ECA Contribution to the European Internal Security Strategy’s call for evidence

The ECA calls on the European Commission to have a comprehensive strategy to combat illegal gambling as part of the broader Internal Security Strategy (link)

The issue 

The European Casino Association (ECA) welcomes the opportunity to provide input on the European Internal Security Strategy and appreciates the European Commission’s commitment to set out a comprehensive EU response covering all internal security threats, online and offline. For the ECA, the most urgent security threat that the European Union should tackle through the Strategy is the presence of illegal gambling operators both online and offline, and the effect of their activities on both the EU economy and consumers. Illegal gambling operators 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. For the ECA, it is essential to shift the regulatory focus towards dismantling these illegal operations, as the current regulatory landscape has not adequately contained the influence of illegal operators, who continue to thrive at the expense of licensed businesses, national economies, and consumer protection.

From a crime perspective, illegal gambling is a recognised enabler of organised crime. From continuous monitoring carried out by Yield Sec (yieldsec.com), it has emerged that, in the EU, criminal networks use illegal gambling revenues and activities to launder money, finance terrorist activities as well as human trafficking. These criminal networks exploit regulatory loopholes and weak enforcement mechanisms to thrive, making illegal gambling a major security concern that must be urgently addressed.

From an economic perspective, illegal gambling can be defined as pure and simple theft: it steals from EU Member States (tax revenue), their commerce (regulated and licensed gaming businesses), and consumers (audience), and contributes nothing to local economies, job markets, or responsible gaming initiatives. According to a recent study commissioned by the ECA to Yield Sec, in 2023, illegal online gambling resulted in a staggering €53 billion in lost revenue for national license holders in EU member states, with this figure reaching €32 billion in the first half of 2024 alone, with 6059 illegal operators actively targeting EU Member States. At over 67%, illegal online gambling accounted for the lion's share of the total online gambling market in 2023. The share of illegal online gambling rose to 70% in the first half of 2024 and continues to rise, partly due to an increasing number of illegal offers from third countries. Additionally, the ECA estimates that illegal land-based gaming operators in the EU generate up to €10 billion. The national governments across the EU are missing out on over €10 billion in annual tax revenue due to illegal land-based gaming operators.

From a consumer security perspective, illegal gambling operators actively target the most vulnerable members of society (minors, at-risk players) as their key audience. There is increasing evidence found by Yield Sec that banned and self-excluded individuals are being directly pursued by illegal gambling operators through aggressive marketing and ads on social media. This not only exacerbates problem gambling but creates a societal disaster, making it an issue to be urgently addressed, for the safety of EU consumers. Licensed operators, such as the members of the ECA, diligently apply numerous laws and regulations and work closely with government regulators, including in the fight against money laundering. They provide responsible gaming and ensure that vulnerable players receive support and protection. Illegal operators, on the other hand, operate completely unregulated, evade state control and do not pay taxes in the countries where they operate. The profits from their criminal activities lead to money laundering and further criminal business. They deliberately exploit vulnerable individuals, thereby exacerbating financial hardship, addiction and social harm. The societal and economic consequences for EU Member States are massive, as these illegal operators fuel crime, debt, and social instability. 

At the same time, it is also crucial to address and tackle the facilitators that, either willingly or inadvertently, enable illegal gambling. These facilitators work through the following sectors:

• Social Media Platforms: Major social media companies that have on their platforms advertisements for illegal gambling content. These ads are frequently presented in a manner that makes it difficult for consumers to distinguish between legal and illegal gaming offerings. 
• Financial Institutions: Credit card companies and banks play a significant role by facilitating money transfers to illegal gambling operators. 

By acting against these facilitators as well, the EU can significantly disrupt the infrastructure supporting illegal gambling activities therewith supporting the national regulators and making it more challenging for such illegal operations to thrive within the European market.

ECA’s Calls to European Institutions

The ECA welcomes the Commission’s upcoming strategy that focuses on: (1) the capacity to anticipate and act on threats; (2) the need to prevent harm and protect people; (3) action at all levels, from global to local; (4) International cooperation to enhance internal EU security.

Given the widespread problem represented by illegal gambling, the EU needs a comprehensive strategy to combat illegal operators and their networks as part of the broader Internal Security Strategy.

With respect to the principle of subsidiarity, the EU institutions are instrumental in providing the necessary measures and coordinating the effort among the Member States to tackle illegal gambling operators. In the present consultation, the European Commission mentions a series of tools and actions that the EU can take to protect citizens and act against threats. These could be beneficial in the fight against illegal gambling and thus receive the full support of the ECA. 

As illegal gambling is a multifaceted and multi-stakeholder problem, we expect that these tools will help EU Member States break the supply chain of illegal gambling operators (financial providers, enablers, affiliates, operators, etc) in order to take back control of the gaming ecosystem and marketplace and, ultimately, protect the EU’s internal security.

At the same time, we call for the following key measures to be taken by the European institutions to further strengthen the Internal Security Strategy and its actions against illegal gambling:

1. EU policymakers must reinforce Europol and support national competent authorities to tackle illegal activities

Rationale: With an overwhelming presence of unlicensed operators in the EU 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 and in the Internal Security Strategy to strengthen Europol’s capacity to tackle illegal gambling activities and their facilitators 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. Upcoming EU legislation must allow national authorities to effectively crack down on illegal gambling operators

Rationale: The ECA advocates for a strong EU legislative framework that allows national authorities, in accordance with the principle of subsidiarity, to effectively act against unlicensed operators who attempt to operate outside of the regulated framework. This includes allowing for implementing tools such as 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), IP/payment blocking (for IP blocking we define measures 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, while payment blocking requires financial institutions to refuse transactions from and to illegal online gambling operations) or even the removal of illegal gambling websites, similarly to what the EU is currently doing to tackle illegal streaming platforms. In addition, a whistleblower website where citizens can report illegal gambling offers would help the authorities to track down and shut down the corresponding sites more quickly.

3. The European Commission and AMLA must ensureeffective implementation and enforcement of the AML/CFT Package

Rationale: The fight against illegal gambling is inseparable from the broader fight against money laundering and the financing of terrorism. Criminal networks rely on illegal gambling revenues to fund a variety of illicit activities, making robust Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures essential to tackle not only illegal gambling operators but also enablers in financial institutions. The EU’s AML/CFT framework provides a strong foundation, but its success depends on rigorous enforcement and effective implementation across all Member States, also under the guidance of the newly established Anti Money Laundering Authority (AMLA), so to prevent financial transactions continuously funding illegal operators, thereby cutting off a vital lifeline for illegal gambling operations.

4. The European Commission must ensure rigorous implementation of the Digital Services Act (DSA) to prevent social media platforms from inadvertently promoting illegal online gambling activities through their advertising channels

Rationale: The misuse of social media for illegal gambling ads attracts consumers away from regulated and legal gaming venues and outside the bounds of legal safeguards and regulatory oversight. This makes some social media platforms also inadvertently facilitators of illegal gambling. The DSA offers several powerful instruments to tackle this issue and protect consumers, including the improved notice-and-action mechanism and the system of trusted flaggers. 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 legitimate right to offer the services advertised, 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.