The pandemic has bled the global economy dry and damaged millions of businesses beyond repair. As the world looks to heal, governments are desperately seeking new sources of funding, and many of them are contemplating regulatory revisions to increase tax collection and refill the coffers. The gambling industry could be on the receiving end of some of these changes and may witness the revolution that operators and players have been waiting for.
The online gambling industry is on a high right now and operators are keeping one eye on the many regulatory changes taking place in countries across Europe and North America.
In this article, we’ll consider the regulatory changes being considered in the United States, Germany, the Ukraine, and the Netherlands.
The Netherlands – A Future Force in the Gambling Industry
A white paper released by Online Casino Ground recently stated that the Netherlands has the potential to become one of the biggest online gambling markets in Europe, a pretty bold statement to make considering the competition.
Dutch gamblers spent over €182 million on gambling in 2019 and in the five years leading up to 2015, the player numbers increased from 500,000 to 1.2 million, sending revenue up to €3.1 billion from €296 million.
It is said that around 50% of the country’s gamblers use unlicensed operators, and these numbers are expected to drop significantly as licensed creators get more attention and offer more bonuses.
Upcoming Regulation in Germany
New regulations are expected to arrive in July 2021 that will see the ban lifted on online casinos and poker games. It will open the doors for a huge number of sports betting companies and will also allow for a small number of online casinos to apply for official licenses. The state will keep its monopoly on the lottery side of things, but its increasingly relaxed attitude to other aspects of gambling will allow other companies to take their share of alternative markets.
However, the regulation of the German market will include some very strict measures, including a €1 betting limit on virtual slot games, limited live betting markets, a complete ban of live streaming on betting sites, and a 5-minute delay when players switch between betting sites.
Online poker games, online casino games, and casino radio will also be prohibited from 6am to 9pm.
As is the case in many other countries, the German gambling market has become somewhat of a political battleground in recent months. But it’s clear that the government would benefit from a regulated market as it would be able to profit from gaming taxes and license fees.
Ukraine – Potential Gaming Hub in Eastern Europe
The gambling industry has been somewhat of a blind spot for the Ukrainian government, but it seems that they are now keen to follow in the footsteps of their European neighbours.
The state plans to sell gaming licenses and to use the funds for social support, boosting the healthcare, culture, and sporting sectors, among others. It also plans to open casinos in major cities like Kyiv, Dnipro, Lviv and Odesa, which it expects will increase the number of tourists visiting these cities and provide some much-needed help for the struggling tourism sector.
Regulators in Ukraine expect to receive around €225 million for legalisation in 2021, with approximately 60 licenses anticipated (including B2B). The number of licenses suggests that the government may be relying on investments from international operators, but changes in the taxation legislation will need to be made before it becomes a lucrative proposition for outside interests.
For instance, the emerging Ukrainian gaming market has one of the highest tax rates in Europe. The government is currently proposing an 18% tax on personal winnings, GGR, and operators’ profits. These rules may slow the growth of the market and prevent it from being as competitive as it could be. But the project law has been submitted to Parliament that should change tax rates, especially the GGR tax and the tax on winnings. This will certainly give a boost to the development of the market after its entry into force.
The USA – An Increase in Both Offline and Online Gambling
According to Research and Markets forecasts, the USA will experience an average annual growth of 15.41% in its online gambling market.
As things stand, legal online betting is only available for bookmakers in the states of Delaware, New Jersey, Nevada, and Pennsylvania. However, the success that Pennsylvania has had in this market could inspire other states to follow.
According to the American Gaming Association, the state generated $3226.92 million in gross gaming revenue for 2017, making it the second most lucrative state after Nevada. As of May 2019, it has received around $2.5 billion in taxes for its gaming revenue, all of which has helped to support local governments and communities, creating 33,171 jobs, $1.8 billion in wages, and creating a positive economic impact of $6.3 billion.
The profits are showing no signs of slowing down, either, and it seems likely that other states will look to PA’s success and be eager to follow in its footsteps.
The Bottom Line
As these examples show, governments are beginning to understand that blanket bans on gambling just don’t work. Rather than controlling the industry, they just force players into the arms of black market providers and unregulated games, which creates an unsafe environment and one that the state does not profit from.
It is also clear that online gambling could help to fuel struggling economies and provide the funds injection that governments so desperately need.
Of course, as with any other major rule change, there are internal power struggles that may delay progress and stall the advancement of reformation.
Author: Maksym Liashko, Partner at Parimatch
