The Rise of the Regulators: Andrew Gellatly, Editorial Director, Gambling Compliance

The dog days of this European summer are proving increasingly uncomfortable for online and offline gambling firms alike.

Everywhere that public debt crises are making the headlines – in Greece, Spain, Italy and even Ireland, - arguments surrounding gambling regulation are heating up too as cash-strapped states look to sweat more cash from their gambling assets

Across newly opened European markets too, operators have watched with appalled fascination as the gambling watchdogs have scrambled to take their positions on the World’s biggest online poker operators Full Tilt and PokerStars, as they recoil from the sweeping US Department of Justice criminal indictments that have rocked their businesses.

And perhaps most surprisingly of all the UK government -previously the most liberal and inclusive in Europe – has chosen to shred its White List policy that allowed free access to the UK market to all EEA-based gambling firms.

The Tourism and Heritage Minister John Penrose said: “All operators selling into the British market, whether from here or abroad, will be required to hold a Gambling Commission licence to enable them to transact with British consumers and to advertise in Great Britain.”

All of these developments mark a huge shift from even nine months ago when the European Commission-, which was the focus of everyone’s attention-, announced their plans to review Europe’s gambling landscape with a Green Paper,

That has all changed. As operators and their communication teams put the finishing touches to their green paper submissions, their efforts seem to have been overtaken by events and the spectacular rise of the national regulators.

Idealistic talk of pan-European harmonization - whether within CEN consumer standards or in the Digital Europe directive - has faded as the realpolitik of regulator collaboration has asserted itself.

Even the EU Internal Markets tsar Michel Barnier has so far been reticent on the timing and scale of any EU-wide laws that his department might introduce for online gambling, so fast is the landscape changing.

It is as though a gruelling succession of more than 40 gambling-related ECJ rulings, which have inevitably been handed back to national courts, have only underscored the fact that gambling is subject to a wide range of cultures and economic circumstances and national regulators may now be best placed to deal with that.

Alliances between regulators are becoming some of the most powerful – and practically more influential than the Commission itself.

EU watchdogs such as AAMS in Italy and Arjel in France have found themselves on the front line when it comes to unraveling the fallout from Black Friday in the US.

Indeed the widely touted cooperation agreement between France’s ARJEL and Italy’s AAMS created a power couple which quickly found themselves conferring with their Alderney counterparts on how to deal with the parlous financial state of Full Tilt

So while the European Commission gets to grips with the technical complexities of online gambling it is the national regulators who are increasingly setting the agenda.

Officials from Germany, Belgium, Hungary, Italy, the Netherlands, Norway and Poland all met in Belgium recently to discuss their own possible tie-ups and plotted the launch of a new think tank for regulators - the European Regulatory Platform - that is designed to cement the power of gambling regulators across Europe.

Spain, which is heading into finalising its own regulatory structure and secondary legislation to ensure new online licences are issued this year, has confirmed that it too is interested.

The new regulators’ mouthpiece, due to launch in September, has already won the backing of a handful of influential MEPs, including the author of the European Parliament’s new report on online gambling

“They do not necessarily agree with bilateral or multilateral agreements. But there was a clear view that if you really want to install online gambling regulations you need co-operation between regulators,” Peter Naessens, legal counsel to the Belgian Gaming Commission, said of the gathering.

This may not be good news for operators confronted with an expensive patchwork of regulations. Johan Öhman the CEO of Net Entertainment recently likened the cost and complexity of complying with national regulations as “like getting hit by a cruise missile.”

But hope remains that the new alliances of regulators will agree information sharing arrangements and common standards that may at least soften the blow.

So if the European cross-border gambling market has tended until now to confirm William Goldman’s truism that “nobody knows anything”, one new reality is emerging.

The new level playing field in Europe is a place populated by the national gambling watchdogs defending their territories and their revenues, and change in each one is only an election away.