Like its famous classical orchestras, Austria’s online gambling regulation needs the right instruments
17.02.2021
Today we’re seeing EU policymakers begin to adapt their regulatory rulebooks to the new realities of the digital age, including measures to better regulate the near monopoly power of various US tech giants. But at the same time, we should also not forget the monopolies which still persist in Europe’s own internet backyard, including in Austria’s gambling market.
Across the EU, consumers are increasingly looking towards the internet for their entertainment and Austria is no different. For the gambling sector, this means more people are choosing to bet on sport, play poker or spin a roulette wheel online. More than a quarter (26.5%) of Austria’s gambling is now being done online and will grow further in the coming years. Yet this trend has been in spite of Austria’s online gambling regulation, which still maintains a monopoly which naturally restricts consumer choice.
You can’t limit the internet
If the online era has taught us anything, it’s that there are endless alternatives on the internet and gamblers have always got somewhere else to go. That’s why online monopolies, particularly in price-sensitive markets like gambling, simply don’t work. Like it or not, but choice is king. All it takes is a few clicks of a mouse and gamblers can easily access gambling websites across the world, including unsafe or unregulated websites based outside the EU (e.g. Asia or the Caribbean).
That’s why it’s important for Austria’s online gambling to take place in a safe and regulated environment and this environment should be sufficiently attractive to attract the country’s gamblers. But this task is undermined by having a monopoly which restricts choice and pushes a significant number of players to look elsewhere for alternatives. Monopolies don’t work online, and that’s the reason why nearly all EU countries have now introduced multi-licensing regulation for online gambling.[1]
Austria still has an online poker and casino monopoly
But in Austria, multi-licensing is limited to sports betting. Because, unlike in most other European countries, the Austrian Gambling Act permits only one company – a monopoly – to offer online poker and online casino. This monopoly has been subject to criticism in recent times and its compatibility with EU law is questionable. With poker and casino making up 40% of the country’s online gambling market,[2] that’s a large chunk of the market where there is no competition or choice, leading many online poker and casino gamblers to look beyond the monopoly for the choice they want.
To fix this, the Austrian authorities should take inspiration from the classical orchestras which the country is so famous for. Maintaining a monopoly for online poker or casino is the equivalent of having the potential of a top-quality orchestra but instead limiting it to only one cello artist who can never be replaced, even if they aren’t good enough compared to other cello artists elsewhere. That is exactly what an online casino or poker monopoly does: and the real loser is the audience or consumer.
Because a full multi-licensing system – much like GGR-based taxation, high consumer protections, and a full suite of gambling products – is an essential instrument of the regulatory orchestra. Individually, these instruments aren’t sufficient to create a symphony but together, playing in concert, they can create a regulatory masterpiece, and, in gambling’s case, this means a well-regulated market which encourages the vast majority of Austria’s online gambling, including casino and poker, to stay with the country’s licensed companies.
It’s a myth that gamblers are better protected by a monopoly
Monopolies have often been justified under the belief that the state is better placed to protect its gamblers. But that’s why countries should have stringent consumer protection rules: it’s the rules that protect the consumer, not whether there is a monopoly or not. For example, Finland, which is the only EU country that still has a full online gambling monopoly, has a problem gambling prevalence rate of 3% of its population, while Denmark has full multi-licensing regulation and a problem gambling rate of around 0.7%. There is no compelling evidence that gamblers are in any way better protected by a monopoly.
Austria is still in a fortunate position that many of the reputable companies licensed there, working on the basis of the Freedom to Provide Services, pay a significant amount of taxes and sustain jobs in the country and provide much-needed financial support for its sports. In 2019 alone, these companies paid €123 million in gambling levies. This cannot be ignored, nor can they be expected to endlessly contribute to the system while the Austrian government keeps a questionable monopoly in place. If these companies leave the market, their tax revenues, jobs and sports sponsorships will leave as well – along with many of their loyal Austrian customers.
It’s now time for the Austrian authorities to revisit the Gambling Act and make it consistent with the objective to protect consumers in an increasingly digital, global and consumer-driven marketplace which is full of choice. The best way to achieve this is to extend multi-licensing to all online gambling products in the country, including poker and casino games. Nearly all other EU countries have already done this. The time has come for Austria to take a step forward in its internet regulation and do the same.
– Maarten Haijer, Secretary General, European Gaming and Betting Association (EGBA)
[1] Multi-licensing allows different private companies to obtain a license to offer online gambling in a country. It is the most effective way to regulate online gambling because it enables enough competition and choice to encourage a country’s online gamblers to use the licensed and regulated websites in their country, rather than those outside it.
[2] Based on the country’s 2019 online gambling market data, H2 Gambling Capital (2020).
About the European Gaming and Betting Association (EGBA)
The European Gaming and Betting Association (EGBA) is the Brussels-based trade association representing the leading online gaming and betting operators established, licensed and regulated within the EU, including bet365, Betsson Group, Entain, Kindred Group, and William Hill. The Swedish Trade Association for Online Gambling (BOS) is an affiliate member. EGBA works together with national and EU authorities and other stakeholders towards a well-regulated online gambling market which provides a high level of consumer protection and takes into account the reality of the digital economy and consumer demand. Together, EGBA’s member companies have 145 online gambling licenses across 17 European countries and more than 16 million European customers.
