Overview of the latest developments in gaming legislation in the Nordic countries
A brief overview of the latest developments in gaming legislation in Norway, Finland, Sweden and Denmark, with a view to the future.
The Nordic countries, Finland, Sweden, Norway, Denmark and Iceland are bound by a longstanding historical and cultural tradition and over time the countries have developed rather similar social structures as well as similar legislation in many areas of the society. The regulation of betting and gaming has been no exception and each of the countries have in force a monopolistic system, the aim of which is to use revenue generated from gaming for the public good. The latest developments, however, seem to indicate the members of the ”Nordic family” going their separate ways when it comes to regulating the gaming market.
The changes in policy are mostly due to external pressure. Finland, Sweden and Denmark are all subject to Infringement procedures initiated by the EU Commission for limiting the free movement of services with their gaming monopolies and all three procedures are at the stage of a reasoned opinion, the last step before referral to the European Court of Justice. Norway, while not an EU member, is bound by the EC Treaty due to its association in the European Economic Area and has had to answer questions regarding its gaming monopoly to the EFTA surveillance authority.
Norway
Norway has adopted an approach of tightening regulation. In 2003, Norway decided to extend the monopoly of the state controlled Norsk Tipping to cover also slot machines, the operation of which was previously allowed for private organization that used profits for ends deemed good for the public. The move saw Norway referred to the EFTA Court by the EFTA Surveillance Authority for its alleged contradiction with the free movement of services. The EFTA Court, however, considered the monopolization acceptable from the point of view of Article 49 EC, since the purpose of the move was considered to be the reduction of problem gambling.
The latest development is a gambling related payments ban, which the Norwegian parliament accepted in 2008. With all forms of remote gambling already prohibited in Norway, except for the possibility of participating in the state operators terrestrial games via the internet, the new law also prohibits the processing of payments from Norway to non-licensed remote gambling sites. The law classifies gaming related payments as unlawful accessory involvement in the holding and mediation of non-licensed gaming and affects Norwegian credit card companies, financial institutions as well as other entities assisting the transfer of payments for remote gambling from gamblers in Norway. Although heavily criticised by industry operators and financial institutions, the law is expected to enter into force during the autumn of 2009.
As evidenced by the latest developments, there is little sign that the situation regarding the Norwegian gaming market will change in the near future. Subject to a different control mechanism for its obligations derived from the EC Treaty and with no impending infringement procedures against it by the EFTA Surveillance Authority, Norway seems under little pressure to change its laws on gaming. It can therefore be assumed, that Norway will continue to uphold its gaming monopoly in the near future.
Finland
In Finland, a two phased process of reviewing the lotteries act is currently underway. The reform is intended to be complete by January 2012, when the existing licenses of the monopoly operators expire.
The reform contains many technical changes to the current system, such as the passing from a formally licensing based system to a system where the monopoly is written in law as well as the setting up of a new authority responsible for the supervision of the lotteries act. Of a more concrete nature is the proposal of tightening regulation for the marketing of non-licensed games, which will surely mean tough times for foreign gaming companies in their marketing operations targeting Finnish nationals as well as the parts of the media publishing the marketing. Worth mentioning is also the proposed change in the interpretation of the existing law, which would allow for RAY, the operator authorized to provide casino games and slots, to offer its games online, thus giving the monopoly operator a strong foothold also in the Finnish online gaming market.
Apart from the reforms already prepared, plans of ISP blocks and the prohibition of gaming related financial transactions remain on the table. Official reports consider the measures difficult to implement both from a technological as well as a legal point of view and as such unlikely to be implemented in the near future, but are considered as possible options in the future.
As evidenced by the content of the reform, Finland seems heavily intent of holding on to its gaming monopoly. With regard to the infringement procedure initiated by the EU Commission in 2006, it seems as though the Finnish government believes the gaming monopoly to be in accordance with EU law and is willing to defend their case before the EC Court. With the EU Commission apparently far less convinced, it seems likely that the fate of Finland’s gaming monopoly will be decided in Luxembourg. Before that happens, any significant changes in Finland’s gaming market are very unlikely.
Sweden
Sweden, like Denmark, came on the brink of being referred to the EC Court for its gaming monopoly when the European Commission stated its dissatisfaction on the efforts of the Swedish government on the matter in July 2008.
Towards the end of 2008, an official study of the Swedish gambling legislation suggested a partial liberalization of the gaming market, with a complete liberalization also considered as a possibility. The study recommended dividing the games on the basis of their risk to the players, with the highest risk games suggested to be held as an exclusive right of the monopoly operator Svenska Spel. Casino games, slot machines, lotteries as well as online bingo and poker were considered as high risk games; where as both terrestrial and online sports betting were considered lower risk games and as such could be subject of a licensing based liberalization. Further more, the report suggested ISP blocking measures as well as gambling related payment bans as means to enforce the new system.
Based on the study, the Swedish government drafted a proposal for changes in gaming legislation and subjected it to a consultation of parties with interest in the matter. The proposal received a lot of negative feedback and forced the government to consider changes, before a draft law could be presented to the parliament. Due to the delay, it is widely expected that no new proposal will be made public before next years parliamentary elections.
The situation in Sweden is therefore at a standstill. While a partial liberalization of the Swedish gaming market in the near future seems to be on the cards, the possibility of a change in policy after next years’ parliamentary election cannot be entirely ruled out. While probably heading towards a free gaming market, more news from Sweden are to be expected in before anything can be said beyond doubt.
Denmark
In Denmark, the liberalization of the gaming market is well under way. Threatened by the EU Commission of referral to the EC Court in July 2008 alongside Sweden, the Danish government chose to take action. A proposal for the law on partial liberalization of the gaming market was notified to the European Commission during the summer. While the details of the procedure are unknown due to the confidentiality invoked by the Danish government, the intended liberalization of online betting, casino and poker are widely reported.
In October 2009, the EU Commission issued a detailed opinion against the Danish proposal. While also covered by the confidentiality, reports indicate that among other things the partial continuation of the monopoly in the areas of pool betting and horse racing as well as the proposed ISP block and gambling related payment bans have raised the eye-brows of the Commission. The standstill period required by the notification procedure ended on November 9th, so more information will surely become available soon.
While the extent and details of the liberalization remain unclear, it is more than safe to assume there will be significant developments in the Danish gaming market in the near future. Denmark seems to be firmly on course to adopting at least a partially free gaming market.
Conclusions
The Nordic family seems to be heading their separate ways in their regulation of the gaming industry. Finland and Norway have taken the approach of defending their historic monopoly against the pressure exerted by the EU Commission and the EFTA Surveillance authority respectively, while Sweden and Denmark both seem to be on the way to liberalization. The close relations of the four countries, however, may prove significant for future developments in the sector. The fact that Sweden and Denmark are liberalizing their market will undoubtedly be an argument for parties seeking a more liberal gaming market in Finland and Norway. The dismantling of a similar monopoly in the neighbouring country with close ties and a common history would surely make it more difficult to argue that social and cultural reasons are behind the legislation.
It will be known in a few years, whether the separation described is of a more permanent nature or if the Nordic countries will, after all, adopt similar regulatory models for the gaming market. With the area having a combined population of around 25 million economically well of citizens, high internet penetration and a culture for gaming, there will surely be plenty of interested parties following the situation.
Pekka Albert Aho*
Lawyer
AA Legal Finland
www.aalegalfinland.com
pekka.aho@aalegalfinland.com
* The author collaborates with and acts under the supervision of Quirino Mancini in connection with editorial projects involving matters of gaming law in the Scandinavian jurisdictions
