AS the House of Representatives continues to prepare the legal framework for combating illegal online gambling by banning online gambling altogether, more establishment voices are being raised in favour of allowing casinos to operate legally on the island.
So far, the debate seems to have polarised on ideological lines, with President Demetris Christofias and government party AKEL insisting on an outright ban as a way of combating a growing social problem.
The alternative view – which some argue is being pushed by particular business interests – holds that forms of gambling that are made illegal simply carry on in the “grey” economy, so the preferable course of action is to introduce effective regulation of what already goes on, which at least would allow the state to collect with much-needed licensing fees and a stream of tax revenues.
Another benefit from this point of view is that a legal private gambling industry would most likely also help reduce unemployment in difficult times.
One aspect that so far seems to be missing from the debate are the technological solutions – known as ‘responsible gaming technology’ – that would provide a wider range of options, including limiting the forms of acceptable online and electronic gambling.
In effect, the government has the practical means available to regulate both electronic and online gambling through the controlled issuing of licenses – thereby mitigating the social dimension of the problem – and at the same time secure a significant regular contribution to the state’s income.
“The biggest problem we see every day is that no matter where you go in the world, where there is no legal gambling, there is a ton of illegal gambling”, Techlink Entertainment Ltd President and CEO John Xidos told the Sunday Mail.
“The two big issues for everyone today are that government needs to have full control in order to eliminate corruption, and the players need to have full control in order to control their gambling expenditure”, he said.
Cyprus already has its share of a multi-billion worldwide online gambling phenomenon, and the number of unregulated electronic gambling shops seems to be growing daily.
DISY deputy Ionas Nicolaou has quoted figures of €2.5 billion turnover in 2008 for online gambling alone with one of the three biggest providers on the island, and with a 30 per cent market share, turning over around €680 million in 2007. Nicolaou said it is estimated that the turnover by 2012 will be in excess of €5 billion, while the €400 million these establishments made in gross profit in 2008 will probably skyrocket.
Xidos has no illusions about the political sensitivity of the whole issue of legalising gambling. “You have to have tough politicians to make this happen. Gambling is 90 per cent political and 10 per cent application-driven. We have the applications, but we need the governments to ensure that they drive the applications forward”, he said.
The legal situation today
AT present online gambling in Cyprus comes under the Betting Law, amended in 2007 to comply with EU legislation for the free provision of services. The House of Representatives is in the process of finalising amending legislation that will allow the state to regulate online gambling by excluding it from this list of services. This is in line with recent changes in EU law, which in practice allows members states to ban online gambling.
DISY deputy and House Legal Affairs Committee chairman Ionas Nicolaou has said that in order to deal with “the phenomena of uncontrollable online gambling” in Cyprus, “the aim of the proposed law is to ban online casinos in our country altogether”.
He said that the aim of the bill would be to prevent access to online casinos by imposing filters on internet service providers (ISPs) to block access to gambling sites, and then refusing to issue licences to ISPs to provide online casino services.
Another provision being considered for the bill is to force ISPs to install filters to prevent the use of credit cards for online casinos.
Other forms of online gambling such as live betting on horse races or sporting tournaments will be allowed.
Responsible Gaming Technology
USED within the appropriate legal framework, responsible gaming technology gives a state the means to eradicate illegal gambling by offering full control and regulation of electronic games of chance.
Typically, a government would first pass a law allowing gambling within a regulated format, which would include strict penalties – prohibitively large fines and jail sentences – in order to deter all illegal activity.
Tenders would then be invited for a central online system – metering machinery, etc. – that will control all the electronic gambling technology that the government is going to allow, followed by tenders from those operators wishing to obtain a licence to offer electronic gambling services.
The state would own/lease and control the central system, with minimal start-up costs, as the service provider typically installs all the hardware, maintains and upgrades it in return for a specified percentage of two to three per cent of net revenues, and also has primary responsibility for protecting the integrity of all data, including any stored personal data.
The central system would be linked up to every licensed machine and provide up-to-the-minute information on its use: how much money goes in or out of the machine, when someone opens the machine’s door, when someone pulls a banknote validator out, or tries to unplug the machine, etc.
The advantages offered include: full, real-time financial control, resulting in the guaranteed collection of as much income as the state wishes; automatic and effective elimination of corruption; total transparency; and prevention of money-laundering.
Most systems also offer technological controls that address the social aspects of gambling, such as registration requirements, personal financial limits, etc.
To regulate online gambling, a government would need to legislate to make internet service providers put in a filter system that would block out the 2,000 or so existing online gambling sites. At the same time, the government would draft a regulation and specifications for people to apply for licences to offer online gambling services within the national jurisdiction. The licensed system can then be monitored in the same way as for electronic gambling machines, allowing for taxes to be drawn.
The casinos question
President Demetris Christofias is coming under increasing pressure to reconsider his publicly-stated opposition to the licensing of casinos in Cyprus.
The Cyprus Investment Promotion Agency (CIPA), the Cyprus Chamber of Commerce and Industry (KEVE), the Employers and Industrialists Federation (OEV), and hotelier organisations PAYXE and STEK have all called on Christofias to change his mind in order to attract quality tourism to the island.
The state’s own multi-million deal with Qatar to develop a luxury complex in central Nicosia could still include a casino, while Hermes Airports chairman Nicos Shacolas has bullishly announced that he fully expects a positive answer to his imminent request to the government to build a luxury hotel and leisure complex next to the new Larnaca airport, which would also include a casino.
At the same time, MIG Group chairman Andreas Vgenopoulos has made it known that he wants to improve the yield from his investment in the Nicosia Hilton by getting a casino licence, and Limassol Chamber of Commerce (EVEL) is supporting a public venture that is bidding for a licence.
ERRATUM
In yesterday’s front-page story, we said that Canadian company Techlink Entertainment Ltd had just signed a deal with the Greek government to supply its responsible gaming technology.
In fact, Techlink is one of several companies currently in discussions with the Greek government to supply technological solutions once the required legislation is passed by the Greek parliament.
