Dr Salvatore Casabona, EUC Visiting Fellow and Associate Professor at the University of Palermo
18 Sep 2013
Block B Level 5, SR 5-2, NUS Law School, NUS@Bukit Timah Campus
A printable version of this report is available here.
Online gambling is a fast growing service activity in the world today. For legal scholars, it has usually been studied from the perspective of public law and criminal law, especially when it relates to other issues such as money laundering. For Prof Salvatore Casabona, the private law perspective on online gambling has been neglected. Inter-disciplinary studies on the subject are also needed, given that online gambling do generate concerns and questions from other fields such as sociology with regards to the social implications of gambling addiction, and in economics on issues of taxation and revenue. There are many interconnected and overlapping levels – the regulation of the online gambling industry can involve international private law and, of course, EU law.
There is currently no harmonised legislation on online gambling in the EU, despite the high level of economic integration in the single market in the EU. There is not even a directive on the subject issued by the European Commission. The result therefore is a patchwork of regulations, where each of the 28 EU member states having their own framework on regulating online gambling. In the UK for instance, there is no specific licensing system for online gambling operators, whereas in France, online gambling is completely prohibited on its territory. One of the reasons for the lack of harmonized legislations was probably driven by economics – in that EU member states want to protect their revenues from the lucrative online gambling industry.
Prof Casabona, however, felt that it does not make sense to allow the status quo to perpetuate; the online nature of the activity inherently renders it a cross-border phenomenon, and since the EU has created a single market that promised the four freedoms of movement – people, goods, services and finance, the EU should therefore try to address the issue of harmonizing regulations on online gambling at European level as online gambling is a service industry, and as a single market without internal frontiers, the freedom of movement of services should be upheld. .
EU law in effect, prohibits EU member states from prohibiting the services of the online gambling industry. Over the past 20 years, the European Commission has indeed brought infringement action against member states. However member states can restrict online gambling activities on the basis of consumer protection or “health”.
In rulings by the European Court of Justice (ECJ), drawing out “red lines” and imposing discretionary restrictions on online gambling activities by member states are allowed, so long as they are not discriminatory – that is to say, member states cannot set restrictions that do not relate to the protection of the consumer. They cannot prohibit a foreign operator simply because they are a foreign operator. ECJ rulings have also established the principles of consistency – what is if allowed in one EU member state cannot be restricted in another. Any licensing scheme must also be transparent
All these approaches, as Prof Casabona pointed out, still do not show an attempt to approach online gambling regulation from the perspective of the gambler. Even teenagers today are able to override restrictions and legislation, with their IT know-how. Here, Prof Casabona listed several alternatives to a command and control approach to regulating the online gambling industry – for instance, self regulation, or co-regulation – which integrates the regulatory role of the state with other stakeholders like online gambling operators and associations of gamblers. None of these have yet been seriously attempted in the EU or anywhere in the world.
During the ensuing question and answer session with the audience, Prof Casabona took the opportunity to clarify his opinion and assessment of the prospects of regulating online gambling. His preliminary conclusion from his research was that online gambling operators should have a role in the legislative/regulatory process, such as through co-regulation models. Here he drew the comparison with environmental law, such as in the enactment of international environmental agreements in consultation with industries and businesses. There is now no real dialogue between the market and governments on the subject of online gambling; there are some consultative processes ongoing, though this is not sufficient. He argued that legal sovereignty does not work in the current age of digital globalisation any longer – not only in the borderless EU, but also anywhere else in the world.