Schrödinger’s legality: online gambling in the EU

According to EU law, online casinos who want to offer their service in the European Union must have an online gambling license that matches the European Commission’s safety and quality standards. European gambling authority regulations meet these demands. However, if you live in Germany or the UK and try to join an online casino with licenses issued in Malta or Sweden, it is entirely possible you will be blocked from accessing their games. What are the parts of European gambling legislation that create these discrepancies?

A recent example

Casinomeister‘s review of Twin Casino gives us an overview of their quality as an online gambling provider. The ratings from both the gambling community’s admins and their users, as well as the additional accredited status, marks them as an online casino with outstanding ratings and immaculate service. One of the review’s bullet points is the casino’s legislation. This category lists the separate gambling licenses the casino has acquired.

It is not rare for an online gambling provider to own multiple licenses. In fact, some countries legislations require them to have a specific license to offer their services legally. In Twin Casino’s case, it’s the Malta Gaming Authority license and the Swedish Gambling Authority license. Both are reputable licenses that expect their applicants to have high standards of security and overall quality.

However, if you try to access the casino from the UK or Germany, the following message appears:

“We regret to inform you that we have discontinued our gaming offer in your residential jurisdiction until further notice. If you have any balance on your account at twin, kindly contact our customer service for assistance with payout.”

What led to these exclusions was a row of recent legislation changes, including Brexit.

Gambling legislation in the EU

One of the main factors that adds uncertainty to online gambling’s legality is the lack of a conclusive international gambling law. Many countries’ legislations are direct oppositions to others’ views on the topic.

EU legislation

There is no EU legislation regarding gambling services specifically. Instead, the EU leaves the creation of gambling laws to their members autonomously. Except, there is one law that applies to online gambling providers. The Treaty on the Functioning of the European Union (TFEU) is the EU court’s list of fundamental freedomswithin the Union.

Relevant to the online gambling sector is the following:

  • Any EU citizen can freely open a business or offer their business’s services in any other EU country.

The way this law has been applied to gambling implied that any online casino with an EU license is allowed to operate in every EU country, regardless of their own legislation. But it’s never quite as easy when two opposing laws from different courts collide. In Germany in particular, this has led to a gray area when it comes to the legality of online gambling.

German law vs. EU law

The problem in Germany has been, and continues to be, that it is not settled and put down in legally binding form, under which circumstances exactly EU law overwrites the national legislation. Many online casino providers use this legal uncertainty to offer their gambling websites in Germany, until someone makes an indefinite decision and enforces it. Some providers, such as Twin Casino, acknowledge the latest German gambling law to be exactly this.

In July 2021, Germany legalized online gambling for the first time. Any provider who had offered their games to German citizens before was – according to national law – doing so illegally, but the EU law left them mostly unbothered by German law enforcement. The new law states that only the casino providers who own the new German license are allowed to legally operate there.

With Germany finally defining under which circumstances online gambling is allowed, many casinos who did not meet these criteria changed their stance and removed their service from the German market. There are two reasons why they won’t register for the license instead:

  1. The license is expensive. | Since the law is still young, not all details have been provided yet. According to the legislative draft, the provider must pay a security in form of a bank guarantee of min. 5 million Euros. Depending on the expected revenue, it can be as much as 50 million. This does not include the cost of altering the casino to meet the regulation’s criteria.
  2. The license has many restrictions. | The German license focuses heavily on gambling addiction prevention and the protection of minors. That’s why they demand restrictions such as a maximum monthly deposit of €1.000 or removing especially addictive games and features.

Casinos that are currently banned for German players might decide to remain that way, so they won’t have to remove game types and restrict their players too heavily. Or they might be waiting for the proper implementation of the law and are working on meeting the license criteria.

Brexit troubles

Much like in Germany, since the 2014 Gambling Act passed, the national license provided by the United Kingdom Gambling Commission is the only license that allows casinos to legally offer their services in the UK. It wasn’t possible to predict every little change that would be set off by the UK leaving the European Union. Especially not regarding topics with such unclear legislations in the first place.

With leaving the Union, the UK lost the treaties that created partnerships between EU states. Without the TFEU, casino providers from the UK or other countries had to rearrange their business affairs. There were many questions to ask:

Are UK casinos now illegal in other EU countries? Are UK licenses owned by international casinos still valid? What about Gibraltar’s status as an oversees territory? How does Brexit affect the many casino businesses registered there because of the local tax relaxation? Will changes in laws and taxes drive businesses out of the country?

Much like after the freshly introduced law in Germany, not all of these questions can be conclusively answered yet. Business and government issues resolve slowly after many meetings and revisions, till the conditions are finally set in stone and can be acted upon or enforced. Many casinos have halted their services in the UK, while they are unsure whether they must renew their UK license after Brexit or not.

Conclusion

It is unlikely that there will ever be an international authority on online gambling laws. As long as the individual jurisdictions create their own rules, there will be anomalies like this gray area created by the overlapping of multiple laws with different origin and the bureaucratic hurdles from passing a law to properly enforcing it.

Luckily, the effect this has on the players is comparably small. They might be inconvenienced by mandated limits, lose their favorite games, or have to join a different online casino. The bigger burden is on the online gambling providers. Their livelihood depends on these changes and forces them to navigate these complicated circumstances. Many of them will lose players and income, pay higher taxes or fees for additional licenses.

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