Debate is raging within the Austrian government about whether to impose a cooling off period and freeze ex-grey market operators out of its upcoming open online casino market, with local operators looking to inflict maximum punishment and legal experts arguing that the proposal would be self-defeating.
Austria is on course for an historic opening of its long monopolized online casino market. Currently, only Casinos Austria, via its brand Win2Day, has the approval of the Austrian government to offer online casino games to the general public.
But for many years, that legal status was ignored by operators based largely out of Malta, who populated a vibrant grey market by leaning on the controversial argument that Austria’s monopoly model is in violation of EU law.
These offshore operators were eventually forced to retreat by a series of high profile court rulings that found Austrian consumers have the right to reclaim any and all losses to an operator without an Austrian licence.
Facing potentially hundreds of millions of euros in compensation claims, grey market providers have largely retreated to Malta, where Bill 55 continues to protect them.
With liberalisation now on the horizon, some forces within the Austrian government and the local gambling industry are insistent that companies which took part in the grey market should not be allowed to simply apply for a licence and wipe the slate clean.
Who’s in favour?
Those lobbying the hardest for a cooling off period are Austrian incumbents.
“One day you’re offering illegal services and the next day you get a license – that’s absurd,” a spokesperson for Casinos Austria told the Kronen Zeitung newspaper.
They are joined by German-headquartered gambling giant Novomatic, which operates a number of land-based venues in Austria under the brand Admiral.
Having sat on the sidelines of the online market for many years, Admiral is incensed by the idea that it could be competing on day one of a new market with operators who did not take the same approach.
The three parties that form Austria’s coalition government are still debating the issues, according to reports.
The only major practical example of a true “cooling off” period occured in the Netherlands, where an 18-month prohibition was in place that prevented many companies from entering the market when it opened in 2021.
At the time, Kindred reported that being forced to sit out market launch had cost it $16.2m a month, wiping out effectively 50 percent of the group’s EBITDA.
Kindred, which has since transformed into FDJ United following an acquisition by the French lottery giant, subsequently regained its strong Dutch position following the end of the cooling off window.
Likely to cool
At least one Austrian legal expert believes that there is a good chance that some form of cooling off, or an equivalent punishment, will be enacted as part of the new law.
“At the moment, it is likely that some form of cooling-off period will be introduced, perhaps by introducing sanctions that apply prior to licensing, but the details are yet to be determined,” said Nicholas Aquilina, a partner at Brandl Talos law firm.
“Whether a cooling-off period will be introduced and how restrictive measures will be will have a substantial impact on the success of the long-overdue opening of Austria’s online gambling market,” he added.
The time pressures referenced by Aquilina relate to the expiry of Win2Day’s exclusive licence, which is set to run out in October 2027. The government intends to establish its new online gambling regime well ahead of that date, so that new licences can be issued in time.
Any attempt to extend Win2Day’s monopoly could run into challenges with EU tender laws and the other highly unpalatable option is to leave the nation in limbo with no legal providers at all.
Complications
Despite how the debate has been framed by some parties, the reality will not be as simple as either allowing ex-grey market offenders into the new Austrian online casino marketplace free of consequence or forcing them to spend time in the sin bin.
There is broad political agreement that any international operator looking to obtain a licence in Austria must pay back taxes owed on its former activity in order to be granted approval.
Operators will also need to settle any outstanding player refund claims, something which could cost companies huge sums and may ultimately keep some of them out of the market for good.
There are thought to be thousands of pending refunds, which operators have largely been refusing to pay while they take refuge behind Malta’s Bill 55.
Against that backdrop, lawyers Christian Rapani and Felix Hohenthanner argue that the penalties for returning to Austria will likely be harsh enough.
“A further exclusion of two to three years on top of that would, in our view, work against the reform’s own central objective. The operators currently holding the largest share of Austrian play are exactly the ones a cooling-off period would shut out. If they cannot offer a licensed product for two to three years, their customers, it is highly likely, will not migrate to the licensed providers,” they told EEGaming.
Ultimately, the two lawyers said, the push for a cooling off period is more about protecting the vested interests in Austria’s casino market than an attempt to keep gamblers safe.
“Our impression is that the proposal is supported essentially only by the land-based operators and by the single provider that already holds a licence in Austria, in other words by those who benefit from keeping new entrants out. We therefore see it less as a genuine player-protection measure than as a last attempt to preserve existing market positions,” they said.
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