The challenge faced by the Netherlands government, in legislating for its significant remote gambling sector, is one faced by many jurisdictions both in Europe and elsewhere.
In a parallel situation, Mexico’s Congress considered a new bill in 2015, the Responsible Games and Raffles Act, intended to bring clarity and order to the piece-meal and ambiguous mix of state/ federal regulations that were then (and still are) in place.
A recent web traffic analysis by Regulus Partners indicated that in Mexico’s case this market is significant (c$500m GGY per annum), and 90% unregulated. Not unlike the Netherlands, the Mexican government had settled on a relatively high proposed rate of duty, as part of the negotiating process to get the measure approved.
The challenge in addressing such a problem, for any government, is to agree on priorities as between the various vested interests already represented in the issue, before progressing to a solution.
Critically the catalyst in this progress is more often fiscal than regulatory: the prospect of raising tax revenues without causing pain to voters has overwhelming appeal to politicians.
Protection, of the population (from criminality and abuse), or even of existing licensees (from illegal competition), routinely comes second. So identifying a simple linkage between the two motivational forces – by which greater tax revenues necessarily flow from effective regulation – is conceptually of great value.
A recent study by Prof Haucap, Dusseldorf Institute of Commerce and Economics, has identified UK as the leading remote gambling jurisdiction in terms of its success at channelling its resident players into regulated sites.
Put another way, UK is one of the most effective jurisdictions in deterring black market operation.
The recent tide of remote regulation has rarely been primarily motivated to channel players into regulated markets; it has more frequently (often explicitly) originated in tax-raising. This political decision on tax-raising needs to be fully informed by the regulatory (and political) objective to control and regulate gambling activity.
The failure to make this connection, or the predominance of the fiscal pressure, has a clear and adverse impact not only on the quantum of tax revenues actually raised but also on the effectiveness of the regulatory regime.
Conversely, the establishment of commercially realistic duty rates, that enable white-market operators to compete effectively with unlicensed competition, is likely (when added to the other components of effective regulation) to capture a significantly great market and hence to raise more tax.
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