ECA’s European Casino Industry Report Prepared by ECA’S EUROPEAN CASINO INDUSTRY REPORT he European Casino Association (ECA) proudly presents the second edition of the ECA European Casino Industry Report. After the great success of the first report in 2013, it was Tclear that the European Casino Industry Report would become an annual standard, not only for all ECA members, but also for many other stakeholders presenting a comprehensive overview of the European casino industry. As was also the case last year, all of the ECA members have contributed to the chapter about their country. Their support is essential to the completeness and accuracy of the report and, as such, is greatly appreciated. This report would also not be possible without the general support from ECA’s associate members, Herzfeld Consulting and GamblingCompliance. There have been a few recent developments within the ECA membership, which are reflected in the additions to this year’s ECA European Casino Industry Report. ECA is happy to include chapters about its two newest members, Latvia, and most recently, the United Kingdom. Though ECA and the National Casino Forum have maintained positive relations throughout the years, both organizations felt that joining forces would help to fulfil the common industry regulatory and policy endeavours and that a unified voice would reinforce our influence in Europe. It is very rewarding to see that ECA continues to amass strength as it reaches the 10 year anniversary of its official founding in January 2005. Today ECA represents an industry of close to €8bn and the interests of approximately 900 casinos and over 70,000 employees in 25 countries across Europe and is the recognised voice of the licensed European casino industry. To meet the needs of the growing membership, our new modern offices at Avenue de Tervuren 168 will serve as a central meeting place in Brussels for our board, working groups and secretariat. Playing safe and secure In the field of responsible gaming and consumer protection, ECA’s members have always been at the forefront. They have never shied away from their responsibilities towards their customers. The latest achievement regarding player protection, by the combined efforts of the ECA members, is the creation of the ECA Responsible Gaming Certification Framework. This framework sets the standards for Responsible Gaming. Casinos are audited by independent experts according to these standards, and a positive outcome results in Certification for Responsible Gaming endorsed by ECA. The new framework was completed last year, but will be regularly monitored for possible improvements, since this is a key issue for ECA. Developing licensed and controlled online gambling The 2014 ECA European Casino Industry Report not only promises a detailed look into the status of the land-based casino industry in the different European countries, but also describes how several of our members are coping with the challenges and opportunities of online gaming, especially now that it is becoming regulated in more and more European countries. It is clear that there is no standard answer on how to deal with online gaming, other than to simply use the opportunity to offer our services through an additional channel of distribution. This development helps our members stay in touch with their customers, even when they are not onsite. The extent to which our members are able to make use of these additional services depends on the market regulations in their home country. That is, whether online gaming is legal and, if so, how well their market is protected against illegal operators. Illegal online gambling services are, as in large parts of the world, still a big problem in many member countries. The remarkable thing is that in some regulated countries, the newly licensed online operators, who were previously offering their services illegally, are now claiming that regulators do not do enough to fight the (remaining) illegal operators. These newly licensed online operators are now complaining that the playing field is not even and the competition unfair. Although this is clearly a case of the pot calling the kettle black, these newly licensed online operators are now beginning to understand the real issues at stake. Online gambling involves a greater risk of addiction than land-based gambling due to the lack of direct contact between the consumer and the operator as well as the omnipresence of the games on the internet. There is a need for control and supervision of gambling activities on a national level, as well as measures to enable gambling to be conducted properly, fairly and transparently. In addition, the risks to the safety and well being of consumers inherent to illegal online gambling seem to be grossly underestimated by some. Illegal operators generally do not abide by any consumer protection or anti-money laundering rules, fraud prevention measures, or taxation obligations. In contrast with land-based operators, illegal online gambling operators do not offer any guarantees to consumers in terms of the protection of assets, payment of winnings, integrity of games or guarding against excessive gambling. Any and every consumer protection measure has no effect on illegal gambling services, because of the very fact that they are operating illegally. They simply choose not to follow the rules. This is why time and effort should be focused on enhancing the fight against illegal gambling operators in order to create a safe gaming environment for European consumers. This means that illegal gambling websites should face strict action by competent authorities. Time and time again, this issue of illegal online competition has been raised by the land- based casino operators. But in the past, since the proposed measures were not backed by the EU, national politicians and regulators would not support our recommendations. European Casino Industry Report 3 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT As a result, ECA agrees that, in the fight against illegal gambling and betting, the identification of best practices is a worthwhile Applying anti-money laundering measures to the entire gambling industry initiative by the current Italian presidency. ECA believes that combatting illegal gambling, along with the dangers illegal gambling entails for consumers, should be a focal point for the EU. ECA likewise believes that the Subsidiarity Principle, which enables In this highly competitive gaming market, the revision of the Third Anti-Money Laundering Directive is of particular interest to the member states to implement the most effective and appropriate enforcement measures, should be maintained. ECA. Ideally, cooperation, including the sharing of best practices about how to fight illegal online gambling, should be global. This is Should the status quo regarding the €2,000 threshold for customer due diligence be maintained by the European Council and the simply based on the nature of the internet. A wide range of possible tools available to prevent unlicensed operators from offering European Commission, this would continue the undesirable situation whereby the threshold is lower than the FATF recommended their services illegally already exist. These include blacklisting, blocking illegal sites, establishing secure and traceable payment €3,000. methods, blocking financial transactions and controlling illegal advertising, etcetera. No measure, by itself, suffices. The strength lies in the member states applying a combination of several tools to protect their citizens in accordance with their own gambling policy. Since one of the goals of the Third Anti-Money Laundering Directive is to ensure it is in line with the international FATF standards, On many occasions, the most effective measure has proven to be the arrest and prosecution of the (ultimate beneficial) owners of it is difficult to understand why the threshold would not be the same in Europe. Particularly because the Anti-Money Laundering/ illegal operations. Measures have to be severe, because, at the end of the day, there is no room for criminal behaviour in regulated Combatting the Financing of Terrorism (AML-CFT) standards are much higher than in most other parts of the world. This point gaming markets. of contention is especially important because a lower threshold leads to heavier, albeit unnecessary, administrative burdens for casinos. Concretely, these burdens translate into higher costs, and therefore, cost and job cutting efforts for legal land-based casinos Calling for tax levels that allow casinos to invest in Europe. Online casinos and other gambling sectors are currently not affected by the Directive, thus further exacerbating the problem of unfair competition. Regulated gambling markets also call for reasonable and realistic gambling taxes, which would likewise fall under the country of destination principle. For example, just as VAT will be applied in the country of reception in all EU countries, starting in 2015, ECA believes that broadening the scope of the directive to the online gaming industry, as well as to other gambling sectors, is of so too should gambling taxation be applied in the country of consumption. The United Kingdom has decided to introduce this particular significance. ECA calls for trialogues between the European Commission, the European Parliament and the Council, to principle, beginning December 1, 2014. Online operators who offer services to people who usually live in the United Kingdom will be ensure that the scope of the directive is extended to all forms of gambling and to guarantee that the directive includes measures confronted with the new positioning of the consumption tax. Taxation will no longer be based on the rate of the place of supply, but that strike a better balance between being responsible and being workable. The control of the ultimate beneficiaries, shareholders, rather, on the rate of the place of consumption. and management of all gambling operations is crucial to avoid the biggest risk of AML-CFT in gambling, namely, the misuse of a gambling operation for AML-CFT purposes by the owner/operator.