Review of the gambling markets of the leading European countries
Europe is considered to be one of the fastest growing and most promising markets for the gambling businesses so far. One of the main factors that guarantees such a position to the Old Continent is its liberal system of legislative control and, consequently, liberal taxation policies. In the following review, Slotegrator presents its own analysis of the European markets and their distinctive features.
The history of gambling in Europe
The games of chance date back to Ancient Greece and Ancient Rome. In spite of the fact that the first casinos were established in 1397, even at that time they were regulated by the law. Although, gambling did not find any support from the Catholic Church and was generally recognized as something sinful, gambling houses kept spreading, eventually attracting more and more gamblers.
Gambling in ancient times could not be as fun as nowadays due to the lack of game varieties that were only bets and dice. The last one was particularly popular in Ancient Greece and the authorities did not restrict its admirers. Seems like, everybody was gambling back then, starting from plebeians up to queens.
However, from time to time the legislators of the Ancient Rome managed to pass laws imposing restrictions on the games of chance. For instance, it was stated by the law that all the money lost while playing dice was supposed to be returned to their owners.
The history witnessed times when all of the existing gambling houses were closed down, because of the official claims of the Church. The longest period of such prohibition lasted around 300 years. Anyway, it didn´t bring down the gamblers ‘attraction to this pastime that caused the real surge in the quantities of illegal gambling dens.
The historical evidence concerning the concrete time when all the gambling houses were legally reestablished again, is quite scarce. Some sources insist on that the gambling houses came out of the shade around 1765 and the first country to legalize this business turned out to be Switzerland. There also exist rumors that the first casino in Europe was known by the name of “Ridotto”, founded in 1638 in Venice (Italy).
At that time, the range of offered games was quite primitive, but exactly that time is considered to be the time of invention of the first roulette tables and the first forerunners of the future gambling infrastructure such as restaurants and hotels.
A more or less serious period of casino development in Europe is associated with the middle of the19th century. By that time, many of the countries started lifting bans for gambling and by the early 20th century, gambling houses became extremely popular across the European continent.
Currently, gambling is legal in more than 20 European countries. You can legally gamble in Great Britain, France, Spain, Portugal, Finland, Sweden, Latvia, Estonia, Norway, Macedonia, Germany, Monaco, Luxembourg, Belarus, Gibraltar, Montenegro, Italy, Poland and on Malta.
The rest of the authorities of the Old Continent are taking action towards legalization of the gambling houses. However, every country has their own legislative limitations and restrictions. For instance, in some of the countries, such as Poland and Sweden, gambling commercials and casino advertising is prohibited.
Economic performances of the European countries
Speaking about the prospects of the expansion of the gambling markets in Europe, we should focus on the most important indexes, such as economic ones, as long as namely these indicators stipulate the advancements of the whole entertainment industry. The gambling market is very sensitive to the slightest changes in the dynamics of the economic development.
Financial turmoil of the 2007–2008, for instance, according to the expert opinion of the analysts, caused the decline in the gambling industry in 2009 by nearly 0,8%.
The EU share in the global economic performance.
Let us consider what European countries are the most economically developed according to the GDP share of each country in the total GDP index of the EU.
Netherlands (5%), Belgium (3%), Sweden (3%), Austria (2%), Greece (2%), Denmark (2%), (Poland (3%), Great Britain (14%), France (16%), Spain (9%), Germany(20%), Italy(12%), other countries (9%).
According to the data provided by EUROSTAT, the total GDP index of the 19 countries of the European Union in 2014 increased by 0,9%, while the index of 28 European countries boosted by 1,4%. It is scheduled, that in 2016 the general growth of the GDP index will account for 1,9 instead of previously projected 1,7%.
For the record, Europe holds the highest GDP rate per capita that keeps climbing up.
The GDP of the EU per capita (thousands of $)
The volume of the gambling business
According to the analysts from Slotegrator, Europe is the most economically developed region with the highest and the fastest growing GDP index, accounting for more than a quarter of the global gambling revenues. Following the report prepared by the British consulting agency
Global Betting and Gaming Consultants (GBGC), the volume of the global gambling, summarizing the results of the 2016, will comprise $525 bill.
Consequently, by the end of 2016 the volume of the European gambling market will make up approximately $130 bill.
Currently, the global gambling statistics is considered to be insufficiently standardized. The data provided by the research organizations concerning the volumes and structures of the gambling market might differ greatly. It happens because of differences in the gambling market structures in different countries, as well as due to the fact that gambling markets are pretty shut in terms of transparency of the information about the amounts of bets, numbers of gamblers, etc.
In this very case, speaking about the volumes of the global gambling markets, we imply all the games of chance, that in their own turn can be divided into two categories: commercial games of chance and state-run lotteries. However, it is quite hard to divide all the types of entertainment according to their commercial properties because of legislative differences peculiar to different countries. The most obvious thing is that casinos and slots can be qualified as commercial gambling.
One of the most rapidly growing segments of the European gambling market is online gambling, that is increasing by 15% annually. This is the maximum index compared to the rest parts of the world. According to the data provided by the European Gambling Commission in 2015, the estimated cost of the European gambling market accounts for $15 bill.
One of the most active European countries in terms of the quantity of gamblers is Great Britain,. Its gambling market has proved to be the most developed one. One gambling house falls within every 125 thousand of citizens. Following the data of the Gambling Commission, in the time-lapse starting from 2009 up to 2015 the popularity of playing slots increased by 328%, while the popularity of board games boosted to 52%, and as for poker, the percentage accounts for 26%.
Online gambling resources store more than 18 million registered accounts belonging to the gamblers from Great Britain. However, the leading position in terms of the Europe’s total GDP from gambling belongs to Italy. It can be explained by the fact that this very index depends not only on the scale, availability, and structure of the gambling market, but also on the specific features of the national legislative regulations of each separate country.
The structure of the gross income of the European gambling business in %
France (13,5%), Spain(12,6%), Sweden (3,2%), Great Britain (20,2%), Italy (24,3%), Germany (15,1%), Netherlands (3,2%), Finland (2,8%), Russia (2,7%), Greece (2,3%), other countries (11,1%).
The data is provided by H2 Gambling Capital
Characteristics of the legislative regulation and taxation policies of the gambling businesses in the European Union
Europe has always been a vivid example of amazing governmental regulations of the gambling activities. Gambling is legalized in almost every country of the European Union, complemented by a clear system of supervision and control. Legislators constantly pass amendments to the already existing laws according to the rapidly changing tendencies on the market. For instance, the European countries were the first to regulate the latest trend of online gambling, benefiting from this business through corresponding taxation policies.
Let us take a closer look at the legislative regulation and taxation policies of the EU leaders with respect to their GI indexes from the gambling business.
It is said, that Great Britain legalized gambling in 1960. Since then, legislation has undergone many amendments and changes according to the rapidly changing market tendencies. Currently, regulation of the gambling business complies with a special law on gambling called “The Gambling Act” passed in 2005 and ratified in 2007. The last amendments to this law were passed in 2014. Basically, the normative acts covered the area of online gambling. The document itself is unique and is considered to be an illustrating example of the document of this very kind. It comprises 362 articles that make up 18 chapters of the law.
The Gambling Act regulates practically all the contemporary varieties of gambling currents (slots, lotteries, casinos, betting houses, etc.), prescribes the system of controlling bodies and institutions, as well as provides preventive means fighting ludomania and protecting children, etc.
For instance, British gambling houses are obliged to fund medical institutions providing treatment from ludomania. Moreover, in British casinos it is allowed to gamble using only cash, no credit cards are accepted. That is why even severely addicted gamblers cannot lose all their property.
The main regulating institution of the gambling industry in the UK is called The Gambling Commission. One of the main functions of this supervising institution is licensing of the gambling activities, as well as monitoring of these activities. Gambling Commission annually publishes reports regarding the state of the gambling market, conducts investigations in order to disclose the cases of illegal gambling, as well as has the right to fine those who breach the rules set by the officials and legislators.
The gambling industry in the UK makes up a big part of the British economy in general, bringing more than 2,3 bill. pounds in terms of GDP. More than 214 000 of people are involved into the gambling business and the annual revenues from gambling, according to experts’ calculations, make up more than a billion of pounds. The recent amendments to the legislation were passed in December 2014, mostly covering online gambling.
Currently, this segment is developing rapidly. For this very reason, in order to avoid big financial losses caused by the British gamblers playing in online casinos located outside the territory of Britain, the authorities set a new taxation policy based on the customers’ citizenship. From now on, online gambling operators that provide the British with online gaming, have to pay a 15% tax. This innovation fills the budget with additional 335 mil. pounds.
At the moment, the United Kingdom accounts for 140 casinos (25 of them are located in London, 95 – in the rest of the |English cities, 5 – in Wales, 15- in Scotland), 2 poker clubs and 690 bingo clubs.
As for the rate of tax on income, Great Britain, as well as the rest of the countries of the Western Europe, has a very advanced system. The amount of tax is equal to the amount of a minimum stake multiplied by 5: the minimum tax makes up 2,5% of the income that is not surpassing 534 thousand of pounds (around 674 thousand of Euros), the maximum rate accounts for 40% applied to the incomes over 4,984 mil. of pounds (approximately 6,290 mil. of Euro).
All the gambling business of Italy is state-owned. Private gambling houses, casinos, and slot machine rooms are prohibited by the law. Similarly to the British one, the Italian gambling regulation system is focused on the prevention of the money losses to the benefit of foreign countries. The legislators solved this problem quite inventively, taking into consideration some of the historical characteristics of the country (the Catholic Church has always been against gambling, considering it a deadly sin), as well as the passionate characters of the Italians.
Gambling houses in Italy are predominantly located closer to the border of the country, literally capturing Italians who previously intended to gamble in Monte Carlo (France), Slovenia, or Switzerland. Subsequently, there are around 5 casinos in Italy with this kind of geographical position.
Moreover, starting from 2011 the Italian legislation keeps imposing restricting measures on the gamblers themselves. For instance, people willing to gamble in the land-based casinos are obliged to have chips worth around €250 minimum and the highest stake accounts for €1000. Another legislative innovation was introduced in 2011, and mostly covered online casinos and their final legalization. The newly passed law enables online casino operators to get licenses and open legal online gambling houses on the territory of the country. The tax on income rate of the online casinos makes up around 20%. This rate is considered to be the minimal one, that contributes greatly to the rapid development of the virtual casinos in Italy, while annual treasury revenues make up around € 17-18 bill. The total revenue from the gambling business in Italy is around €60 bill., which is the highest number in Europe.
Germany is famous for its rigid legislation regarding gambling activities. For instance, it is very hard to open a big casino, because of the quantities of documents required by the authorities. But it is quite easy to open a small gambling club with slot machines. All the system of gambling licensing and taxation in Germany is determined by the local policies. A medium tax rate makes up around 80% out of the gross income of the gambling house. In case of getting extremely high revenues, German casinos are obliged to pay 90% of their income to the government.
In June 2012 the majority of federal districts of Germany (except Schleswig-Holstein, it has its own law) accepted a brand new law regulating gambling activities. Due to its introduction the gambling market, that previously looked like a national monopoly, turned into a commercial and licensed unit. Online casinos are legally permitted in Germany, but can be established only in accordance with certain rigorous rules. Schleswig-Holstein is the only exception to this rule, as long as gambling operators have more freedom there.
France is considered to be a leader in terms of the quantity of casinos established on its territory. Slot machines and gambling houses have been legalized and permitted relatively a short time ago. Anyway, as soon as the ban for gambling was finally lifted, it contributed greatly to the financial state of the country. Currently casinos turned into a perfect tool permitting to distribute financial means between gamblers. Every casino visitor always leaves the premises with a payoff.
The French legislation has undergone more changes than any other country, so far. Every time the country witnessed governmental changes, casinos experienced them as well, either falling under the ban or being legalized again. At the moment, the official permission for gambling is issued by French Department of Justice. The general performance of casinos depends greatly on the legislation and permissions issued by the local authorities. All the employees of the casino houses and gambling establishments have to register in a special record of the Ministry of Home Affairs.
The present quantity of actual casinos in France has already surpassed 400, but big casinos are quite rare to find. For instance, the most popular among them are Lyon Vert Casino located in Leon and Palais de la Mediterranee in Nice.
All the gambling activities in France are regulated by a special police department called Sous Direction des Courses et des Jeux. When it comes to the issues of casino licensing, it is the task of the High Commission on gambling, belonging to the Ministry of Home Affairs, to regulate those matters.
Gambling in France is governed by special taxation policies. The notion of progressive scale is applied to the gambling business taxation. Gambling houses are allowed to keep 25% out of their gross income, and progressive tax is imposed only on the remaining sums of money.
The local tax rates are established by the district authorities and account for not more than 15% out of the gross income of the gambling house, which is the amount of money that remained after 25% were withdrawn.
Apart from taxes, casinos pay fixed dues to the budget of the city council. It might be a special fee for every single newly opened roulette or slot machine.
The structure of the gambling market of Spain is made of land-based casinos, betting houses, lotteries, and bingo. Similarly, to the rest of European countries, Spanish gambling legislation has undergone considerable changes.
The last proposal to legalize gambling was passed in 1977 and was actively supported by the majority of the citizens. As a result, appeared a special Royal decree on the legal regulation of the gambling business.
The new constitution of the Kingdom of Spain was ratified in December, 1979. That marked a considerably new stage of the contemporary development of the gambling business in this country. In 2013 a new unique law was passed covering the needs of gamblers. According to it, gamblers’ losses are considered to be unsuccessful investments. That is why, when amounts of losses surpass the amounts of payoffs, citizens can benefit from their rights to reduce the tax. But this law works backwards as well: all the casino payoffs are considered to be revenues liable for taxation.
In 2014 Spain formed a new governmental institution responsible for regulation of the gambling industry called Spanish Gaming Commission . This regulatory body submits to the Spanish Department of Treasury that belongs to the Ministry of Finance.
Other European countries
In order to open a gambling house in Switzerland you might need a concession or a license, which is issued only after certain local rules are obeyed. The total budget is composed of the gross income of the gambling houses taxed by 80% . Usually this tax is spent on allowances such as pensions, disability benefits and payments connected with the loss of breadwinner.
In Switzerland, gambling is regulated since April 2010 by a special law on gambling and gambling houses, particularly by its article №106. This article establishes two main types of the games of chance: betting and lotteries. Consequently, gambling is allowed only in licensed gambling houses. Betting and lotteries are regulated by the Federal act on lotteries and commercial betting. Unfortunately, online casinos are prohibited in Switzerland.
Sweden sets very rigid legislative rules regarding gambling. There are only 4 casinos that operate on the territory of this European country. Due to the well-coordinated collaboration of the authorities with law enforcement bodies, gambling houses regularly fill treasury with money coming from taxes. All the casinos belong to a state-owned company.
Gambling is quite popular and legal in Austria. It brings more than € 500 mil. annually to the state budget. Such funds are usually spent on various social and cultural programs, as well as promotion of sports.
Greece is paying a lot of attention these days to its gambling houses, precisely, to the creation of favorable conditions for the development of the gambling business. The commercial crisis has forced the authorities of this country to turn to gambling in order to solve its financial problems. The gambling market in Greece is controlled by the official state regulator called the Commission on gambling. It is responsible for issuing licenses for the gambling houses and has regulating functions.
It seems that land-based casinos do not lose their popularity in Poland, while the national regulator prohibits online casinos. The only exception to the rule is betting for the sports events.
In Netherlands, the gambling ban has been lifted relatively recently. Currently, the country accounts for 14 officially registered casinos.
It is not a secret, that the main source of Monaco’s income is its numerous gambling houses. The lion’s share of the funds is brought by a famous luxurious casino “Monte Carlo”. Currently, Monte Carlo is considered to be one of the best resorts of the world and is the world’s gambling capital with its gorgeous hotels and gambling houses. Thousands of people are coming here annually to tempt their fortune.
Progressive tax rates imposed on the gambling business is a very popular practice on the Old Continent. The principle of progression is usually applied while determining the taxation policies for the incomes of the gambling houses. For instance, Austria set a tax that accounts for a minimum rate multiplied by 9: minimum 35% for the revenues under €35 thousand and the maximum 80% for the revenues surpassing €220 thousand.
Structure of the European gambling business
The development of the European gambling market is predominantly influenced by casinos, betting and lotteries. Basically, it is determined by the historical traditions. Anyway, European gambling already accounts for a couple of centuries. Surprisingly, civilization practically did not affect the games of chance invented literally in the times prehistorical. Till today, dice, cards, and roulette haven’t changed. Europeans have always liked gambling. Games of chance are considered to be a traditional form of pastime. For instance, during Renaissance the development of gambling houses was promoted by the distribution of playing cards. Seems like, nothing has changed from those times. Let us consider the structure of the British gambling market as a vivid example of that. As you can see, the leading positions are taken by betting, slots and casinos.
Data was kindly provided by the Gambling Commission (2015–2016).
The global market, in terms of categories of the games of chance, is segmented literally the same as the European market.
The global gambling market in terms of product categories (2012), %
Casino Lotteries Slots Betting Bingo
Resource: Gambling in the US - Statista Dossier.
The current global changes on the gambling market are influenced by the development of a new segment - online gambling. The recent EU normative acts give the following definition of online gambling: “Online gambling services include services of betting, lotteries and the rest of games of chance provided remotely via electronic devices and catered upon the individual request of the customer”. This segment is thought to be the most problematic in terms of state regulation, as long as Internet technologies allow to bypass the national legislation. That is why the legislative norms regarding online gambling are constantly changing and online casinos are constantly monitored by the regulators.
The main organizations regulating online gambling in Europe
The UK Gambling Commission.
Gambling regulator created according to the law on gambling called “The Gambling Act” passed in 2005 and ratified in 2007. Regulates the majority of gambling and betting varieties
The Independent Administration of the State Monopolies of Italy– The Amministrazione Autonoma dei Monopoli di Stato (AAMS).
Controls the Italian gambling market, issues licenses to online casino operators providing casinos, poker, sports betting, and bingo.
AAMS licenses enable operators to organize legal gambling houses on the domestic Italian market, but prohibits operating on the foreign markets.
Regulation institution supervising online gambling in France – Autorite de Regulation des Jeux En Ligne (ARJEL).
ARJEL was established in 2010 in France after online gambling was finally legalized. ARJEL issues licenses giving operators the opportunity to operate on the French market and enables gamblers to place their stakes on sports events, horseracing, and poker.
Spanish Gaming Commission (Commision Nacional del Juego)
One of the ¨youngest¨ regulating bodies. Provides licensing for the online casinos in Spain. One of the obligatory rules for the operators is to register their domains in the zone.es.
However, in a range of European countries online gambling is still prohibited. Such countries include Switzerland, Estonia, Greece, Lithuania, and Czech Republic.
The future of the gambling business in Europe
Due to well - thought legislation and historical traditions, European gambling will keep developing. Currently the world’s gambling capital is Monaco; however, the revenues of the most luxurious casino are not very high. But the authorities of the majority of counties realize how profitable might gambling turn out for their budgets, that’s why they are actively working on the elaboration of the legislative norms regarding gambling.
For instance, Spain was finally given the green light for creation of a so-called Euro-Vega. In the beginning of 2011, Las Vegas Sands Corporation proposed a project worth $21 bill. designed to create a gambling zone preserving Vegas style with hotel premises comprising 20000 rooms, a developed infrastructure for holding business and cultural events, as well as trade centers.
According to the announcement made by one of the EU representatives, the European Commission will file lawsuits against countries members of the EU, if their gambling legislation does not comply with the gambling legislation of the European Union. “Our Commission will contact all the countries not complying to the set rules, in order to remind them about the existing norms and make sure that all the problematic situations are fixed according to the current precedent law. If the said situations are not solved promptly, I will suggest my colleagues starting corresponding procedures”, commented the EU representative.
Many changes will take place in the area of taxation policies. The rapid development of the gaming industry in the EU has led to the situation that operators are expecting raises in the tax rates. The prices for licenses and the rest of permissions will considerably climb up. The European Union is planning to get around 60% of the gross income of the casinos, compared to previous 50%.
From the perspective of Slotegrator, one of the leading distributors of digital solutions for online casinos, Europe still does not have analogues to Las Vegas. One of the most striking advantages of Europe is that gambling here is welcomed and the authorities are relatively loyal to the representatives of the gambling industry. That´s why European gambling has all chances for a very promising future.
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