An overview of the regulatory framework on Gambling Services in the European Union

written by Efi Thoma *

The European Union (EU) does not have a harmonized, single regulatory framework for betting companies. Instead, the regulation of gambling services, including betting, remains largely within the competence of individual Member States. 

This results in a diverse and often fragmented legal framework across the EU. While the EU facilitates some level of cooperation and sets overarching principles, the specifics of licensing, operational requirements, and consumer protection measures vary significantly from country to country.

Despite the lack of a unified framework, several key principles and EU-level instruments influence the national regulations of betting companies. More specifically, the Treaty on the Functioning of the European Union (TFEU) guarantees the freedom of establishment and the freedom to provide services within the EU. These fundamental freedoms mean that Member States cannot unjustifiably restrict betting companies legally established in another Member State from offering their services. However, the Court of Justice of the European Union (CJEU) has consistently recognized the right of Member States to restrict gambling services based on public interest objectives, such as the protection of minors, combating gambling addiction, and preventing crime and fraud. These restrictions must be proportionate and non-discriminatory.

In addition, the Consumer Rights Directive and the Unfair Commercial Practices Directive indirectly impact the way betting companies operate by setting standards for fair and transparent commercial practices and ensuring a high level of consumer protection in the EU. The EU's Anti-Money Laundering Directives require betting companies to implement robust procedures to prevent their services from being used for money laundering and terrorist financing. This includes customer due diligence, transaction monitoring, and reporting suspicious activities. Betting companies that process personal data of EU customers must also comply with the GDPR, ensuring the privacy and security of this information.

The Court of Justice of the European Union highlighted the importance of EU notification procedure in gambling regulation. As a result of a recent ruling regarding the EU notification requirements for draft gambling legislation, the European Gaming and Betting Association (EGBA) emphasized the crucial importance of the EU notification procedure. The CJEU ruled that drafts of national laws that expand existing gambling laws or add new requirements must be notified to the European Commission. This is necessary to ensure compliance with EU legislation. Failure to do so can render national provisions unenforceable against gambling operators. The purpose is to ensure that players can be protected across all European member states, which requires collaboration between the CJEU and EGBA.

In light of the foregoing evolving EU regulatory framework betting companies will be required to invest significantly in compliance, adopt proactive approaches to responsible gambling, and maintain a thorough understanding of the pertinent legal and regulatory framework across the EU. Failure to adapt could lead to significant legal, financial, and reputational risks.

* Efi Thoma is a Dual-Qualified Lawyer (LL.B.,LL.M.,IMES) member of Cyprus & Greece Bar Associations (contact details: ethoma@legalexpertscy.com)

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