Cyprus' dangerous game
Cyprus is trying to ban egaming, but by doing so is risking the wrath of the EU, says lawyer Olga Georgiades of Lellos P Demetriades LLC.
Since 1997 legislation has been in place to prohibit land-based gambling and casinos, to regulate state lotteries and private bingo games, and to license sports and horse race betting in shops, but a loophole in the law exists for online gambling.
Due to this loophole, the Cyprus Attorney General officially recognised that companies licensed in an EU member state can freely provide online gaming in Cyprus via websites, betting shops or internet cafes, in so far as the Republic itself encourages consumers to participate in lotteries, games of chance and betting for the benefit of the public purse.
As a result, many EU-licensed gaming companies currently provide online gaming products to customers in Cyprus.
However, the government is trying to close this loophole to ensure the concession agreement with Greece’s OPAP SA monopoly is successful by forcing out the competition.
Since 2004, various draft bills have been introduced, seeking to ban online games, poker and betting exchanges, and to create a licensing authority for sports betting, but its efforts were blocked by the European Commission (EC) for violation of fundamental freedoms.
In September 2010, a new draft bill was submitted to the EC, but Malta and the UK filed objections, fearing the ban would hurt the European gambling market. Numerous complaints were also filed by private companies.
The EC sent its comments to the Cypriot government in December 2010, requesting numerous clarifications on online payments, limited licences and discrimination between online service providers. It is expected to make a final ruling on the bill in March this year.
In my opinion, this bill affects intra-European Community trade, denies fundamental freedoms, prevents competition and contravenes recent European Court of Justice (ECJ) decisions. Certain absolute prohibitions on online gaming are not objectively justified:
- OPAP, a profit-making company acquired exclusive rights under non-transparent conditions to offer online games of chance, creating risk of addiction and excluding competition; it is not subject to money laundering-prevention rules. OPAP’s games are also prohibited by the 2010 bill, but this is overlooked
- There is no risk of fraud by EU-licensed companies because they are subject to specific monitoring procedures in their home member states
- Cyprus constantly seeks to make more profit from lotteries, horse racing and other gaming
It should be noted that if Cyprus adopts a law against the EC’s detailed opinions, infringement procedures may be initiated and huge fines may be imposed; something surely unthinkable for the country and its government given the current economic conditions.