Gambling in Cyprus:Dangerous Game

Legislation in Cyprus in 1997 banned land-based gambling and online casinos. The country is trying to organize state lotteries and private bingo games and the licensing of sports and horse race betting in shops. However, there’s still a “grey area” in the law when it comes to internet gambling.

Because of this grey area, the Cyprus Attorney General formally accepted that companies licensed in an EU member state may offer online gambling in Cyprus through websites, betting shops or internet cafes. On condition the Republic encourage players to participate in its lotteries, games of chance and betting that will be advantageous to the public purse.

As such a number of EU-licensed gaming companies now offer internet gaming products to players in Cyprus. The Cyprus government is trying to secure a concession agreement with Greece’s OPAP SA monopoly. If successful, it wipe out any competition.

Various draft bills have been imposed since 2004, to successfully ban casinos, poker and betting exchanges and to introduce a licensing body for sports wagering. All this have been blocked by the European Commission (EC) for infringement of basic freedoms.

A new draft bill in 2010 has been submitted to the EC. The UK and Malta expressed their concerns, fearing that the ban would impact negatively on the European gambling market in its entirety. Various complaints have been filed by private companies too.

In December 2010 the EC has sent its comments to the Cypriot government, requesting an explanation with regard to online payments, inadequate licences and favouritism between internet service providers. In March this year it’s expected to make a final ruling on the bill.

This bill impacts negatively on intra-European Community trade, denying basic sovereignty, prohibits competition and contravenes current European Court of Justice (ECJ) decisions. Certain absolute prohibitions on online gaming are not objectively justified:

• OPAP, in pursuit of revenue acquired exclusive rights under non-transparent conditions to offer internet casinos, in effects this excludes competition; it is not subject to money laundering-prevention rules.
• Chances of fraud occurring by EU-licensed internet casinos are very slim; since they are subjected to stern auditing procedures in their home member states.
• Cyprus strives to increase its profit margin from lotteries, horse racing and other gaming.

Cyprus aims to enforce a law which is in contravention with some of the EC’s policies. It leaves the EU no choice but to impose huge fines-this is not acceptable for the country and its government taking into account its current economic environment.