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Friday, June 29, 2018
by Andrew Tottenham  

Managing Director, Tottenham & Co

Results released recently by the Bavarian State Lottery Corporation, owner of Bayerische Spielbanken, which operates the nine casinos in Bavaria, show that only three - Feuchtwangen, Garmisch-Partenkirchen and Bad Wiessee - are profitable. That profit totals around €8.3 million. Bad Wiessee accounted for the bulk of the amount, with a profit of €6.2 million. Unfortunately, the profits from these three are not enough to wipe out the losses from the other six: Bad Füssing, Bad Kissingen, Bad Kötzting, Bad Reichenhall, Bad Steben, and Lindau. Those losses came in at a total of €11.3 million.

The Bavarian casinos have a long history of losing money. After years of losses, they managed to eke out a small profit of €150,000 in 2016, but then fell right back into losing money again in 2017. The 2016 profit was the product of an exceptional item: the repayment, as mandated by a court ruling, by the Bavarian state of €4.7 million in fees paid to the government in the previous eight years. Without this repayment, the accounts would have been covered in red again.

by Luke Haward
CDC Gaming Reports

Cybercrime is a huge, sprawling and multi-faceted mess, much like the Internet itself. Opportunities for malfeasance abound and policing crime is a living nightmare. Technology is evolving at a rate beyond which anyone effectively keep up with it. Only the anti-hackers - cybersecurity pros and advanced system administrator who have some real white-hat wizardry -stand much of a chance of keeping up with the hackers. Even then, gaps in IT security are only revealed once they've already been breached. It's a constant game of catch-up.

Some hackers come to justice. Some can actually be ethical - even activist - in their choice of targets and objectives. Then again, many are simply self-driven criminals who happen to have the know-how and are opportunistic. If it can be done, do it; if it's available, get it. The hackers' natural inclination is toward anything that has a pulse and is a money-making machine. The output is captured and dumped elsewhere. Hence, the natural marriage of online gaming and hacking is now happening more and more, this time with cryptocurrency and the banking systems as well.

Stepan Stehlicek is a lawyer at the Prague office of Becker & Poliakoff, a law firm that provides private legal assistance regarding gaming regulation, EU law and technology law among many other services.
A year and a half ago, new legislation on the regulation of gambling became effective in the Czech Republic. According to the Ministry of Finance, the body responsible for regulating gambling, the new regulations are a major breakthrough, a modern treatment of the gambling industry with all of its social and economic impacts. The impact of the new regulations and market development may not have had the desired effects, however, and currently there are voices and indications that these changes are in fact having a detrimental effect on the Czech gambling business.

In a recent interview with Pravo, Ivo Valenta, owner of SYNOT, one of the major operators in the Czech lottery and sports betting businesses, said that the new regulations are too strict and the new tax increases are too high, and speculated that they will force some operators to close. Based on the experience of Becker & Poliakoff to this point, this statement stands on solid ground.

The Euro News Revue
Andrew says: And the winner is... JOCS SA. Who? you may well ask. Local bingo operator JOCS SA has won the license for the casino in Andorra, the principality that nestles in the Pyrenees mountains between France and Spain. A few big names bid - Genting UK, Cirsa, and Casinos Austria, specifically - but the '100-percent Andorran owned' JOCS´ bid to build a €15 million casino and event centre in the main city took the contract.
Luke says: The recent Swiss decision to impose restrictions that prevent access to foreign-based gambling sites specifically springs from the significance of a binding referendum which firmly legitimized these new laws. With one hand, the Swiss gave (online gambling permitted), and with another they take away (only by national providers). The Swiss authorities have - for all their democratic excellence - a certain God-like sensibility to them. Who can blame them for wanting to keep all that action in-house? Then again what many protestors feared more than inhibitions on their gambling options, was the spread of this ethos. This mentality that it's fine to remove access to sites that lie beyond borders - the censorship of the Internet itself -  is a far more serious concern. Will this lead to other restrictions, in media, news or social apps?   
Luke says: This coverage details the findings of a study, commissioned by the UK Gambling Commission and undertaken by the Responsible Gambling Strategy Board (RGSB), recommending actions that might reduce the risk of problem gambling amongst young persons and keep children safe regarding gambling matters. Key features include highlighting the need for all gaming verticals to carry solid ID verifications and to avoiding marketing content which could appeal to children. There's still an abundance of that in the industry, both here and abroad; the gaming giant Coral got booked for it only the other week. The RGSB also found, in more cheerful news, that gambling by 11-15 year-olds seems to have dropped. Their recommendations - which include a review of a slew of permitted activities, including the National Lottery, and to better gather data on underage gambling - may seem heavy-handed, but the issue is a serious one, and promises to become more pronounced as technology and gaming become more ever-present in our lives. 
Luke says: Swedish gaming authorities are keeping a constantly updated reference point for changes coming in under Swedish law. Bill SFS 2018:1138 was voted in by Parliament in early June but won't come into effect until the start of 2019. There are several key aspects to the issue, including an all-new licensing system and new protections against problem gambling. The Swedish government will lose its virtual monopoly on gambling services, save for land-based casinos and token machines, but it will gain the ability to oversee and penalize illegal and unlicensed operators. At least, that's the idea. The bill also enshrines a new cooperation council to oversee the prevention of match fixing in sports. There's still going to be inevitable tension between a national regulator and rogue foreign operators, but I have a feeling Sweden will be more tenacious in attempting to pin those rogue operators down than some of its neighbors. 
Andrew says: I am shocked - shocked - to find that gambling is going on in here! (apologies to Captain Louis Renault.) This story details how Dr Quirkey's Good Time Emporium, on Dublin's O'Connell Street, offers slots and video poker machines in direct contravention to Ireland's gambling laws. Breathless tone aside, this is hardly news; to my knowledge, Dr Quirkey's has been openly operating gambling machines for over 20 years.  
Luke says:  Dutch legislation seemed to turn a major corner last week with this announcement from the Dutch authorities that they will be passing a bill modernising online gambling regulation. The act more closely aligns Dutch regulations with those already in place throughout Europe. There are also plans afoot to privatise the state-owned Holland Casino. The general thrust of the legislation is aimed at preventing underage and illegal gambling; one key provision included is this business of needing a physical branch office within the Netherlands to be considered for licensing. This is a really intriguing move which will certainly compel more physical relationships between operators who wish to legitimately function in the Netherlands and the nation itself, as well as making it far easier to identify rogue operators. Another excellent aspect is the requirement of every operator to appoint an "addiction prevention" representative. Ultimately, of course, it's a market liberal move that permits the legal action of licensed entities in an online space. 
Andrew says: All is not fair in love and war. Polish casino operators ZPR and Casinos Poland are at loggerheads over the revenue predictions they make when submitting a tender for a casino license: the one (Casinos Poland) says the other (ZPR) grossly overestimates the revenue it thinks it will generate. It does seem strange that the Ministry of Finance uses revenue estimates provided by the bidder as one of the criteria in deciding which project it awards the license to, but there is no downside to the bidder if they get it wrong.
Luke says: Though it reads a little wonkily, this report from European Gaming covers recent stark developments in Polish law, where apparently a new set of tax provisions have just been voted into law by Parliament. Said provisions, which will be retroactively applicable, state that participants of legal gambling activities will be exempt from paying any personal income tax on any legally organised games involving "slot machine...card games, dice games and cylindrical games (roulette, etc)." In other formats, such as mutual bets and lotteries, the tax remains the same: 10% over a low threshold. One aspect which is a little confusing is that the report states that "gamblers will be treated in a uniform manner after the changes," while listing two different tax circumstances for two different sets of games. Still, it's good to see them trying to clear things up on the tax end. 
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