Remote gaming is a borderless activity – so why bother with
a license? Why would any cyberspace operator want and need a serious license
from one or more particular jurisdictions?
The answer is simple: serious operators welcome serious
regulation. The ‘intrusion’ of a serious regulator is regarded as an opportunity
for stability and solidity and serious regulation is deemed a benefit rather
than a hindrance.
Malta introduced its new Remote Gaming
Regulations in April 2004. These regulations were a much awaited
mile-stone superseding the previous law regulating offshore betting
offices (The Operation of Betting Offices Regulations, 2000 - LN 34). The
Remote Gaming Regulations 2004 definitely present a much awaited solution
to cyberspace operators that want a qualitative solution to their business
Serious and avant-garde regulatory
techniques, verifiable and stable regulations and a positive regulatory
ambience are not the only benefits derived from establishing one’s
operation in Malta. The benefits are various and range from beneficial
corporate and gaming taxes, a variety of licensable activities, the skill
of the Maltese workforce, stable IT resources and the general
competitiveness of costs when setting-up one’s operation.
One other very important consideration for an
operator tapping the European market is the freedom to provide one’s
services throughout the EU. Malta is a full member of the EU and is very
important to any operator wishing to target Europe to be located in a
European jurisdiction. This definitely translates in additional benefits:
• For the player - such operator would be
deemed to be safe and credible;
• For other regulatory authorities – such
operation would be regulated by higher and more serious standards imposed
by an EU country.
Player protection has always been of
paramount importance. Gaming has unfortunately presented us with some
bitter experiences of ‘vanishing’ operators and unpaid players.
Malta’s rules related to player protection
ensure that players’ money is protected; that players’ money is kept
separately from the operator’s funds in a separate clients account; that
players are given the required information on the operator, the games,
handling of players money and lodging of complaints; rigorous procedures
for registration and opening of accounts; filtering of players and a clear
indication that the operator is regulated by the Malta Lotteries & Gaming
Authority (LGA), including a hyperlink to the site of the Gaming
Player protection is definitely high on the
LGA’s agenda with regular checking and monitoring of operators and
complaints by players. This results in serious protection of player’s
hence resulting in more players seeking to be on the customer list of
Cross-Border Activities – Free Movement of Services
An online gaming operator definitely needs to
be able to roam freely in cyberspace - it has to be able to reach
customers across borders without unnecessary hindrance!
The EC Treaty presents us with the
fundamental principle of movement of services. The problem is that
national authorities have still sought to impose restrictions on gaming
activities involving their nationals mainly to protect state monopolies.
Recent jurisprudence of the European Court of Justice (ECJ) has sought to
bring down these national limitations that hinder the fundamental
principle of free movement of services.
Basically, the ECJ has held that justifiable
restrictions would mainly centre around grounds of public policy and
consumer protection. Besides, limitations imposed by national governments
should be have to be objectively applied to everyone, without any
discrimination on grounds of nationality or residence.
The Gambelli Case
The Gambelli case was a landmark case in this
respect. In this case, the Public Prosecutor initiated criminal
proceedings against Piergiorgio Gambelli and other intermediaries for the
organization and reception of bets for the British bookmaker Stanley
Gambelli and others argued that by prohibiting Italian citizens from
linking up with foreign companies in order to place bets and thus to
receive the services offered by those companies by internet, by
prohibiting Italian intermediaries from offering the bets managed by
Stanley, by preventing Stanley from establishing itself in Italy with the
assistance of those intermediaries and offering its services in Italy from
another Member State amounted to a clear case of restrictions imposed by a
monopoly in the betting and gaming sector, hence resulting to a
restriction on both freedom of establishment and freedom to provide
The ECJ in the Gambelli case finally held
that national legislation which prohibits the pursuit of the activities of
collecting, taking, booking and forwarding offers of bets, in particular
bets on sporting events, without a licence or authorisation from the
Member State concerned constitutes a restriction on the freedom of
establishment and the freedom to provide services provided for in Articles
43 and 49 EC respectively.
It is for the national court to determine whether such legislation, taking
account of the detailed rules for its application, actually serves the
aims which might justify it, and whether the restrictions it imposes are
disproportionate in the light of those objectives. It is thus for the
courts of the Member States to determine whether the national authorities
have acted proportionately in their choice of means, having regard to the
principle of freedom to provide services.
In this case the ECJ did not explicitly say that the Italian regulation in
the field of sports bets imposes a discriminatory and unjustified
restriction on the freedom to provide services. Nevertheless, it gave a
clear indication that:
Member States must stop invoking imperative
reasons of public order to justify restrictions, particularly in relation
to public funding, while the actual objective pursued is the protection of
the national markets from foreign competition;
To the extent that the court leaves the
decision to the Italian court, it gives clear “guidelines” on how the
latter should use its discretional power to interpret the facts of the
The level of protection offered by the
country of establishment and the control exercised over the legality of
the gaming operation should be taken into consideration when the
authorities of the country of destination assess the proportionality and
necessity of the restrictive measures.
Therefore, it is not absolutely guaranteed
that all EU established operators could unconditionally offer their
services throughout Europe. The national court would need to determine
whether the restrictions imposed by national authorities on
operators/intermediaries who facilitate the provision of services by a
bookmaker in a Member State other than that in which those services are
offered (by making an internet connection to that bookmaker available to
players at their premises) is a restriction that goes beyond what is
necessary to combat fraud, especially where the supplier of the service is
subject in his Member State of establishment to a regulation entailing
controls and penalties.
The proposed directive on services aims at
removing the obstacles to the freedom of establishment for the provision
of services and the freedom to provide services within the internal
market. When the directive becomes reality, further harmonisation would be
necessary to ensure that gaming is fully integrated and interpreted, but
when this takes place gaming operations will fall within the scope of the
directive, hence resulting in the principle of free movement of services
as being applicable. The important factor in this case would be that the
operator be established in the EU. In this way, the benefits from the
application of the internal market principles relating to the freedom to
provide cross-border services within the EU can be reaped to the full.
Malta is a country presenting a stable
history in financial, banking and commercial services. By joining the EU,
Malta aligned its position and perspective to EU directives and
regulations, including corporate rules and money laundering safeguards.
This, coupled to a strong gaming legal regime, render the Maltese license
as the best solution to any serious operator.