Culture That Works

The online gambling bills passed by the state legislature in the recent years seem to be jinxed. The New Jersey bill was first shot down by the governor and now it has been revealed that the Washington D.C. bill has hidden terms and conditions. When the bill was first passed there was a large amount of hope and celebration that this would be the beginning of a trend toward the legalization of online gambling.

Secrecy And Scheming

However, in a recent article published by the Washington Post, it has been confirmed that there was a large amount of secrecy and scheming to have this bill passed. The D.C. Lottery was originally slated to offer the activity in a limited manner. This was slipped into a supplemental budget enacted in December 2010. The Chief Financial Officer and Attorney General both questioned the legality of this move.

No Committee Review

Independent Councilor Michael A. Brown did not consult then-mayor Adrian M. Fenty. Also, there was no public hearing or committee review regarding the budget. Therefore, there was not any explanation for bypassing the normal process involved in the enactment of legislation. Furthermore, Brown did not reveal his employment with law firm Edwards Angell Palmer and Dodge as a public policy adviser to the government.

Conflict Of Interest

The main clients of the law firm include organizations and manufacturers of various online gambling activities. One such company is GTech which owns GTechG2, an online gambling software development first. Since all of these businesses would benefit from the legalization of online gambling, this is a major conflict of interest. The law firm was also recently the largest sponsor of a discussion about online gambling in San Francisco.

The Law Firm’s Response

When questioned about Brown’s actions, the law firm stated they were unaware of his intent to sponsor the legalization of online gambling. Since this incident, Brown has left the law firm to lobby with the Madison Group, a consulting firm. Brown has also claimed there is no conflict of interest because the companies represented by the law firm were not interested in conducting business in the Washington D.C. area.

Unfortunately, the ramifications of these schemes have not yet been disclosed. However, it is likely they will have a negative impact and certainly delay the legalization of online gambling in Washington D.C. and across the United States.

In a recent announcement by German officials, the prime ministers of the 16 federal states have declared to defer any decision on creating a State Gambling Treaty until October 2011. This statement was communicated by the prime minister of the Saxony-Anhalt region as a representative for all prime ministers. However, he did express his intent by declaring the country is well on its way.

The Proposal

In April 2011, 15 for the German states forwarded a single proposal to be considered by the European Commission. The proposal delivered the opening of online sports betting within the country on a limited basis. This would be based on a 16.66 percent tax. At this point, the group received flak from the gambling industry due to the high tax rate. The European Commission is expected to publicize its ruling in July.

Deferment By The Prime Ministers

The deferment will give the German states extra time to study the various implication of the potential verdict of the European Commission. One private operator that has considerable interest in the German market is Betfair. The company has commissioned research by German law professor Bernd Grzeszick of the University of Heidelberg. The Professor gave his opinion about the current proposal stating that they would be turned down.

A Violation Within The Proposal

He came to this conclusion because the draft violates Articles 49 and 56 of the European Union Treaty. Also, H2 Gambling Capital, a leading online gaming data company, indicated that if Germany continues with the proposal, it would only capture 7 percent of the market due to citizens preferring to access offshore sites.

A Statement From Betfair Representatives

Betfair representatives released a statement confirming that they are hopeful the prime ministers utilize their time to agree upon an airtight treaty allowing reputable private companies a fair chance at the market which will help protect citizens against black market operations. At the same time, the proposal was applauded by the gambling industry as it was viewed as being less restrictive toward private casino operators.

The drafted proposal aimed at issuing licenses to private operators for all online casino products. The proposal also originally called for a 20 percent gross tax profit. This draft was received by the European Commission in May 2011. The Betfair representative hopes to see this proposal adopted by all states in Germany. The decision made by the European Commission could be a major advancement or a hindrance to the online gambling industry.

Denmark decided to proceed with its online gambling proposal which is currently being reviewed by the European Commission. Unfortunately, there is a delay in the review process which has given the Danish authorities time to review the proposal. Also, the Danish Gambling Authority (DGA) has modified a section in one of the most important clauses supporting online gambling operators.

DGA Supervision In Other Jurisdictions

The initial proposal required licensees to have their gaming servers located in Denmark. Many online gambling operators had a major issue with this requirement because they would have had to duplicate the equipment. Therefore, the DGA has decided to allow part of the operator’s servers to be located outside of Denmark’s jurisdiction. The thought process is that the DGA should be able to adequately supervise the servers in another country.

However, the list of acceptable countries to house the server has not yet been published. The DGA is conducting many discussions with other national regulators. One consideration for this amendment in the proposed clause was the realization that some casinos will have trouble operating in Denmark if the equipment was located within the country. Therefore, this could present a loss of appeal to their jurisdiction from the online gaming community.

Taxation Proposal

The European Commission has proposed an online gambling tax rate of 20 percent on all gross wins. However, the Royal Casino in Aarhus and the Danish slot machine association are fighting this proposal stating that the government is attempting to subsidize online gambling. Unfortunately, this is against the European Commission’s principles.

Target Implementation Dates

The DGA is hoping that the European Commission will publicly announce its decision before the summer break in August. That way upon return, the steps to install a regulated online gambling system can be initiated. The original regulation date was January 2011. However, due to the objection by land-based gambling operators, this date was unrealistic.

In December 2010, the Danish taxation minister announced that the government was attempting to have the law set by the summer of 2011 which is also now unrealistic. As a result, the DGA is unwilling to set a target date but is hoping to have all affairs in order by the beginning of 2012.

This is a major step for the gaming industry in Denmark. Once the approval is released, experts can begin building the jurisdictional system and online gambling can commence. At this point, a slew of new casinos will be available to online gamers.