From offering a helping hand to imposing unreasonable restrictions, gambling regulators around the world are responding to the crisis in a variety of ways. Some governments have passed emergency laws banning gambling activities, while others have shown their understanding of the gambling sector’s role in the economy and are offering what assistance they can. We’ll take a look at responses from several governments around the world and end on the one we think is taking the best approach.
Table of contents
China: as high-handed as ever
China, as always, provides a roadmap for how not to handle the gambling industry. Macau’s famous casinos were closed for two weeks, resulting in devastating revenue losses, and the entire population was confined to life online, but nevertheless the government steadfastly refused to consider legalizing online gambling - even for a limited time period during the quarantine. In fact, the government announced a step in the opposite direction.
The crisis hit Macau’s casinos particularly hard, cutting February revenues by nearly 90% and forcing the government to reduce its expected gross gaming revenue for 2020 by 50%. It’s a safe guess that Macau’s casinos could have absorbed the impact of the crisis better if they had been able to offer even limited gambling services through an online branch.
During Macau’s two-week casino shutdown, analysts couldn’t help but point out that the crisis demonstrated why online gambling should be legalized in the country. During the period right before the casino closure, the rate of Chinese players visiting online casinos rose by 90% compared to the previous year. And where do Chinese gamblers turn their attention? Unsurprisingly, to offshore sites, usually located in the Philippines.
If the crisis doesn’t illustrate why the government should legalize online gambling, it’s hard to imagine what would, but Chinese authorities seem perfectly content to keep their restrictive regime in place. Moreover, the Ministry of Public Security even announced a plan to escalate its anti-gambling campaign.
In addition to blocking gambling sites and blacklisting their employees, the government will now also be going on the offensive, interfering with investment in offshore operations and seizing their financial assets where possible. The Ministry also announced it would seek to punish payment processors who conduct transactions involving offshore operators. Considering the other urgent issues at hand, the fact that Chinese officials would find time to focus on online gambling shows how dead-set they are against the practice.
The Philippines: under China’s thumb?
The Philippine Amusement and Gaming Corporation (PAGCOR) temporarily suspended all forms of gambling - including online gambling - on March 21. The move came as a turnaround from earlier statements from the Philippine government that online gambling would continue regardless of the crisis.
The regulator requested that the suspension be lifted for Philippine Offshore Gaming Operations (POGOs) and select VIP gambling services. Letting online operations resume certainly makes economic sense; in March, PAGCOR supplied $118 million in funds to the Socio-Civic Projects Fund of the office of the President to help with emergency measures. The Philippine government has announced a $528 million fund to provide economic relief to sectors of the economy, such as hospitality, entertainment, and leisure, that have been affected by the crisis outbreak.
While the closure of land-based casinos to combat the crisis makes obvious sense, it’s more difficult to understand the blanket prohibition on online gambling. PAGCOR’s contributions to economic relief seem like a valid reason to lift the suspension, though its request to resume operations have been met with a resounding (and unexplained) “no” from the government. The association has announced that the restrictive measures currently in place are costing it nearly $118 million a month. Coincidentally, that’s the same amount that PAGCOR supplied to the Socio-Civic Projects Fund. Could the calculation be a message?
The Philippine government’s decision to prohibit online gambling is oddly reminiscent of the hard-line stance taken by the Chinese government, which has made no secret of its desire that nearby countries join its anti-gambling crusade. Vietnam and Cambodia have been conscripted into carrying out the Chinese government’s will in the past, prompting the question of whether something similar is happening in the Philippines.
Latvia: lacking foresight
From an economic (and common-sense) standpoint, the regulatory response in Latvia is simply baffling. On March 22, The Latvian Parliament passed an emergency law that outlawed all physical gambling but allowed interactive (online) gambling to continue. However, the same law announced the suspension of all gambling licenses, for both land-based and online operators. (Meanwhile, the government has given a green light to online alcohol delivery services, perhaps indicating that the Latvian Parliament prefers to pick and choose its citizens’ guilty pleasures.)
After asking for clarification on the seemingly contradictory law, operators discovered that as of April 6 they were banned from offering their services. At the moment, the ban only extends through April 14, but there’s a strong possibility it could be extended for up to three months.
Jānis Trēgers, head of the Latvian Association of Internet Gambling (LIAB), responded to the government’s suspension of online gambling licenses by saying it lacked any “economic logic” and that operators harmed by the decision could possibly bring lawsuits against the government to try and win some compensation for the revenues they’re being stripped of.
Closing brick-and-mortar casinos has become a standard response to the crisis. However, banning Latvian licensees from offering online services simply creates an opening for foreign operators. Needless to say, this draws an obvious parallel with the stance of the government in China - and with all the potential tax revenues that are funnelled out of the country by players turning to offshore sites.
But there’s a greater paradox to the government’s move. The motivation is ostensibly to protect problem gamblers from spending money they can’t afford to lose in the midst of an economic crisis. However, the foreign operators that players will now undoubtedly be turning to won’t have (or want) access to the recently-established Latvian self-exclusion register, putting players in greater danger than they would be if they could just play on Latvian sites.
The government has taken steps in the past to prohibit offshore operators from operating in the Latvian market. Local financial institutions are prohibited from conducting transactions involving unlicensed operators and internet service providers are required to block the domains of unlicensed sites, as if Latvia existed in an alternate reality where VPNs, mirror sites, and proxy servers did not exist.
Germany: dragging its feet
Germany has taken its time to get around to regulating the online market. In early March the heads of Germany’s 16 states finally voted to legalize poker and online casino games, albeit with some strict limits - a €1-per-spin limit on slots and a €1,000 limit on deposits. Regulators are also now accepting applications for sports betting licenses, a move they believe will bring nearly 100% of sports betting into the legal and regulated market.
However, the new regulatory scheme is only set to go into effect on 1 July, 2021, leaving German gamblers with nowhere to go but sites that face the German market without a license - undoubtedly taking plenty of potential tax revenues with them. Those tax revenues would be staying in the country if German authorities had shown a little foresight and regulated the online sector by now. Any additional financial resources would undeniably be of use during an economic crisis that has grown so severe that has led to desperate times for many. Moreover, given that Germany is renowned for being a law-abiding nation accustomed to order and structure, it is surprising to the point of suspicion that they have turned a blind eye towards the grey and black operators that have been roaming their market for so long.
Netherlands: a very expensive slap on the wrist
The government of the Netherlands is keeping a tight leash on the gambling sector as it moves towards regulation, and during the crisis is sending a clear message about...well, about messaging.
While a number of regulators around the globe are issuing warnings against intrusive advertising strategies that reference the crisis, the Dutch are ratcheting up the fines. Kanspelautoriteit (KSA), the Dutch gambling regulator, has announced an increase in the fine that will be levied if advertising restrictions are broken by using crisis-related marketing. The minimum fine for using the novel crisis in an advertisement will be €250,000, (€50,000 higher than the usual fine for advertising infractions) and could rise depending on the content of the advertisement.
The KSA has a point - exploiting the crisis is not only wrong, it adds to the stigma the industry already suffers from. On the other hand, avoiding all mention of the crisis is kind of ignoring the elephant in the room at this point - and all the warnings from regulators beg the question of how many other industries are banned from mentioning the current situation in their advertisements.
The fine increase is purely a response to the crisis and doesn’t stand to influence the industry in the long run. By comparison, the UK government could very well be using the crisis as an opportunity to lay the groundwork for future restrictions, as they offer the industry an olive branch along with some very firm suggestions.
The UK: the carrot and the stick
Members of the UK’s Betting and Gaming Council (BGC), which include 90% of betting and gambling businesses in the UK, will be receiving aid from the UK government in order to keep paying their employees, and will also be included in a business tax holiday. At first, the casino and sports betting industry had been excluded from the government’s bailout measures for the leisure industry. The reversal will help gambling firms to survive the crisis, and is being warmly welcomed by the BGC. Coincidentally, at the same time, a group of MPs has requested the BGC implement a £50 daily limit on betting in order to curb a potential rise in problem gambling.
The request for a daily bet limit seems like one of a few ways the UK government is reminding the industry who holds all the power cards. The CEO of the UK Gambling Commission (UKGC), Neil McArthur, released a public letter asking online gambling operators to maintain high standards of consumer protection during the crisis, especially regarding age verification and affordability checks. Operators are also asked to intervene at the first sign of problem gambling behavior.
Furthermore, On April 2, it was announced that as part of the UKGC’s ongoing review of the Gambling Act 2005, players under the age of 25 will not be eligible for online platforms’ VIP programs. No new restrictions have been announced on under-25s’ rights to drink alcohol, smoke, vote, drive, and join the military.
The inclusion of BGC members in the economic relief measures along with the MPs’ request for a daily betting limit indicates that the UK parliament could be seizing an opportunity to tighten its grip on the gambling industry. With a parliamentary group reviewing the UK’s current regulation, there could very well be some strings attached to the bailout measures that haven’t been made public. It’s important to note, however, that the UK government understands the scope of the gambling industry, especially the number of people it offers employment to.
A cynic might note that the gambling industry’s inclusion in the economic bailout coincides rather suspiciously with the request for a daily bet limit and exclusion of under-25s from VIP programs. Were the restrictive measures conditions that had to be met in order to be included in the bailout package?
The UK government is offering the gambling industry relief money in one hand and restrictions in the other. In comparison, Malta is focused on patching the wounds in their economy before the hemorrhaging bleeds them totally dry.
Malta: pragmatic in the face of a crisis
On March 24, Maltese Prime Minister Robert Abela announced an economic rescue package designed to aid the sectors of the Maltese economy that have been hit the hardest by the crisis outbreak. The government will give businesses a subsidy of €800 per month for each full-time employee and €500 for each part-time employee working in the hospitality, leisure, retail and travel sectors.
The prime minister elaborated that the goal of the stimulus package is to provide just enough assistance to help businesses survive the crisis and recover on their own after it’s over. As Malta is the heart of Europe’s iGaming industry, it’s not surprising that the government recognizes the importance of giving the industry a shot in the arm. Aside from a reminder to avoid crisis-related advertising from the Malta Gaming Authority, the Maltese government has left the industry alone.
Perhaps surprisingly, given its comparatively restrictive history, one of the countries that’s doing the most - or, depending on your perspective, the least - to help the gambling industry ride out the crisis is the United States.
The US: a growing appetite for betting
Despite the current scarcity of real sports events to bet on, a number of states across the US are continuing to legalize sports betting. The state of Washington, for example, recently legalized sports betting in Native American tribal areas, and regulators in the state of Colorado are continuing to issue licenses to sportsbook operators, aiming for sports betting to start in May (we’re hoping sportsbooks in Colorado offer esports and virtual sports, so punters have something to bet on). The General Assembly of Virginia recently passed a bill that will not only legalize sports betting but allow for the construction of 5 casinos throughout the state.
So far, horseracing fixtures in a number of states are being allowed to continue, provided that spectators are banned from attending and instead encouraged to bet from home via apps and other online platforms. The arrangement is enabling the industry to stay on its feet, whereas in many other countries horseracing fixtures have been canceled.
Las Vegas casinos have taken a serious beating from the emergency closures enforced by the state government, but stand to benefit from a $2 trillion bailout package aimed at stimulating the economy. In the meantime, the Nevada Gaming Control Board announced that it would allow its licensees to offer esports betting, meaning that punters disappointed by the lack of traditional sports to bet on can try their hand at wagering on CounterStrike: Global Offensive.
Malta, the UK, and the US are demonstrating a deep understanding of the role the gambling industry plays in their countries’ economies. Essentially, gambling is being treated just like any other business being affected by the crisis - subject to health and safety requirements and eligible for economic assistance. By offering gambling businesses bailout money, and by allowing them to continue whatever operations they can, the authorities are doing themselves a favor by keeping a source of tax revenues open - and any extra source of income for government coffers takes on an added importance as the need for emergency funds increases.
In comparison, the positions taken by the governments of Latvia, China, and the Philippines seem short-sighted and counterproductive. Instead of treating the gambling industry as a valuable part of the economy, they have singled it out for punishment. Of course, China’s refusal to regulate is hardly surprising, but the measures enacted in Latvia and the Philippines come as something of a shock.
Of course, the moment a jurisdiction signs a law that bans gambling, a black market springs up before the ink on the paper is dry. Time and again it’s been proven that making gambling illegal provides fertile soil for the seeds of black and gray markets to sprout up and flourish - and once they’ve put down roots, they’re impossible to weed out.
Regulators in Latvia claim their intention is to stop players from wasting money, but the fact of the matter is that gamblers love to gamble - and where there’s a will, there’s a way. Hell will freeze over before punters stop looking for places to bet. But most importantly, whether governments approve of gambling or not, it’s impossible to deny that the industry is tied to a host of other businesses like travel and hospitality, and their fates are connected. In times of trouble, it makes more sense to stay together than it does to seek a scapegoat - we’re all a piece of the same puzzle.