Western Europe: big bet, big payoff
A land of strict regulations and high taxes, Western Europe still manages to lure iGaming operators with the promise of untold riches: this region alone accounts for almost half of the world's online gambling market size. In this article we'll take you for a journey along the Old Continent's western edge, presenting an overview of each country's market and regulations.
Over the last few decades, Western Europe has become the epicentre of iGaming.
Pushed by the need to boost revenues and control the effects of new technologies, most governments in the region have legalised and regulated online gambling by instituting local licensing systems.
This process has allowed private operators to enter some of the world’s wealthiest markets, replacing the pre-existing model of public monopoly on gambling, the remains of which are still visible in the form of national lotteries.
From promised lands like the United Kingdom and Italy to small gambling jurisdictions punching way above their weight like Malta, here’s a rundown of the region’s markets.
The British gambling industry is nothing short of massive, with almost 100,000 people employed in the sector and a gross gambling yield (GGY) surpassing the £14 billion a year mark. The total GGY for the online gambling sector now represents nearly 40% of the overall market. It reached the £5.7 billion mark for the 2019–2020 tax year, for an impressive 8.1% increase over the previous year.
Gambling can be considered to be part and parcel of British culture, with nearly half of the adult population punting on a monthly basis. Sports betting is extremely popular, while horse racing betting, albeit on the decline, plays a significant role in the local gambling scene.
The British gambling industry is regulated by the 2005 Gambling Act, which allows the operation of both land-based and online establishments upon obtaining a license issued by the local regulatory body, the Gambling Commission. The annual license fees for online casinos are calculated based on the operator’s GGY, ranging from a few thousand pounds to well over half a million pounds for yields above the £1 billion mark. License holders have to pay 21% of their GGY generated from UK customers in taxes.
Due to the technological advances since the introduction of the Gambling Act, the British government has launched a review of existing regulations in late 2020, with the aim to update them and guarantee the safety of vulnerable groups. Due to this, operators will likely have to implement tighter player verification and affordability checks going forward.
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Much like in the neighbouring United Kingdom, sports betting and horse racing have a long history and attract a large number of gamblers within the Irish market.
Land-based gambling in the country, however, is a muddy affair: while some sectors of the industry are clearly regulated, as is the case for lotteries and sports betting, many others are subject to unclear, conflicting legislation. For example, while commercial physical casinos are banned, so-called “private members clubs” have been established in the country thanks to a loophole in the law. These clubs are essentially small-scale casinos that require their clients to register as members (for free).
As the amendments to existing laws failed to provide a coherent regulatory framework, it is not surprising that the Irish government intends to conduct a sweeping reform of gambling regulations in 2021. The existing texts on the subject are the outdated Gaming and Lotteries Act of 1956 and the Betting Act of 1931.
As for online gambling, many operators choose to obtain a license in a jurisdiction with a clearer regulatory framework, and then apply for a permit to offer their services to the Emerald Isle’s residents. All of this could very well change with the introduction of new regulations, thanks to Ireland’s attractive corporate tax rates.
While land-based gambling in the Netherlands is strictly regulated, online gambling is currently subject to a blanket ban, with very few exceptions limited to specific sectors of the industry. This, however, is set to change completely on October 1, 2021, when the online market will open following the coming into force of the 2019 Online Gambling Act.
Operators will need to apply for a license and be based within the EU, the EEA, or in a third country whose legislation isn’t in conflict with the principles upon which the Online Gambling Act rests.
Application fees to enter the market are estimated to be in the €40,000 to €50,000 region. The tax rate will amount to 29% of the operator’s GGR, to which operators will have to add 1.75% of their gross gaming revenue (GGR) as a contribution towards the treatment and prevention of problem gambling, and to fund the local gambling authority, the Kansspelautoriteit.
The Dutch gambling sector’s turnover is currently north of €2 billion per year, but it is expected to grow in the near future thanks to the opening of the online market.
Gambling in Belgium is regulated by the 1999 Gaming Act; this was amended in 2011 to accommodate for the rise of online gambling.
The Belgian Gaming Commission runs a closed licensing system. There is a capped number of licenses available for casinos and betting operators; a license to operate online can generally only be obtained if the operator already holds a land-based permit in the country.
These limitations make it extremely difficult for new operators to enter the market, and even more so for foreign companies. While the Gaming Commission can grant licenses to online-only operators acting in partnership with a land-based establishment, all nine permits to run online casinos are currently taken.
There is, however, a handful of licenses available for online betting operators.
This might very well be an option worth considering for investments: the GGR of online betting is close to €138 million (equal to about four-fifths of the online casino market), growing year on year by 11.76% (2018 data), and operations in this segment are subject to an attractive tax rate of 11% of their GGR.
With a small but affluent population and the third-highest GGR per capita in the EU, Luxemburg could be an attractive country for iGaming operators. However, establishing an online gambling business in the Grand Duchy isn't feasible due to existing regulations.
While the 1977 Gaming Law tightly regulates land-based gambling, online gambling is mostly unregulated. The number of available licenses for brick-and-mortar casinos is formally uncapped, but Casino 2000 Montdorf holds a de facto monopoly. Similarly, per the 2009 Gaming Law, the Loterie Nationale (the local national lottery, organised by a non-profit public institution supervised by the government) is the only entity that can legally offer online gambling services.
Luxembourgish institutions consider these two monopolies a way to channel the desire to gamble into controlled environments, and they maintain strict player protection and advertising regulations to complement this regime.
Still, even if it’s not possible to obtain an iGaming license in the country, local authorities are known to tolerate EU-based operators offering services to residents of Grand Duchy.
France has one of the most comprehensive gambling regulations in Europe. The responsible authority, Autorité nationale des jeux (ANJ), became operational in June 2020, replacing its predecessor ARJEL.
Casino and card gaming are only allowed in licensed land-based establishments, except for poker, which can be offered by online operators.
There are two monopolies, Française des Jeux (FDJ) and Pari Mutuel Urbain (PMU). FDJ holds exclusive rights on land-based sports betting and all lotteries; PMU controls the land-based horse racing betting market.
Online sports and horse racing betting are open to licensed operators, but only on events selected respectively by the ANJ and the Ministry of Agriculture.
Taxation for online sports betting is on the heavy side: when combining the due levies, operators have to contribute a staggering 54.9% of their GGR. Online horse racing betting receives a different tax treatment, with a combined contribution amounting to 13.8% of the wagers.
The size of the market, however, makes up for the tax rate. With nearly half of the residents engaging in gambling in a country of 67 million people and a growing GGR already over €11.1 billion in size for online gaming alone, France is one of the biggest markets online operators can choose to enter.
When the House of Grimaldi was flirting with bankruptcy in the mid-1800s, Princess Caroline had the idea of opening a casino to replenish the treasury. The rest is history: Monaco became one of the world’s poshest seaside resorts, and the casino the largest source of income for the royal family.
Curiously, local nationals, which account for only a fifth of the principality’s population, are banned from playing at the casino. Online gambling is entirely unregulated, and no licensing process exists, leaving the market open for foreign operators.
Thanks to its ski resorts, the small principality in the Pyrenees is a mecca for tourists; it’s not surprising, then, that the regulation of land-based gambling has been on the agenda for years.
The Andorran government made it possible to apply for licenses to open brick-and-mortar casinos back in 2018 but has yet to award a single one of these.
Meanwhile, online gambling is not regulated or part of the public debate, which means locals are free to access foreign operators’ services.
One of the biggest in Europe with its €7.6 billion combined GGR, Spain's decentralised gambling market is the peculiar result of the country's history in the past century. Gambling was decriminalised by royal decree as late as 1977, during the process of transition towards democracy. According to the 1978 constitution, gambling regulation isn't an area under the state's exclusive authority, hence each of the 17 regional governments can impose its own regulatory and licensing regime.
It follows that running an online gambling operation at a federal level requires a license issued by the central regulatory body, the Dirección General de Ordenación del Juego (DGOJ); on the other hand, all land-based operations, and online ones limited to specific autonomous communities, require licenses issued by the competent local authorities.
At the national level, gambling is regulated by Law 13/2011. Operators are required to obtain separate licenses for each general category of gaming they are interested in offering and for each specific type of game within those categories. Licensing fees start from about €45,000 for registration and auditing, plus €10,000 for each gaming category on offer.
Taxation for the sector was amended in July 2018 to lower the overall burden on operators and create a unified regime. The tax rate currently stands at 20% of the GGR, except for operators based in Ceuta and Melilla, where a 10% rate applies.
Portugal has fully regulated land-based and online gambling markets. The industry still hasn’t fully recovered from the effects of the Great Recession; it has also been held back by exceptionally high tax rates for local operators since the introduction of a licensing system in 2016.
The above is reflected in a problematically high market share for unlicensed operators, which can offer players better odds.
Gaming is regulated by the Serviço de Regulação e Inspeção de Jogos (SRIJ). The legislative framework comprises a series of decrees that update Decree-Law No. 422/89, with the most important being Decree-Law No. 66/2015, which regulates the licensing system.
The state-run Santa Casa da Misericórdia de Lisboa (SCML) has a monopoly on lotteries and parimutuel sports betting.
Operators can obtain licenses to offer casino gaming, fixed-odds sports betting, mutual and fixed-odds horse racing, and bingo.
Fees start at €12,000 for the issuing of a license (except for bingo, which costs €2,000), plus €18,000 for the homologation of the technical systems. Further fees are due for the homologation of each type of game on offer.
The tax rate for online casinos is fixed at 25% of GGR, while for betting it amounts to 8% of the turnover.
The Italian regulatory framework for online gambling is a patchwork of laws developed over the past two decades, widely considered to be one of the most thorough in the world.
Enforced by the Agenzia delle Dogane e dei Monopoli (ADM), it features stringent regulations for both operations and advertisement to provide a high degree of protection for players.
Local licenses are non-renewable, have a predefined period of validity, and can only be acquired through a tender process, open whenever deemed necessary by the government. With a starting price set at €2.5 million in the current tender, licenses are extremely costly; by acquiring one, however, operators gain access to the largest gambling market in the European Union.
Lotteries are subject to a private monopoly, but licensed operators can offer pretty much any other form of gaming and betting.
Taxation varies between 20% and 25% of the operator’s GGR, depending on the specific type of game offered.
While the Italian online gambling market has historically trailed the land-based one, the Covid-19 pandemic caused a significant acceleration in the shift towards remote gaming, with a 45.1% increase in online GGR during 2020. This makes Italy an even more attractive market for online operators.
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The tiny Republic of San Marino is home to a partially state-owned casino named after the mountain it sits atop – Mount Titano. Land-based gambling is regulated by the Ente di Stato dei Giochi, which also has a monopoly on the exercise of all related activities; no online license has ever been issued.
In line with the Catholic Church’s stance on gambling, the Holy See formally placed a ban on the opening of gaming establishments, both land-based, online, and on ships flying the Vatican flag*, with 2013’s Law XVIII.
* we’re as baffled as you are.
Possibly the most renowned gambling jurisdiction in the world today, Malta was the first European Union member state to adopt a set of online gambling regulations – the Remote Gaming Regulations of 2004.
Thanks to this head start and an attractive tax system, the Mediterranean state cemented its position as the go-to jurisdiction for operators seeking a reputable license issued within the EU.
The existing laws were revised and consolidated in the 2018 Gaming Act, which is complemented by a series of regulations and directives issued by the Maltese government and the Malta Gaming Authority (MGA), the local regulatory body.
Applications for licensing are accepted on an ongoing basis. The cost of a license starts from a fixed annual price of €25,000; to this, operators have to add a monthly variable contribution calculated on the gaming revenue generated, capped at €600,000 per year.
The taxation regime, as already mentioned, is particularly advantageous. Designed to minimise the effects of double taxation on operators, the amount due is equal to 5% of the revenue derived from players located in Malta.
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Start your iGaming business with Slotegrator
With plenty of markets to choose from, each with a complex set of regulations, starting an online casino or sportsbook can be daunting. Thanks to our experience in iGaming, we at Slotegrator can assist you in choosing the right market for your business and guide you in the process of acquiring a local license.
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