Description of sector
In the Gambling Act 2005, gambling is defined as betting, gaming or participating in a lottery. The commercial gambling sector includes betting, arcades, casinos and bingo both land-based and online operators. Loteries can only be run for good causes and cannot be run for commercial or private gain.
The current EU regulatory regime
Gambling legislation is not harmonised at EU level, and each Member State has the right to establish national provisions on gambling. Each Member State has developed and maintains its own national legislation and licensing rules.
Gambling is an excluded sector for the purposes of the EU Services Directive. Article 2(2)h of the Services Directive says that the Directive does not apply to ‘gambling activities which involve wagering a stake with pecuniary value in games of chance, including lotteries, gambling in casinos and betting transactions.’
The freedom of establishment and the freedom to provide services (Articles 49 and 56, TFEU) are general principles of EU law which can be applicable to gambling. However, Member States may impose restrictions on when, and under what circumstances,gambling facilities can be made available. Case law (see for example Läärä, Zenatti and Gambelli) confirms that restrictions of the following kind may be justifiable for overriding reasons relating to the public interest: consumer protection, preventing fraud, preventing “incitement to squander on gambling” and addressing other general social problems.These various factors closely resemble the licensing objectives set out inthe Gambling Act 2005.
Although gambling laws are not harmonised at European level, action has been taken against some Member States for unjustified restrictions on the provision of gambling services, including the cross-border provision of internet gambling.Most of these cases involve the reservation by a Member State of rights to offer gambling services to one or more providers. The European Court has recognised in these cases that member states have a wide margin of discretion in this area, given the wide difference in social andcultural traditions across Member States.
The Technical Standards Directive (2015/1535/EU) aims to prevent the creation of new technical barriers to trade.18 Where a Member State wishes to impose a technical regulation (for example, if draft rules will impose quality, safety or performance requirements in relation to an industrially manufactured product), the Directive requires that it must first send a draft of the regulation to the European Commission and other Member States and, except in urgent cases, wait for a period of three months before adopting the regulation. During this standstill period, amendments must still be able to be introduced. Changes made by statutory instrument to permitted stakes and prizes for gaming machines would, for example, be notifiable under the Directive, as would changes made by the Gambling Commission to their own gaming machine technical standards.
In June 2017 the UK authority, the Competitions and Markets Authority (CMA), launched enforcement action addressing failings by operators around transparency and fairness of gaming sign-up promotions for new customers and practices around free bet offers. A number of online gambling operators were suspected of breaking the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), which is part of the UK’simplementation of the EU Directive 2005/29/EC on unfair business-to-consumer commercial practices.
Online gambling operators are data driven and move personal data across national borders in accordance with EU data protection standards. As a member of the EU, the UK is party to the twelve data agreements with third countries that are currently in place.
The Gambling Commission cooperates with gambling regulatory authorities of Member States as part of the Commission Expert Group on Gambling Services, primarily for the purposes of data sharing and compliance with applicable laws and regulations, including the protection of consumers and players, the prevention of money laundering and fraud, and the integrity of bets.
Casinos (land-based and online) are included in the EU 4th Money Laundering Directive, which is implemented by the Money Laundering Regulations 2017. Having completed a risk assessment, the Government opted to exempt gambling services, except casinos, from the specific provisions of the Anti Money Laundering (AML) regulations but will keep this under review.
EU legislation that affects the gambling sector is generally applicable to Gibraltar but not Crown Dependencies or other Overseas Territories.
The European Commission has granted State Aid approval for a levy on horserace betting for the benefit of the horseracing industries in the UK, France and Germany.In the Britain, the British Horserace Betting Levy requires betting operators to contribute 10% of their GGY on British horseracing derived from customers in Britain. Levy funds are used to support the British horseracing industry, in line with the statutory objectives.
Although the gambling element of horseracing is not governed by EU directives, the movement of people (jockeys and stable staff) is subject to the principles of the European Economic Area (EEA) freedom of movement.
In the current system racehorses can move between UK, Ireland and France under the Tripartite Agreement (TPA). The TPA is a derogation from EC Directive 2009/156/EC and enables horses which are of demonstrably higher health status than the general horse population, and therefore at lower risk of transmitting disease, to travel under the TPA without veterinary health certification.
A horse travelling within the EU but between the UK and a non-TPA country (e.g. Germany), is subject to further health certification requirements and inspection, however, this is all through the harmonised and streamlined Trade Control and Expert System (TRACES), the EU common database for tracking the movement of animals system which provides for the simple registration and obtainment of a health certificate before ahorse is moved.
Existing frameworks for how trade is facilitated between countries in this sector
The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the EU.
Gambling and betting services
The baseline for trade in services is the World Trade Organisation’s (WTO) General Agreement on Trade in Services (GATS). All WTO Members are parties to GATS which sets out general rules, principles and obligations as a framework for trade in services;plus a schedule of commitments which set out how open and non-discriminatory parties commit to be across the service sectors covered.
The gambling and betting services sector is covered by GATS. Legally committed market access for UK gambling operators is therefore dependent on the specific commitments listed in their GATS schedules by WTO Members. In practice, gambling laws and markets can be very different, with some countries restricting or prohibiting certain types of gambling.
All of the EU’s existing EU trade deals, and those currently under development, look to build on the GATS baseline by expanding the commitments of EU Member States to open up their services markets to each other. The most ambitious of these is the EUCanada Comprehensive Economic and Trade Agreement (CETA). Gambling and betting are reserved in principle in the CETA, allowing certain Canadian provinces and territories to ‘adopt or maintain a measure limiting market access’ and EU Member States (with the exception of Malta) to ‘maintain any measure with respect to the supply of gambling
Movement of horses between states for racing events is possible between states outside of the EU. The International Federation for Equestrian Sports (FEI), the international governing body of equestrian sports, has developed a non-binding framework with the objective of harmonising the conditions for the international movement of high- 25 The UK is a member of the WTO in its own right, but its current commitments are listed in wider EU schedules.
Underpinning the functioning of the online gambling sector is the ability to collect, share and process personal data. As a member of the EU, in the UK this is made possible by the EU framework for personal data.
Directive 95/46/EC on the processing of personal data establishes EU rules for the use and transfer of personal data both within the EEA and between Member States and the rest of the world. From the 25th May 2018, the EU General Data Protection Regulation(GDPR) will replace this Directive as the EU standard on general data processing.
The EU data protection framework includes provisions allowing the Commission to give a third country ‘adequacy’ having assessed that the third country’s data protection framework is ‘essentially equivalent’, which allows personal data to flow freely between the EEA and those third countries. Further detail on issues related to data is set out in the future partnership paper on the exchange and protection of personal data.