Rolf Sims, Public Affairs Manager, Kindred Group PLC
Since the turn of the millennium a large majority of jurisdictions in Europe have opened up their domestic gambling markets by implementing licensing systems for online gaming. Due to technological developments and innovation policy makers have adopted new approaches to gambling regulation in an attempt to pursue effective channeling policies founded upon consumer protection, prevention of problem gambling, combating criminal activities and taxation or funding of good causes.
Norway is one of the few jurisdictions in Europe that still maintains a monopoly model for the domestic gambling market and has adopted a range of protective measures restricting access to the Norwegian market and undertakes a stringent approach to enforcement of national law. In 2010 Norway implemented payment blocking as a tool to limit the access to offshore gambling companies, enforce national law to support the state gambling monopoly and undertake government policy to promote social-political considerations and prevent criminal activities.
In Norwegian law, processing gambling payments is regarded as an involvement in the offering of non-licensed gambling. In the preparatory works the Government acknowledged that this measure would not actually stop Norwegians playing with overseas companies. The intention was to create a hurdle and make the access to such gambling offers more difficult. The Norwegian Gaming Authority is responsible for enforcement of Norwegian gambling law and the ban is undertaken in cooperation with banks and financial entities.
According to the payment blocking regulations it is prohibited for banks and other financial institutions in Norway to procure deposits (stakes) and withdrawals (winnings) between Norwegians and offshore gambling companies. There are no obligations for players in the regulations. Furthermore, it is not illegal for people residing in Norway to participate in online gambling services provided by operators outside of Norway.
Ten years down the line it is evident that payment blocking has not had the intended effect. Public documents and reports from 2010 up to today clearly verify that this measure has not reduced the number of Norwegian players participating in the offshore gambling market. In addition, a recently presented national prevalence survey into problem gambling in Norway shows an increase in both the numbers of players participating in offshore online/digital games and the numbers of problem gamblers. Payment blocking has therefore not worked as a measure to stop or reduce problem gambling.
Despite the Norwegian Government's efforts players still continue at their own free will to participate in betting and gaming offers by EEA-based operators. Payment blocking has not strengthened the Norwegian Government`s intended channeling policy.
However, one has become witness to a disturbing development within the enforcement of payment blocking. In their quest to enforce the ban, banks are questioning customers on why they participate in offshore gambling offers and requesting them to attend meetings to discuss their gambling activities. In addition, they are threatening to terminate customer agreements and close customer accounts, even though the latter are only being partially used for online gambling and Norwegians are free to gamble online. This is an unforeseen development and clearly outside the banks` mandate pursuant to the payment blocking regulations. Furthermore, it was never the intention that payment blocking should entail banks threatening their own customers.
Payment blocking therefore raises several principle issues with regard to the banks having a policing role within the gambling area, thus being obliged to use resources to implement measures and routines to enforce regulations outside their core domain. Furthermore, it should not be the banks` role to question and take a moral stance with regard to their customers gambling online, with a threat to close consumer agreements and accounts. In addition, one may ask if the Norwegian Government and banks should actively stop citizens from using their own private funds on their own free will in an activity which for them is fully legal. This is a major contradiction within regulation and supervision of the Norwegian gambling market.
Also, according to Norwegian tax law winnings players achieve in offshore gambling are regarded as taxable income. At the same time the Norwegian Authorities and banks are actively trying to stop the payouts of the same winnings. This just underlines the total lack of consistency in regulation and the hypocrisy within payment blocking.
A gambling market is never defined by competition, available products or regulations. In a digitalised and globalised world, where individuals are empowered to find information, make decisions and execute their own free will, a gambling market is always defined by consumer demand and behaviour. The ability of policymakers to adopt regulations to the total effect of combined actions by consumers must define the content of regulations. In the today`s online environment consumer behaviour is driven by a freedom of choice and the industry will always implement solutions to meet customer expectation and enhance player experience.
Payment blocking may never be a tool for regulation or control. Effective channeling policies are totally dependent on sustainable regulation allowing for an open licensing market and certain regulatory parameters that must be in place rather than protective measure entailing market restrictions.
Norwegian authorities lack a fundamental acknowledgement of the technical innovations and changes in consumer behavior within the online environment. Instead of using resources on limiting players from participating in an activity, which for them is legal, the Government should rather pursue a policy of adopting a model entailing sustainable regulation and public licensing and control of operators offering gambling to Norwegian players.
Experiences from Norway have proven that payment blocking does not stop internet gambling, and affects neither the business of banks nor offshore gambling companies. But it does have an effect for consumers in total contradiction to the intentions within the preparatory works. Payment blocking has opened up for a prowling into the private consumer sphere and the individual`s own freedom of choice. This is a disturbing development and if not challenged it could create a dangerous precedent. One may question if this could become a template for public supervision and control of other areas entailing similar effects with regard to consumer behaviour and freedom.