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Administrative cooperation in EU gambling industry

Online gambling in EU

Bilateral cooperation agreements

More recently Member States’ regulators have started to enter into bilateral cooperation agreements. On 28 June 2011 the French and Italian gambling authorities signed a first crossborder cooperation agreement. The purpose of the agreement is to improve the enforcement of the respective national regulatory systems and the effectiveness of the regulatory work by sharing information and experience in four key areas: compliance checks on operators licensed in both countries and adoption of player protection measures, institutional communication strategies, preventing fraud in the sports sector and the fight against websites of unauthorised operators.

In May 2012 Denmark and Malta entered into a cooperation agreement. The two jurisdictions intend to exchange information in particular to enhance and facilitate respective licensing processes and the monitoring of licence holders, to protect young and vulnerable groups and to protect players. The agreement also raises the issues of equipment location parameters and common use of B2B service providers. The Member States aim to cooperate on enforcement of their gambling laws regarding joint licensees and to collaborate on areas such as non-duplication of requirements and controls, shared responsible gaming initiatives and employee exchange programmes.

Denmark has signed agreements with a number of jurisdictions, such as Alderney, Gibraltar and the Isle of Man, in order to establish a formal basis for cooperation and information sharing between the competent authorities.

Bilateral cooperation allows for a better adaptation of the scope and content of the cooperation to the individual needs of the parties and can be more effective than multilateral cooperation. However, by its very nature it covers only two Member States and does not allow for common initiatives tackling the existing challenges in the cross-border online gambling market. Bilateral cooperation agreements furthermore require sufficient resources if entered into with a number of Member States.

Existing bilateral and multilateral cooperation agreements help Member States in their regulatory work and have proved useful in achieving a certain degree of cross-border cooperation. These agreements however have deficits in terms of the quality of information that can be exchanged and the implementation of decisions taken in multilateral structures and thus often does not meet needs of a regulator. Member States miss appropriate structures for the exchange of information as well as focussed discussions and an appropriate follow-up on agreed implemented programmes.

Areas for administrative cooperation

Successful administrative cooperation requires a clear definition of the areas Member States can request and exchange information on and develop common actions and initiatives.

In the conclusions on the framework for gambling and betting in the EU Member States the Council concluded that the cooperation between the Member States seems required to assess the scope, possibilities and mechanisms, in order:

  • to share information on gambling operators,
  • to protect consumers, minors and ensure the integrity of games,
  • to minimize, where possible, any unnecessary administrative burdens,
  • to identify and share best practices in relation to for example player protection, technological tools for effective regulation and responsible gambling measures.

The development and implementation of technical solutions such as cross-border B2B licences or cloud computing in the gambling sector might pose further challenges in terms of multijurisdictional regulation and increases the need for enhanced cooperation.

The level of administrative cooperation depends on the information and data that can be exchanged between gambling regulators. In terms of the quality of the information and data and the conditions for sharing it a distinction can already be made between sharing information of a more general nature and sharing information and data on specific issues.

General information sharing would concern

  • National legislation governing online gambling and the competences of the national authorities regulating gambling,
  • Experience and best practice regarding the enforcement and supervision of national online gambling regulations, consumer protection, gambling addiction, prevention of fraud and money laundering, ensuring the integrity of sports,
  • Authorisation/licensing conditions for operators seeking to operate in a Member State, including information on testing and certification of gambling equipment. Information and data exchange on specific issues would cover
  • Applicants at the pre-licensing stage,
  • Testing results and certification of gaming equipment, software, games to be offered,
  • Post-licensing information exchange such as
    • monitoring of authorised operators,
    • enforcement of applicable rules for consumer protection,
    • enforcement of applicable rules prevention of fraud and of money laundering,
    • operators’ compliance with applicable legislation and/or licence conditions,
    • any breach by operators of their license conditions,
    • audit reports/findings,
    • licensees suspended,
    • customer interaction, and
    • complaints against authorised operators,
  • Consumers/players such as
    • exclusion lists or barred citizens,
    • identity checks for the purpose of age verification,
    • identity checks for the purpose of crime prevention (identity theft, money laundering),
  • Illegal unregulated operators such as
    • their identity,
    • the means used to detect them,
    • the means used to prevent them from operating in the jurisdiction, and
    • interaction with the authority/jurisdiction authorising them (where this exists).

Tools for administrative cooperation

Administrative cooperation will only work if arrangements are put in place defining why, on what and how regulators should cooperate. Many responses to the Green Paper consultation see a crucial role for the Commission in organising administrative cooperation among Member States. The Commission is called on to create a structure for administrative cooperation and to assist this cooperation, in order to ensure focused discussions as well as an appropriate follow-up on agreed implemented programmes. In exploring how to improve administrative cooperation in the EU two different goals have to be distinguished: (1) involve the Member States in the development and implementation of an EU policy on online gambling services and (2) provide a structure for the coordination of administrative cooperation between Member States. Both are needed.

Involve Member States in the development and implementation of an EU policy on online gambling services

The Communication “Towards a comprehensive European framework for online gambling” and this Commission Staff Working Paper define an action plan identifying initiatives to be taken at national and EU level in response to key challenges for the regulation of gambling services. In order to better involve Member States in the development and implementation of an EU policy on online gambling services the Commission will establish an expert group on gambling. The expert group, composed of representatives of Member States, will provide advice and expertise on the preparation of EU initiatives. It will also be tasked with facilitating the development of mutual understanding and the exchange of information and best practices. Several Member States have called for the establishment of an expert group by the Commission. Stakeholder experts may be invited to the expert group, in line with respective Commission procedures.

Provide a structure for the strengthening of administrative cooperation between Member States

In order to strengthen cooperation assisting Member States and gambling regulators in their regulatory and supervisory work and responding to daily and operational needs an appropriate structure for administrative cooperation between Member States needs to be in place. This corresponds to a request from the European Parliament calling on the Commission to explore – in keeping with the principle of ‘active subsidiarity’ – all possible tools or measures at the EU level designed to protect vulnerable consumers, prevent addiction and combat illegal operators in the field of gambling, including formalised cooperation between national regulators. The structure such formalised cooperation between national regulators could take however depends to a large extent on the kind of information and data to be exchanged between the authorities.

As a first step cooperation needs to focus on exchange of more general information and best practices, in order to share intelligence, reduce administrative burdens and build confidence and trust between regulators. Member States have suggested that regulators should start collaborating on common objectives.

In order to facilitate this cooperation the Commission will set out, together with all EU/EEA regulators and in cooperation with Member States, the objectives of cooperation, common principles and cooperation arrangements. Ultimately, the aim is to facilitate cooperation between the all EU/EEA regulators, setting out the arrangements for sharing of information, views and assessments, and preparing for the management and resolution of cross-border issues.

The advantage of a step-by-step approach as regards administrative cooperation is the general acceptance of all Member States and the prospect of immediate implementation. It may be general in scope and requests for information or intelligence exchange may be more on a case-by-case basis, entailing therefore a degree of administrative work. In the long term this may not suffice to deal with the challenges of the online gambling market adequately as inter alia it may not facilitate the exchange of information on applicant licensees and on authorised operators (eg minimal application process requirements met, such as financial stability of company, shareholders, certified technical equipment and software, monitoring, complaints by customers, interaction with regulator), and it will not allow for the use of existing instruments for mutual assistance and administrative cooperation in the EU, such as the Internal Market Information system (IMI).

Therefore, in a second step cooperation could be extended to exchange of information on operators and players. This will enable administrative cooperation to be fully functional.

However, the challenge will be to define the kind of information to be shared and to put the right infrastructure in place to guarantee protection and reliability of data.

The EU has a solid data protection legal framework. The exchange of information between Member States should comply with the rules on the protection of personal data in the Data Protection Directive. The processing of personal data under EU Law may only take place under certain conditions and in accordance with a set of principles. EU law furthermore requires an adequate and specific legal basis for the processing of personal data.

In its conclusions on the framework for gambling and betting in the EU member states the Council concluded that IMI could become a useful tool in order to facilitate administrative cooperation (3057th COMPETITIVENESS (Internal Market, Industry, Research and Space) Council meeting). This has been reiterated by a number of Member States and stakeholders in the consultation. The European Parliament states that IMI could serve as the basis for more effective cooperation among national regulatory bodies. IMI is a software application accessible via the Internet, developed by the Commission in cooperation with the Member States, in order to assist Member States with the practical implementation of information exchange agreements by providing a centralised communication mechanism to facilitate cross-border exchange of information and mutual assistance. In particular, IMI helps competent authorities to identify their counterpart in another Member State, manage the exchange of information, including personal data, on the basis of simple and unified procedures and overcome language barriers on the basis of pre-defined and pre-translated workflows.

The Commission proposal for a Regulation on administrative cooperation through IMI (The proposal for a Regulation is envisaged to be adopted by the European Parliament and the Council before the end of 2012.) is to create the possibility to launch IMI pilot projects to test the use of IMI for administrative cooperation, including the exchange of personal data, in any single market area. In practice, IMI guarantees a high level of technical and procedural data protection. The processing of personal data in IMI offers a considerably higher level of protection and security than other methods of information exchange such as mail, telephone, fax or e-mail. In addition, data protection considerations are addressed in the day-to-day use of the system. The Commission will therefore, through a dialogue with Member States, explore further the possibilities for an exchange of personal data, in particular through the application of IMI and in compliance with applicable data protection rules.

The Regulation on Consumer Protection Cooperation (Regulation (EC) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws (the Regulation on consumer protection cooperation)) sets up an EU-wide network of national enforcement authorities with similar investigation and enforcement powers investigating possible breaches of consumer laws and to take action against traders. The network seeks to tackle breaches of consumer law in areas such as misleading advertising and distance selling. The Regulation further sets out supporting measures to foster expertise and cooperation between authorities as well as the possibility of international cooperation agreements with third countries. The Commission will further assess the use of this tool and may draw from this network in seeking to facilitate administrative cooperation amongst regulators.

Cooperation with other enforcement bodies and stakeholders

In the Commission’s workshop on efficient national enforcement measures and administrative cooperation participants considered cooperation with other enforcement bodies and dialogue with industry (not only operators but also related services such as hardware and software IT providers and consumer associations) crucial to properly regulate the market as well as share knowledge and experience. Cooperation on criminal investigations should be improved.

Dialogue with industry can be formal or informal or on an ad-hoc basis. Regulators and industry alike stressed that continuous cooperation and dialogue can only benefit the quality and efficacy of regulation.

The Commission therefore encourages Member States to ensure cooperation between relevant competent authorities at regional and national level, such as enforcement and consumer organisations. In order to respond to the regulatory challenges of a technologically complex and fast developing market regulators should also engage in a constructive dialogue with the industry sectors concerned.

Cooperation with third countries

The challenges in the online gambling market are of a transnational character, often originating from outside the EU borders. With regard to illegal offers from third countries regulators have little or no contact with relevant authorities in other parts of the world, often because no such regulators or contact points exist, making it difficult for the regulators of the Member States to follow-up on operators from such countries (e.g. Asian ones). In some instances regulators use established networks in other industry sectors, such as financial services, for information sharing.

Currently no agreements exist between the EU and third countries covering gambling related issues. However, Member States almost unanimously call on the Commission to coordinate actions and initiatives toward third countries.

The Commission will together with Member States identify the issues that need to be raised with third countries and will seek to strengthen the dialogue with these countries. Existing international information and intelligence exchange mechanisms need to be understood and better exploited.

© European Union

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