Much faster than expected the Greek government has come out with the first draft of the proposed legislation. It is based on the model adopted by other European countries such as France, Denmark and Italy. The proposal covers online sports betting, poker and casino services. It requires that the providers of these services to residents of Greece acquire licenses, operate under a Greek domain name and set up servers and transactional processing in Greece. The proposed licenses will have a validity of five years. In order to keep unlicensed foreign operators out, precautionary measures envisaged include ISP blocking of their web sites and instructions to Greek financial institutions to prevent any illegal online gambling transactions with Greek citizens.

The political debate is likely to begin in the Greek parliament in September 2010. Now the strategic decision will be taken by the politicians. Two options are likely to be discussed. One option is the perpetuation of the OPAP monopoly over online gambling. The other option is the establishment of a competitive system with regulatory restrictions. A target date of May 2011 is set in the proposed legislation.

The core issue is advertising in the media. Korppi writes, “In practical terms [foreign] online poker and casino businesses are now banned from advertising or promoting their services in media published or aired in Finland by locally owned companies.” A large number of European online casino operators see Finland as a target market and advertise their products in the Finnish media. Under this new law these operators will not be allowed to advertise and therefore the media companies would lose substantial business. Summarizing the sense of the mainstream media in Finland, Korppi states that the online gambling law is unfair, against the spirit of free speech and devised solely to serve the needs of the newly introduced gambling monopoly.

Under pressure from the European Commission to allow regulated online gambling, Finland decided in the beginning of 2010 to follow the model of Svenska Spel and Danske Spil to have a strong state owned operator and a regime that inhibits private foreign operators from entering. Accordingly the Finnish government selected RAY as the operator and Playtech as the software provider. Then, according to Korppi, in June the parliament “rubber stamped” the proposed bill converting it to law without a proper debate and without allowing affected parties to voice their apprehensions, thus earning the wrath of both foreign operators and the local media.

However, the decision of Canadian provinces to pursue online gambling may not auger well for online casino players. Canadian provinces are effectively trying to ban private online gambling operators and apparently Casino Club is the first victim. The online casino has sent e-mails to its players stating, “We regret to inform you that due to the new regulations of the British Columbia Lottery Corporation, Loto-Québec and the Atlantic Lottery Corporation, online gaming products in Canada are prohibited. Unfortunately we are required to add Canada to our list of excluded countries.” Existing Canadian customers will have to stop wagering at Casino Club from September 24 and have been asked to withdraw their balances as soon as possible.

Reid being a hurdle to online gaming may seem like a paradox to many because he is a member of the Democratic Party and has been against the moralistic conservative right stand taken by Spencer Bachus. But Reid’s compulsions are far greater. They go the very source of his political funding. Reid is from Nevada and is backed by the powerful land casino lobby of Las Vegas and he will go which way they want him to. Till recently this lobby was united and unanimous that they did not want competition from online gambling and therefore Reid’s objective was clear and that was to stall the HR 2267 in the Senate.

But one of the most powerful of the land casino companies, Harrah’s, has broken away from the pack and has come out in support of online gambling. The American Gaming Association has been forced to adopt a neutral stance and this has put Reid in a quandary. If his backers are split he will be forced to antagonize some of them when he has to take a call on online gambling and this could hamper his re-election. Therefore he may be willing to keep things on hold till the American Gaming Association decides one way or another.

Throughout the mark up hearing, Barney Frank stressed that additional revenue generation was only an incidental benefit. He said that he had pioneered this bill because Americans had the right to freedom. The Government should not infringe on this right unless it causes harm to others. Several amendments to the bill as originally drafted were made. Sports betting was removed from the purview of the bill. So were tribal casinos and state lotteries. Restrictions were imposed on advertisements from online casino operators, with a view to protect problem gamblers.

The regulation of online gambling as set out in the HR 2267 includes the following activities. The regulatory authority will issue licenses after a process of vetting them and will also maintain a blacklist of illegal operators. The bill ensures use of technology to prevent minors from signing up at online casinos. The online casino operators will set limits on deposits and losses from its members in order to prevent compulsive gambling. Fraud prevention, prevention of money laundering and tax avoidance will be other areas that the regulatory authority will be involved in.

Ed Williams, member of the Board of Directors of the Credit Union National Association, represented the financial services sector that manages the financial life lines for online gambling. He described the challenges faced by financial services companies in complying with burdensome UIGEA rules. These rules put the onus on financial companies for preventing unlawful Internet gambling transactions. Williams testified that H.R. 2267 would promote “…regulatory simplicity while assisting financial institutions compliance with UIGEA.”

Annie Duke is one of the most respected poker professionals in the country. Though she spoke for the online poker players she voiced the views of all online players including online casino players. She said that American poker players would prefer to play on sites licensed in the United States rather than at offshore sites. She was sure the regulation proposed in the HR 2267 would provide even greater consumer protection. At the same time regulation and taxation of online gambling would provide much needed revenue.

Today there are many Congressmen who have not yet taken a stand on the legalization and regulation of online gambling in America. Michael Waxman, spokesperson for the Safe and Secure Internet Gambling Initiative, addressed them by saying. “Lawmakers who have not yet taken a position on this issue should realize that their constituents are likely among the millions of Americans who wager online despite attempts to prohibit the activity. Members would best serve their constituents by accurately representing their interests and supporting Chairman Frank’s bill.”

Though no official announcement was made it is expected that a vote on this bill in the House Committee would be held early in August 2010.

The hearing will be a half day affair and will begin after lunch. The House Committee has not released a witness list so the exact agenda is unknown. However, it has been made clear that there will be no vote at the end of the hearing. The unofficial news is that another hearing for the bill will be scheduled in August and the mark up will take place at that hearing. The bill was introduced in the House of Representatives in May 2009 and had its first hearing in December 2009. The slow progress of the bill has been attributed to the more important financial matters before the House Financial Services Committee.

The online gambling community is frustrated by the slow progress of the bill. iMEGA Chairman, Joe Brennan Junior, has given voice to this frustration. He said in response to the announcement of the hearing, “Hearings are nice; they keep the ball in the air. What’s needed are votes: committee votes, floor votes. The i-gaming lobby has been working too hard for too long. It deserves more than a hearing.”

The problem with the proposed law is that it is not conducive to European online gaming operators applying for Polish licenses and this would defeat the EC objective of having a common playing field in online gambling across Europe. The online gaming operators would be required to form a joint stock company in Poland and would have to maintain their servers in Poland. The financial transactions would have to be carried out through Polish banks. The financial guarantees and license fees for online operators have been fixed at higher levels than compared to land based operators. There are some unreasonable advertising restrictions as well.

Many of these requirements have been imposed with a stated view to prevent fraud and protect the online casino player. However, the online gambling operators are geared to meet the objectives of fraud prevention and customer protection without being located in Poland, because their licensing authority also mandates that the same precautions be taken. Therefore the Polish law would result in duplication of resources and this would add to the cost making the operations uneconomical.

Poland has up to wait up to mid August. Thereafter they can implement the law as proposed but would risk legal action from the EC. Or they can make the changes suggested and resubmit the draft law for approval.

Last week the Swedish court took up the matter. The court referred the issue to the European Union Court of Justice seeking whether the Swedish lottery law was compatible with European Union law on service provisions and games of chance. The EU Court opined that a member state could ban online gambling for cultural, moral or cultural reasons. Hence Sweden’s lottery laws were held consistent with the European Union policy. The EU Court however said that Sweden could not discriminate against foreign gaming operators by imposing harsher penalties on them. The punishment meted out to foreign and domestic operators had to be the same.

This is the second instance of the European Union Court of Justice deciding that member countries can prevent private operators from entering online gambling. Last month it had issued a similar pronouncement when the Dutch court had asked for its opinion. At that time the reasons cited for upholding the local laws were prevention of fraud and addiction to gambling.

This is to help with the objections of those like Sol Boxenbaum who are strongly anti-gambling. Boxenbaum says that the committee’s results will not be useful. He claims that rt that the advisory committee expects to release will be useless. Boxenbaum maintains, “Three years from now, you’re looking at suicides, you’re looking at bankruptcies, you’re looking at all kinds of things that can go wrong.”

Finance Minister Raymond Bachand took a more optimistic view, saying “We have authorized Loto-Québec to develop online games but we are going to ensure that everything is done to maintain… the fight against gambling addiction.”

For those who enjoy online gambling, the news is good despite the debates that continue to rage. Quebec’s residents will be able to gamble at a casino that is maintained by Loto-Quebec and overseen by the province. Making deposits will be easy for Quebec’s residents, as the business will be local and legal. Best of all, regulation will mean that the law, not the whim of the casino owner, will have the final say in any dispute between the casino and the player.