iGaming Daily

Charlie Horner (00:02.136)
This year, debate has rumbled on around harmonisation of certain taxes and regulation around online gambling in the European Union. With the AI Act and the Digital Services Act, two pieces of EU legislation that iGaming operators need to keep in mind, further laws around AML are on the way, while murmurs of a 1% tax on EU operators from 2028 onwards refuse to go away. Is the European Union able to convince 27 member nations to sign up for a further tax grab on the sector?

And what would the impact of EU harmonisation be? Welcome back to iGaming Daily, supported by Optimove, the creator of positionless marketing and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner, and today to discuss all of this with me is iGaming Expert Editor Joe Streter. Joe, how's things?

Joe (00:37.316)
Thanks.

Joe (00:54.092)
Yeah, really good. Thanks, Charlie. Really good. Yeah, doing well and a really interesting time to be discussing kind of wider European politics, I think, with the election that just took place in Germany. Quite a disrupted continent at the moment, a lot of uncertainty. So, yeah, an interesting time to be discussing the EU and European politics.

Charlie Horner (01:19.116)
Yeah, certainly, certainly. an a noteworthy election result over the weekend for sure. but let's let's jump into this because EU harmonisation is something that's sort of been bubbling under the surface throughout the summer. I've noticed we've reported on it here and there throughout the summer in terms of tax proposals, AML proposals. and I would encourage listeners to go back to episode eight hundred and thirteen where w we we discussed what the EU is doing on on

il the illegal gambling front. so check that out. but let's let's talk about some of these proposals, Joe. reports suggest that the EU budget for twenty twenty eight could look at a block wide gambling tax. But what exactly are those harmonisation proposals sort of floating around Brussels at the moment?

Joe (02:09.398)
Yeah, Charlie, mean, what was your opening gambit in the intro was a bit more bitey than that, you've asked me in a much nicer way this time, but it was, will 27 member states be allow for further tax? What was the opening gambit?

Charlie Horner (02:28.513)
W yeah, w will the EU be able to convince twenty-seven member nations to sign up for a further tax grab? what what do you think?

Joe (02:37.836)
Yeah, no is the answer to that question. Absolutely not. Yeah, so, but obviously, you know, it's never quite that simple, is it? But yeah, when you asked that, thought, when you put that question out there in the opening monologue, I thought, wow, yeah, that's, when you word it like that, the proposal of Victor Negrescu is, yeah, an ambitious one, but.

Charlie Horner (02:40.311)
Mm-hmm.

Joe (03:02.872)
You know, there is progress to be made here. there's really two kind of different ideas being touted around Brussels. The tax one, the EU tax is one that is, it doesn't really seem to have too much legs. But then there's the, also the EU levy, you know, a levy that is being pushed about that is seeming to have a little bit more momentum.

It would be around 1%. They reported it would raise around 2 to 4 billion euros a year or 14 to 28 billion over the 2028 to 2034 period. So it's significant this, right? It is significant. It's not going to be easy to get anything like this over the line. And there's always going to be very vocal opponents in the EU. But

that there is a little bit of momentum around this. And I think with it comes a further discussion about wider harmonization across the EU when it comes to things like money laundering and player protection and things like that.

Charlie Horner (04:17.057)
Yeah. y you mentioned the the character Negrescu, who I believe is at the at the forefront of some of these proposals. Do you wanna just tell us a little bit about Negrescu, what his proposals are and maybe why he has come up with these proposals in in particular?

Joe (04:37.44)
Yeah, okay, so let's have a look into it. So he's a member of the Romanian Social Democratic Party. He's now the vice president of the European Parliament. And yeah, he's been a firm backer of an EU iGaming tax, a kind of levy across the EU.

Yeah, don't know. What do you know about him Charlie? You know, he's an interesting character, right? And he's bringing this. He's the one very much who's kind of pushed this into the ecosystem. I know it's had some, even some kind of negativity from the Romanian gambling sector. which is obviously his home nation, but yeah, an interesting one, an interesting cause for him to be pushing forward. Yeah, do you know anything about him?

Charlie Horner (05:30.688)
I I I'm not completely familiar with with with him or his or his politics, but I w you know what I do know is what what you've said there, Joe, is that he's, you know, he's got he's a high ranking member of of the EU Parliament. He's he's certainly got influence in Brussels. So the fact that a character like this is is mooted around such proposals is is is I guess significant for the sector to take note of.

But it isn't just tax, and w we'll come back to the idea of tax, because it's an interesting time for for the EU with that budget coming up in twenty twenty eight and some of the challenges that th the bloc has. But you mentioned earlier that there are other harmonisation proposals. W what are those other proposals and what you know, what do operators have to keep in mind?

Joe (05:57.945)
Yeah.

Joe (06:22.296)
Yeah, well, if I keep it to, you know, to what he said really quickly, if I could read you the quotes from Negrescu of why he put this forward. He said he's called for an EU levy. This is back earlier in the year. So since then, these plans have changed and they've evolved to some other harmonization things as well, like you say. But he said, I called for an EU levy to finance education skills, prevention and mental health to be applied for online.

Charlie Horner (06:30.007)
Show

Joe (06:51.33)
online betting and gaming. And he said he's seen support growing for this. He said the fast growing digital industry, speaking about iGaming there, generates billions and benefits from the single market. That's significant, right? He's saying that the European gambling kind of benefits from the EU single market, yet escapes EU taxation. So yeah, he's putting forward a strong case. There's obviously a lot of hurdles to go through, but he is putting through a strong case. And I think...

Yeah, if he can, he's the one that's got this ball rolling. So it'd be interesting to see where it goes. But in terms of some of the other harmonization efforts, I think it's important to kind of understand that before we get there, before we go anywhere with this, definition, a legal definition of gambling has to be agreed across the EU and across European nations, across all those states, because...

As of right now, there is no single EU gambling license. There's no gambling regulator in the EU. There's no single EU gambling regulator. There's not even an advertising standard, no responsible gaming framework. Everything is fragmented. And I think that's gonna stay the way it is for a while, but we might get kind of we might get kind of a flaw. We might get kind of a base. Something might come in that kind of, yeah, it sets the...

You know, we have this base, so it's not going to dictate how each EU state regulates their industry in any way, but we have a base level there. And sorry.

Joe (08:34.72)
Yeah, and as for the kind of taxation, sorry, going back and forth here, but they are kind of all intertwined. As for the taxation, I think the fear for operators and the fear for some member states is that right now, because there is none of this, you know, it doesn't exist. Once you open the door, even if it is at 1%, you kind of let that beast in and then there's room to kind of grow it. There were already talks of...

a kind of incremental model based on the size of the operator. So, yeah, or the size of the nation. So, yeah.

Charlie Horner (09:12.001)
Well, it seems like you know, even before we get to anything else, coming up with a definition of gambling as we've seen in the United States is a a a much more difficult task than you might think. I wonder if the EU would have similar problems. but you're absolutely right, Joe. I think i there is a a a risk of there is a risk of y opening the door to some regulation and then it and then it cascades in terms of you know, if if

one piece of regulation gets through, maybe it is AML, maybe it is through the AI Act. Maybe once one piece of re legislation comes in, more comes down the line. But maybe there are some benefits of this as well, and we'll we'll get to that in the in the second half of of the of the show.

Charlie Horner (11:29.047)
But Joe, we'll take a very short break and we'll come back and we'll discuss maybe the pros and cons of EU harmonisation of online gambling regulation.

Charlie Horner (13:15.679)
Welcome back to iGaming Daily. We're talking all about EU harmonisation of tax and regulation. Now Joe, just before we we move on and and go into a bit of a debate about whether we should be bringing in such measures, we should probably just clarify what hurdles or what hoops or just the voting process for passing new taxes in the EU. do you do you just wanna bring listeners up to speed?

Joe (13:43.282)
Yeah, well, I'm going to spare them the bureaucracy of the full process because there's quite a lot there, but there are a few important caveats. One is that for a taxation change, would require all, every kind of member state has a veto. Now, maybe there's a loophole there for a levy. Maybe that's why a levy has a bit more momentum than a tax change or...

you know, whether I the lines might be so blurred that they both come fall under the same umbrella. So they both have the same veto kind of guidance. I'm not sure but you know, when you look at some of the nations that are within the EU, you can see why it would be hard to push forward a gambling tax when one single nation has a or one single member state has a complete veto, right? Yeah.

I don't need to name names, but you know who some of those more problematic players at the table may be in terms of getting through a, if you're a pro EU gambling tax voice, you know who you're going to be looking to, to raise their hand and veto that bill, whatever happens.

Charlie Horner (14:58.519)
Hmm. Yeah, certainly. So we'll we'll keep an eye on that. But let's just let's just convince ourselves that this levy, this tax, is is gonna is going to come in. Let let's let's imagine ourselves in a in a scenario where that happens. And can we think of I think 'cause I think this is the more interesting question, right? We I think we we look at harmonisation across the EU, whether it's tax or whether it's regulation on on on

AML or or AI or anything like that, and we think that's a that's a bad thing, and we we were slightly cautious or hesitant. But can we think of a pro harmonisation side of the debate? You know, I guess if you're an operator, you're a reasonable sized operator and you're you're in, you know, 15, 20 different markets across Europe, you have you have to have 15 or 20 different systems, 15 or 20 different.

Team teams of compliance staff. you have to have all of those different, you know, guardrails in place to make sure that you're compliant across all of those different markets. Are there any benefits of an EU wide system?

Joe (16:09.956)
Yeah, you're right.

Charlie Horner (16:10.901)
And I we're we're kind of blurring the lines here between tax and and and regulation here, but I guess I I I guess we c we can open that debate up to to either or.

Joe (16:21.472)
Yeah, for sure. I think the two could kind of, know, they're all coming in the same wave, I think, potentially. But yeah, you've kind of, you've heavily hinted at the answer there, Charlie, that I'm going to give you, I think, technical compliance architecture, technical compliance architecture. Not easy to say, even harder to do, I'm sure. But yeah, you know, if you can...

bring it in across rather than have kind of different systems for each market. If you could bring it in across the same market across European member states, that would obviously help efficiency. But that's a long way from happening because I think, you know, if the EU does kind of bring something in, it's going to be baseline. You know, you're not going to have 27 member states that are kind of

that their bar is the EU standard, that there's going to be more than that in each member state. Does that make sense? There's going to be further hurdles to cross in each. So in terms of being able to kind of copy paste based on the EU standard, I think you're a long way from that. And also there are still going to be market nuances, right? Just because the EU framework is the same, there's still going to be significant market nuances between the Netherlands and...

you know, Spain or, you know, whatever EU states. But yeah, so, you know, there will be for sure. you know, there will be, there will be times when it can boost efficiency. But yeah, for now, I think we are a long way off that happening. I think where it could be of benefit is around player protection. I think we we could see some good player protection baselines come in and just maybe around

kind of support with AML, just kind of collaboration in terms of AML. Yeah, I think it could help that.

Charlie Horner (18:24.193)
Yeah, you mentioned AML there. You know, the the AML regulation is coming into effect next July across the EU, which sets standards on due diligence and and you know, c catching risky behaviours on on platforms, not not just in iGaming, but across different sectors. So but that certainly will apply to to online gambling, as we know that's one of the key risks in in our sector. So certainly one for for operators to to look at across the EU and

Maybe that's one piece of standardization that just simplifies compliance for operators. But we'll we'll we'll see. so maybe that's standardization and I guess it it reduces complexity a little bit, Joe. But ultimately more regulation probably isn't a good thing or a beneficial thing for for many operators across Europe. So I guess let's talk about the big risk, because there is a huge risk if and and we

This is this is a well trodden line, Joe, so forgive me for for bringing it up again. But I guess if you increase regulation, make it more stringent, there's usually one winner. And that it and it certainly isn't the licensed operators, is it?

Joe (19:35.503)
Yeah, I know that that is a real threat, Charlie, right? The unlicensed sector, you know, we'll see an opportunity as long as you add friction to the regulated sector. But yeah, and also, you know, when you talk about the Money Laundering Act, the Digital Services Act kind of mirrors that as well in the sense of it being, you know, brought in. But yeah, very different, but kind of...

the same type of principle. And that's significant in terms of tackling the illegal gambling sector as well. yeah, but obviously more friction, more regulation, more red tape, even though at a baseline, so what it seems at a baseline is, yeah, it will only serve to impact the unlicensed sector.

creates opportunity for the unlicensed sector.

Charlie Horner (20:36.343)
Yeah, yeah, certainly does. And the the European the European Casino Association earlier this summer called upon the the the authorities across the block to do more to tackle illegal gambling and and that's something that we did talk about on that episode eight hundred and thirteen that I mentioned earlier. but that that takes significant resource, doesn't it? You know, that's having having a a whether it's like in the UK, an illegal gambling task force or a similar sort of body or law enforcement

agency to to go in and and tackle some of these illegal platforms. That's that could be all of the cash from a levy and more, right? I mean this is this is stuff that's really tough and expensive to do.

Joe (21:21.08)
Yeah, it is. know, a lot of them also exist outside of the EU. They don't exist within the EU. They are based outside of the EU in places that you just couldn't get to them. So, yeah, it really doesn't. There's no indication either that the, you know, the levy from that would be implemented on the gambling industry would be spent back on the gambling industry and on a...

thriving sector in the sense of tackling the black market. By all accounts, it seems like, you know, be spent elsewhere, which, you know, is not necessarily, you know, it's EU tax money, right? And they're saying it's for the because for the use of the single market. So, yeah, it's a tricky one. But yeah, it's, it's a really tough nut to crack. It's far harder nut to crack than

probably implementing this tax, they do certainly need to be vigilant as they bring in more policy.

Charlie Horner (22:18.197)
Okay, well we know that the Digital Services Act is is live. We know that the AML regulation is going live next year, the AI Act is also live as well. So there is s you know, some form of harmonisation on the cards. But we we said earlier in the show, Joe, that we don't really expect there to be a gambling levy that that actually makes it through, you know, th through the EU Parliament because it there's just too much complexity with it. So I won't ask that question again, but I guess as a closing question.

I is there any more harmonisation that that you think will be particularly beneficial? You mentioned earlier that maybe on responsible gambling or player protection. Is that something that you you could see coming in in the in the years to come?

Joe (23:02.68)
Yeah, absolutely. You've kind of mentioned this wave of other kind of harmonization acts. And I think we could see something come in along this lines for sure, along those lines for sure. As for the tact, I think you're right. I think the voices at the table that are kind of against it are just too vehemently against it.

Yeah, gambling is a sector unlike any other really. I do think they would struggle to get this over the line. But, you know, let me close Charlie on saying that, assuming that was the final question, let me close on by saying that, you know, I look at the election in Germany, I look at the politics of the rest of Europe and who am I to predict what could happen across kind of...

across the European continent. It's very unpredictable. And yeah, there is a real opportunity, I will say that for the EU to kind of dip into the coffers of the gambling industry here, of the European gambling industry. saw, mentioned those funds at the beginning, and that's kind of with a baseline tax, not a big tax, just 1%, I guess fairly significant, right? But...

there's an opportunity here and I think when that opportunity knocks I wouldn't be surprised if they find a way to get it over the line. don't know how but yeah wouldn't be surprised.

Charlie Horner (24:31.467)
Yeah, but I guess politics is so unpredictable that we we don't know what what's gonna happen. But we'll continue to monitor everything on SBC News, iGamingExpert, iGaming Daily. but Joe, for now, thank you very much for joining me. we have mentioned responsible gambling and player protection and potential harmonisation across across there on on the show today. so just just as we come to a close, we do have a responsible

gaming session or masterclass at SBC Summit twenty twenty-six in Lisbon. So if you want to learn how to integrate responsible gaming into your marketing strategy with a master class led by Ian Cautions on Thursday, first of October, you can get yourself a conference pass by visiting SBCEvents.com forward slash SBC Summit forward slash masterclasses. But yeah, once again thanks Joel for joining me today. Thanks to Optimu for supporting the show and to our listeners.

Thanks for tuning in to today's episode of iGaming Daily and come back tomorrow to keep up to date with all the latest global gambling news.