Brussels, 05/01/2007 (Agence Europe) - At the end of 2006, European Lotteries (representing national lotteries) unveiled research commissioned from consultants associated with the London School of Economics, highlighting the negative impact of fully opening up the EU gambling industry and allowing the unregulated provision of cross-border gambling services. The study shows that under European Court of Justice case law, gambling simply cannot be considered as a simple provision of services, and details the disadvantages for national lotteries and the public interest of de-regulating the industry. The main reasons quoted were removing quality controls and a drastic cut in the amount of funding for charities.
According to the London School of Economics' study, the impact of de-regulating gambling would be enormous, due to differences between national lottery service providers and private operators. Public lotteries have to respond to broad public demand for gambling across all sections of the population in a responsible and controlled manner, avoiding excesses of both supply and demand, but this does not apply to private operators, who are in the business to simply generate profit. In 2004, national lotteries paid out an average of 33% of their turnover to charity or the state in the form of taxes (figures are not available for Italy and Malta), whereas taxes on private operators only recouped an average of 3% of their takings. In 2004, pay-outs from the national lotteries accounted for around 53% of their turnover, whereas private operator pay-outs exceeded 91%.
The research notes that de-regulating the industry would lead to a significant cut in national lotteries' business to the benefit of online gambling through private operators, and therefore any opening up to competition would lead to huge losses of the level of 35% on average across the EU25 (a total of around €16 billion a year), with losses as high as 70% to 95% in countries where national lotteries hold a huge market share. The researchers also predict that any huge increase in the number of lotteries and other forms of gambling would inevitably lead to a rise in the number of problem gamblers, which would in turn lead to huge social and economic losses for society as a whole, a cost which they explain is difficult to put into figures. The national lotteries would also have to face serious job losses.
The study calculates the EU gambling industry as generating a turnover of €290 billion in 2004. The five biggest markets are the United Kingdom (€98 bn), France and Germany (both €34 bn), Spain (€27 bn) and Italy (EUR 24 bn). Each year, Austrians top the league of gamblers in terms of the amount of money spent, betting an average of €1900, followed by the British (€1640) and the Finns (€1550). Half the takings of Polish lotteries are given to charities, followed by 41% in the UK and 27% in France.
There is no specific EU legislation covering gambling. Speaking at the European Parliament, EU Internal Market Commissioner Charlie McCreevy (who enjoys betting on horses) said at the end of last year that it would be impossible for the EU to strike agreement on harmonising the betting and gambling industry (see EUROPE 9309), and the industry has therefore been excluded from the future directive on services in the internal market. The industry is therefore governed by EU Treaty rules. Those in favour of public monopolies quote protection of public order and consumer aspects of the Treaty to justify restricting the provision of gambling, whereas private operators focus on the freedom to supply services and the freedom of establishment. European case law, especially the C-243/01 Gambelli ruling in 2003, does not challenge public monopolies but points out that national restrictions had to be necessary and proportionate. It would be difficult for Member States to prevent private operators from providing gambling services while leaving public operators to freely expand the services they provide. In 2006, the European Commission launched two rounds of infringement proceedings against ten Member States in this connection (see EUROPE 9170 and 9286). (mb)