Recent developments in both the UK and Sweden have again thrown the spotlight on the fragmented approach taken by different EU Members to online gambling regulation despite the best efforts of the European Commission (EC).

The Swedish Government are trying to impose restrictions on foreign online gambling operators from offering their services to Swedish residents. The proposed new laws will seek to restrict local resident access to such operators by imposing blocking obligations on ISP’s and payment processors alike – a kind of UIGEA (Unlawful Internet Gambling Enforcement Act) on steroids.

Not surprisingly, the consultation process accompanying the proposed law’s drafting has resulted in numerous submissions from industry associations and corporations both within and outside Sweden voicing a concerns, including the practical enforceability of the laws and their legitimacy against the backdrop of the EU’s freedom to provide services provisions.

The freedom to provide services provisions are a central tenet of the EU Treaty, included with the purpose of discouraging EU Members from enacting protectionist laws and encouraging cross border trade in services. Where laws permit local operators to provide a service to the exclusion of foreign operators they are arguably breaching overarching EU law and open to EC scrutiny. Sweden’s proposed ban on online gambling services will not apply to locally licensed operators, and as such arguably breaches EU law and may yet earn the ire of the EC.

But in the meantime, it is the type of measure that is leading the UK to consider a rethink of its approach to online gambling regulation. The UK is currently an open online gambling market. Both locally licensed and foreign operators area able to accept bets from UK residents. Further, operators licensed in jurisdictions included on the UK Gambling Commission’s ‘White List’ are free to advertise and promote their services within the UK just as locally licensed operators are. Jurisdictions afforded ‘White List’ status include all European Economic Area Members, as well as Gibraltar and Antigua Barbuda.

While other EEA Members like Sweden continue with attempts to ban foreign operators despite the best efforts of the EC, UK based operators subject to those bans are wondering why they should have to compete with foreign operators for a slice for a slice of the UK market. A number of major UK based sports betting operators have voiced this precise concern to the UK Government and Gambling Commission and it seems their voice is being heard. A review of the current regime is underway – planned for completion by the end of 2009 and to be tabled in Parliament in early 2010. Until such time as the review and any resulting amendments to the current Act are complete, the UK Gambling Commission has announced no new additions will be made to the ‘White List’.

Successful free trade arrangements are very much a multi-lateral animal, and will never exist successfully with only one willing participant. Presumably this is why the European Commission seems to be fighting so hard to stamp out protectionist online gambling laws through Europe – otherwise the result could be a collection of fragmented, insular markets rather than one large, competitive and open one.

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