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Wednesday, August 22, 2018
by Andrew Tottenham  

Managing Director, Tottenham & Co

Money laundering, or should I say anti-money laundering (AML), is concentrating the minds of people in the gambling industry all around the globe. The EU implemented the 4th Anti-Money Laundering Directive in June 2017. The UK Gambling Commission has handed out record fines for failures in AML procedures to both online and land-based gambling businesses. In British Columbian, a June report about money laundering in casinos rocked the industry and the provincial regulator. Even the Republic of Northern Cyprus, home to a $1 billion a year casino industry, has taken steps to combat money laundering through its casinos, confiscating $100 million and investigating a further $5 billion of transactions. Gambling businesses throughout Europe have become the de facto front line in efforts to combat money laundering.

One of the problems the industry faces is that the old compliance "tick box" approach is no longer enough. The Compliance department in many companies used to be an audit function: transactions were sampled and tested and provided they met the requirements, the box was ticked, and everyone was happy. But our governments have now decided that casinos should not only implement policies and procedures to stop money laundering, but also should be the investigators.  

by Luke Haward
CDC Gaming Reports

There have been rumblings across the Eurozone ever since the European Commission (EC) sheathed its claws on matters gambling, announcing in the summer of 2017 that it was suspending all infringement proceedings and treatment of complaints related to gambling. This was a matter of strategic choice of priorities, said the EC. As one might expect, because that EC decision effectively leaves control of gambling law in the hands of national governments, we've since seen a wave of changes proposed for and made to national gambling laws.

Most of those changes have taken place without EC intercedence, but there are cases where the European Court of Justice has intervened. For example, the EU Court found that Hungary's iGaming law was incompatible with the wider laws of the Union. But one area where it's hard to see the EU intervening is with advertising legislation - the topic of this article - unless it somehow involved discrimination.

The Euro News Revue
Andrew says: Novomatic must love the mountains! After having been part of the winning bid for a casino in Andorra, a principality in the Pyrenees, they have won the tender for a casino license in Monachil, a municipality best known as a ski resort in the south of Spain. The population of the municipality, in the Sierra Nevada mountain range, is less than 8,000 people, but it is only 8km from the regional capital, Granada, whose population is around 250,000. That's still not a huge number, so Novomatic must be hoping to greatly increase its visitors by attracting the skiers who flock to the area every year.
Andrew says: I'm not sure if this is the final nail in the coffin for Casino di Campione but the Court of Como has declared the casino bankrupt and ordered its closure. Almost 500 employees of the casino and 50 from the municipal Government will lose their jobs. Since the casino was the largest employer and the biggest tax payer in the municipality, the closure is a blow to the whole Canton - so much so that four local councillors have resigned, hoping to bring down the municipal government. I'm not sure what this will achieve, but desperate times can require desperate measures.
Andrew says: What does a new CEO do before presenting their first set of financial accounts? Write off as much as possible, and blame the previous CEO. Everything should look like an improvement from then on. John O'Reilly, the new CEO of Rank plc, a UK public company with online betting and gaming, land-based casinos, and bingo halls, announced that the company had been through a "challenging year," with annual profits down over 40%. Group EBITDA before exceptional items was only down 6.8%. Enhanced due diligence procedures for anti-money laundering (AML) were said to have had a material adverse impact on customer visitation to the casinos, down 9.4%. However, average spend per visit was up 4%, so maybe some of the higher-spending customers were not put off after all.  A quick review of the accounts does show the key metrics trending down for the land-based businesses and up for the online.  
Luke says: A new report out by the Spillemyndigheden Danish Gambling Authority suggests that the popularity of online casino-type games has skyrocketed in the past four years, having reportedly more than doubled in that time period within Denmark. Perhaps it's the cold weather, perhaps some other uniquely Danish attribute, but for a smaller nation they have a surprisingly high proclivity towards gambling, ranking third after the much larger gambling economies of the UK and Italy. Most of this play takes place at home, but an increasing amount is via kiosks, which are growing in numbers across the country. There are concerns in particular for the young, with half of all those seeking support for problem gambling being under age thirty. There are even rumblings concerning the need for further regulation, echoing moves and noises we have seen and heard in Italy, the UK and Ireland in recent weeks. There is a general concern that children and young adults particularly vulnerable, and not well enough protected under current regulations and industry practices.
Luke says: This timely article turns the spotlight on the fact that Ireland reportedly has the biggest gambling losses of any European nation, which is hardly surprising given the incredibly low gambling tax of 1%, coupled with outdated gambling laws, with plans for reform mired in delays and "stuck at the committee stage", something has a real Kafkaesque edge to it as bureaucratic phrases go. The Irish Board of Health's 2010 finding that 40,000 people in Ireland have a gambling problem is cited, and it is further suggested that this number may have since doubled, thanks to the proliferation of online gambling. This is not unlikely, but the solution, as the article suggests, is to speed the pace of gambling law reforms still floundering in the Dáil. There is much more awareness now of the problem, but precious little in the way of actual regulative change.
Luke says: There's been movement in the Dáil, with Independent Alliance Minister John Halligan spearheading a reported move within the Department of Finance to consider adjusting the tax for gambling operators in Ireland. Halligan is suggesting raising the tax from its sweet and low 1% to a still sugary 2%, which would equate to a roughly €50 mil bonanza for government in terms of tax accrued. The fascinating twist is that Halligan is recommending the full amount be set aside for gambling recovery and treatment, in some sense a state-managed version of the suggested 1% mandatory levy which GambleAware have been requesting for their ongoing UK operations to help support and serve those affected by problem gambling. Some would argue this all goes back to the EC's decision last year to step back from all EU law infringement proceedings concerning gambling. We have since seen many more nations choose to make major adjustments to their gambling laws, including of course major moves such as Italy's recently announced advertising ban.
Luke says: It was pretty much expected by anyone in the know on these matters, that once smallest bidder, and the only local one bidding for the Andorra casino, was announced as the winner, that some form of appeal would be made by at least a number of the other bidders. Amongst these objecting are giants of the international scene, including Malaysia's Genting and the two biggest entities in the French gambling industry, Partouche and Barriere. On the face of it Genting was disqualified for not giving clear evidence of having secured the land referenced in their bid, but the operator is not swallowing that rationale, at least not without a fight. According to this news coverage, Genting are appealing to have the tender restarted, and an engineer accused of undeclared ties to Novamatic is threatening to counter-sue for the spread of "false rumours". Sounds just about time to stick some popcorn on the stove.
Luke says: An oddly symbolic move from the notoriously bureaucratically-minded nation of Belgium, imposing a 24-hour license suspension on the behemoth Ladbrokes, due to their provision of virtual betting services which had not been explicitly permitted under national law. The firm was taking such bets in the country until mid-March of this year. Betting on "fantasy competitions" was banned in Belgium last summer, but the firm continued to take bets in the face of this change. Interesting, Ladbrokes reportedly responded that it had been unaware of the infringement until very recently, and that the national press were informed before the matter was even discussed with the firm themselves. It is an almost unique sanction in the history of gambling regulation, and one which surely is intended to raise public awareness of the mis-step, while demonstrating the power of the presiding authority to control licenses across the land.
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