50 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2023 Lotteries and their associations have been wrestling with the growing problem of illegal gambling for many years now. WLA and EL task forces continue to do an excellent job in collecting data, clarifying the challenges, and discussing strategies to defend the interests of lotteries. But we need more! Illegal activities are flourishing more than ever throughout Europe, and now are expanding into the African continent and elsewhere. Illegal operators openly advertise their activities in jurisdictions throughout Africa and Europe, regardless of whether they have proper license to operate, and even entice retailers with higher commissions to promote their illegal games over the legal games. They openly violate the laws and are pleasantly surprised that governments do not take action to enforce the laws and stop them from operating. On the contrary, we see politicians, investment companies and media companies act as if there is nothing wrong with affiliating with enterprises that operate illegally. There seems to be no recognition on the part of policy-makers and regulators of the social costs and lost revenues that result from illegal gambling. In many countries, the illegals control more than half the market. Not only does this lead to loss of governmental income, but it also increases the level of health problems and criminality. Organized crime uses illegal gambling as a source of income and money-laundering. They manipulate sport competitions, betting and casino games, enter the lottery market through derivative products, and completely disrupt the games-of-chance market. Many operators manage to procure legal license to operate in some jurisdictions while continuing to act illegally in others where they can’t get a license to operate. These operators comply with laws where it is expedient, and illegally where it’s not. Granting a license to operate legally to companies that operate illegally in other jurisdictions is perpetuating this problem. By minimizing the consequences for breaking the laws and disregarding regulations, we are implicitly sanctioning and institutionalizing this double standard that perpetuates illegal iLottery and online gambling. Companies which operate illegally in even one jurisdiction should be denied license to operate legally in any jurisdiction. If all governments worked together to embrace this straightforward standard, illegal gambling would be significantly reduced. Illegal operators use a similar strategy everywhere. They enter markets where governmental authorities have other bigger priorities than to enforce laws against illegal gambling. They build market-share with little regard for making a profit. Once they have a strong customer base of players, they petition the government for license to operate legally and turn the underground economy into taxable revenues. Governments should not accede to this blackmail as that simply reinforces the incentive to operate illegally. It was more than twenty years ago that the European Court of Justice stated that a monopoly is a very good solution to address the gambling market, and is acceptable under EU law. The Court also stated that a regulatory framework can include a Article 11 of the Macolin Convention: Article 11 – The fight against illegal sports betting With a view to combating the manipulation of sports competitions, each Party shall explore the most appropriate means to fight operators of illegal sports betting and shall consider adopting measures, in accordance with the applicable law of the relevant jurisdiction, such as: a) closure or direct and indirect restriction of access to illegal remote sports betting operators, and closure of illegal land-based sports betting operators in the Party’s jurisdiction; b) blocking of financial flows between illegal sports betting operators and consumers; c) prohibition of advertising for illegal sports betting operators; d) raising of consumers’ awareness of the risks associated with illegal sports betting FIGHTING ILLEGAL LOTTERIES, GAMBLING & BETTING: URGENT TIME FOR GOVERNMENTAL ACTIONS By Philippe Vlaemminck Managing partner of Vlaemminck.Law, Brussels Continued on page 49
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