 3 - Legal vs illegal operators: definition
Legal Operators: These are businesses that hold the necessary national licenses to offer gaming services within a specific jurisdiction. They adhere to a comprehensive regulatory framework, encompassing national laws, European directives, such as the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Package, and international standards. Legal operators are subject to rigorous checks on their ownership, financial stability, and operational practices to ensure they meet high standards of player protection, responsible gaming, and financial integrity.
The ECA, representing licensed land-based casinos and their online operations, strongly advocates for a fair economic and financial framework that enables legal operators to thrive and contribute to national GDPs and the EU’s economic competitiveness. The ECA highlights the economic benefits of legal casinos, including job creation, tourism, and tax revenue generation.
Illegal operators: These are businesses that operate without the required national licenses, essentially functioning outside the bounds of legal safeguards and regulatory oversight. They often target countries where they lack legal authorisation, taking advantage of regulatory gaps or deliberately flouting the law. Illegal operators pose a significant threat to consumers, as they bypass crucial regulations designed to protect players, such as mandatory ID and AML checks, and measures to address problem gambling.
The Yield Sec report indicates that a substantial portion of the online gaming market in the EU, and associated revenue, is controlled by illegal operators. The ECA highlights the detrimental impact of this illicit activity, including loss of tax revenue for Member States, undermining consumer protection, facilitating criminal activity, distorting the market, and harming legitimate businesses.
Annex 4 - National licencing process
Legal and regulated gaming operators undergo rigorous checks to get their national licenses in all EU Member States, with specific checks varying from country to country. During these checks, national authorities make sure that, for instance, the operator does not pursue illegal or criminal activities, that its financial record is solid, and that the infrastructure it uses (both online and offline) is secure and effective in providing regulated quality games to consumers.
Annex 5 – National implementing tools to fight online illegal gambling
IP blocking: measure used to restrict access to illegal online gambling websites or operators by preventing users within a specific jurisdiction from connecting to their internet protocol (IP) addresses.
Payment blocking: requiring financial institutions to refuse transactions from and to illegal online gambling operations.
Blacklisting: including the name of specific illegal online operators in “blacklists” to inform the general public, consumers, banks, media, and internet service providers about those gambling operations that are illegal.
Reporting of illegal gambling websites: starting from November 2024 in The Netherlands, Dutch online gambling trade associations NOGA and VNLOK have jointly launched a reporting portal “Meld Vals Spel” (meldvalsspel.nl) where association members, other licensees, partner organizations, and other professional stakeholders can report examples of unsafe practices and activities across illegal gambling websites or apps. The initiative aims to facilitate more effective enforcement against illegal gambling.
Other examples of national tools used in the UK: The UK has also seen the use of criminal sanctions both in relation to the use of illegal gambling premises and illegal websites. The United Kingdom has achieved significant success since 2021 in tackling illegal gambling as a result of government agencies working together through the Government Agency Intelligence Network (GAIN). Regional Organised Crime Police Units have worked closely with the UK Gambling Commission (UKGC), Licensing Authorities and HM Revenue and Customs to disrupt and close down illegal gambling activity within Great Britain.
This combined with the increased use of the Proceeds of Crime Act 2002 to prosecute offenders for money laundering offences allowed the authorities to strip the perpetrators of their assets and illegal profits and secure longer prison sentences rather than prosecute for offences under the Gambling Act. The maximum penalty for the unlawful use of premises or unlawful provision of facilities for gambling is 51 weeks. For money laundering offences the maximum prison sentence on indictment is 14 years.
Similar combined enforcement action has been successfully used to identify operators of illegal lotteries on social media and, in particular, on Facebook. The UK Gambling Commission has agreements with Internet service providers (ISPs) and uses them to disrupt illegal activity. As part of its activity in tackling on social media, the Commission succeeded in taking down nearly 400 illegal lotteries advertised on Facebook in the period 2020/2021 alone. The UKCG has been taking a particularly tough line with the advertising of illegal sites that are targeted at self-excluded customers. All UKGC licensed remote operators are required to sign up to and participate in the National Multi-Operator Self Exclusion Scheme, GAMSTOP.
In just one year the Commission increased their enforcement activity by over 500 percent between 2021/22 and 2022/23 and doubled the number of successful positive business disruption outcomes, in addition to the action taken against illegal promotions on social media.