Analysis: Do Switzerland’s new regulations really make a difference to international operators?

In a referendum carried out on Sunday, Swiss voters gave their consent to a raft of new online gambling restrictions that will effectively cut international operators access to the Swiss market from 2019.

Under the Money Gaming Act , only local operators with a land-based presence in Switzerland can operate licenced online gambling websites until the licencing window re-opens in six years’ time.

Swiss internet service providers are also obligated by law to block access by local players to international gambling operators’ websites, with the Swiss government paying any associated expenditure. Also included in the bill were measures to prevent problem gambling.

Switzerland, not being part of the EU, is not subject to the same laws concerning the free flow of information, good and services as its nearest neighbours and as a result can enforce whichever restrictions it deems necessary to preserve its economy. But do these laws go too far and curtail the potential for Swiss market expansion?

Andreas Glarner, Partner at MME Legal believes that the Swiss have acted out of character in restricting their access to gaming stating that: “I do not believe that introducing ISP blocking measures preventing people to freely access foreign internet based services to protect commercial interest of a local industry are worthy for a direct democracy like Switzerland.

“There might have been other solutions to open up the online gaming market without compromising on player protection and without losing tax income.”

Speaking about the potential for international operators to continue on as usual, despite the act, Glarner adds: “As these operators will have higher marketing budgets (due to compared to Swiss operators very low tax costs) and are thus able to offer more attractive conditions, they will remain very attractive to Swiss customers. Using this rationale, I assume that a substantial number of Swiss players will continue to use foreign sites.”

So, is the Money Gaming Act a paper tiger, all growl and no bite?

Bernie Höneisen, head of public policy of the Internet Society Switzerland chapter seems to think so, saying: “When as a result everybody uses Google’s DNS servers instead of those from their Swiss provider to avoid the blocking, the security measures taken by Swiss providers come to nothing.”

Even the Swiss people doubt the tone and effectiveness of the Money Gaming Act, if the sheer number of people signing a petition to force the referendum is to be taken at face value.

Andri Silberschmidt, president of the Young Liberals of Switzerland, said: “The real story of this debate is that the politicians in favour of the law had to admit that internet bans will probably not bring the results they wish and if it won’t, they will eventually have to change the law in a few years’ time.”

And that may prove to be the tip of the iceberg, if Höneisen is to be believed, adding: “If you block unlicensed online gambling providers, hoteliers could ask why not block AirBNB and taxi operators might think, Uber could be blocked as well.”

Whatever happens, the Swiss Money Gaming Act isn’t going away, having been fully ratified by the Swiss parliament, but six years is a long time in the online gambling industry and the legal makeup of the Act in six years’ time may be very different to that today.