Ekaterina Hartmann: Lobbying on gambling is not as easy as lobbying on other topics
European Gaming and Betting Association’s Director of Legal and Regulatory Affairs. Ekaterina is a Master of Laws and did a PhD in Medical University in Sofia. Previously she worked in the European Parliament and European Commission. Dr. Hartmann has been working in gambling for more than 8 years.
In the interview with EGBA Director of Legal and Regulatory Affairs, you can read about Association, its activities, goals, perspective of creating a single EU market for the operators, and more.
– Your maiden name Alexandrova sounds pretty Russian.
– I'm Bulgarian. My mother speaks Russian, but not me. I left Bulgaria when I was 18 to study, but I’m still very much Bulgarian, I think. I studied in the Netherlands at the University of Maastricht where I did European policy and European law. When I finished my LLM masters I moved to Brussels. I used to work for the EPP Group in the Parliament for a couple of months. After that, I went to work for the European Commission for three years. I worked in the legal department of DG Health and Consumers that dealt with food, health, and consumers. While I was working, I also did my PhD at the Medical University in Sofia because at that time I was working a lot with healthcare issues. I did my PhD on healthcare systems.
After that, I started working in gambling. Now I’ve been working in gambling for 8 years at the European Gaming and Betting Association.
– What can you say about gambling regulation in Belgium? Is it loyal for operators?
– EGBA covers EU and EEA countries, and Belgium is one of the member states that we work on. Belgium’s regulation is good in general, but it also has some serious issues. It’s good because there is a real possibility to get a license. A company can apply for a license and obtain it which is not really the case everywhere. For example, in Hungary, in theory, an operator can get a license, but in practice, no other company besides Hungarian firms can really get it. In Belgium, it is possible to have a license. They have a very good regulator, the Belgium Gambling Commission. Their law – I wouldn’t say it’s perfect because one of the requirements in order to be able to obtain a license is to have a partnership with a land-based operator.
– I’m asking about Belgium specifically because you started your gambling career in this country. How did you meet that gambling sphere?
– Basically, I wanted to work on the subject that I studied. Obviously, the best place to have a career in the subject of European policy and European law was Brussels. Once I came to Brussels I worked in a number of different areas. When I was in Parliament I was working on social policy and regional policy. Then in the European Commission, I more focusing on health, consumers and food. After that, I was looking for a job in the private sector. And I thought that this opportunity of gambling was an interesting thing because it was a digital sector. And I always found digital business very interesting. All EGBA members exclusively offer online services except one. We’re mostly dedicated to online. So, I thought this opportunity was very interesting. It was maybe a little by chance that I started working in gambling. And I think it’s a very exciting sector. And it’s also very challenging to lobby for, because the gambling industry doesn’t always have a good reputation, and we’re here to try to change that reputation.
– Why do you think gambling is so special? Which problems specifically do you see in regulation terms?
– So, you have some issues that are contrary to EU law. For example, the establishment requirement, as I’ve already mentioned. You also have other issues with regulation that can be very bad related to the success of regulation. Every regulator needs to think about what kind of channelling degree I want to have in my market. And channelling basically means ensuring that players from your jurisdiction are going to play on the regulated offer versus playing on the black market.
And it also means that to achieve this a regulator has to make his offer very attractive, which cannot happen if they let’s say want to impose a lot of overly strict restrictions. For example, if a legislator forbids advertising, forbids bonuses, or sets payout ratios which are unrealistic. All this kind of things prevents a licensed operator from offering an attractive product on that market. And then what we see is that players go to the black market which is on the Internet one click away. They go to the operators that can offer them better odds.
So, one of the most important tasks for a regulator is making sure they have made a regulation in a way that both protects the consumer by adequate consumer protection measures and at the same time is sufficiently attractive to players to actually play on that regulated offer.
What we’ve seen in the past years is a lot of rising in the regulatory restrictions. Before we were very focused on this kind of purely legal kind of fundamental restrictions of establishing your server, establishing an office. Now we see very much a shift towards other kind of restrictions like restrictions on advertising. This is something that operators in the EU and other jurisdictions should really think about. The industry should behave in a responsible way. Because if the industry doesn’t behave in a responsible manner and if we don’t look at self-regulating we’re going to end up in a situation where a regulator is going to want to regulate much more strictly. And usually, when that happens it is much harsher restrictions being imposed than the ones that we can agree to put forward ourselves. And this is one of the reasons why EGBA’s working a lot lately and exactly on self-regulation. We have come up with our Code of advertising. Basically, all of our members have to subscribe to it. And we have also opened it for other operators that are not members of EGBA. They also have a possibility to sign up to it. There will also be an independent monitoring body that will monitor anyone who signed up to the Code.
We think there is a number of balanced provisions that make sure we can still keep advertising, because in Italy now there is an advertising ban. In Spain, they amount to the advertising ban, because advertising is not only heavily restricted it’s only allowed between 1 and 5 AM. In the UK we now have both a watershed and a whistle to whistle ban.
– Advertising – OK. What else does EGBA work on?
– Another example is anti-money laundering. We’re currently starting to work on guidelines for anti-money laundering procedures which are very different in EU member states. But a lot of things can be standardized, so we’re looking at standardizing at what brings a customer to your attention as an operator. What level of risk we’re going to assign to a customer: low, medium or high. How do you judge that? Then if we talk about enhanced due diligence, how do you decide what is acceptable proof of source of funds? In all these kinds of things, you kind of try to help operators do a better job with internal AML policies.
What we’re also doing is working on a Code of Conduct for the famous General Data Protection Regulation (GDPR) which you’ve probably heard of. Everyone who does business in the EU needs to comply with it. Gambling will be one of the first industries who will actually have a Code of conduct under the GDPR. GDPR actually encourages such kinds of Codes of conduct. And also the interesting thing for operators is that if an operator subscribes to an industry code which is deemed as approved by the European Data Protection Supervisor, in case they have been found in breaching the GDPR, the operator can get up to 50 percent of the fine reduced, which is very attractive. We’ve seen already a lot of fines been issued because of GDPR.
These are three areas where we as EGBA try to make operators aware that their behaviour has consequences. Because if an operator is advertising with very irresponsible messages, obviously the regulator is going to step in and this is bad for everyone. We try to get the industry to adhere to higher standards and on the other hand, we try to educate and to bring forward the message to the industry and to the regulators by explaining what we think is a good regulation.
– You have worked in different industries. Let’s compare gambling and for example pharmacy. Where can we find heavier regulations? Why gambling is a complicated thing?
– If you’re taking pharma as an example, pharmaceutical products are very heavily regulated in the EU. You have a lot of regulations, directives, basically a lot of secondary legislation. But gambling is very unique. It is an industry that doesn’t have sector-specific legislation on the EU level. So, every single member state has its own regulations and issues their own licenses.
It makes gambling unique because there are very few sectors in the EU that are excluded from the single market. Being excluded from the single market means that if an operator has a license in one member state, it cannot provide gambling in another one unless a further license is applied for and awarded. All of the big operators have really tens of licenses across the EU. For example, EGBA members had 121 licenses in 20 EU states in 2018.
However, we shouldn’t forget there is also another regulation on the EU level, which may not be specifically on gambling, but which applies to gambling: GDPR, audiovisual media services directives (AVSMD), AML, etc. so the EU is still very important for gambling.
And this is what we’re also trying to do as EGBA, to convince national associations to cooperate more, to provide a platform to discuss all these kinds of issues and to ensure the industry speaks with one voice both on European and national levels.
– EGBA wants to create general unified regulations rules for every EU country. But it seems like a very complicated task. Countries are different. How do you think it could work out?
– EGBA believes that having one sack of rules in the EU for gambling would be very beneficial. But realistically it’s not going to happen in the short terms. This is because the subject is very difficult politically. There’s not much to be gained politically from dealing with gambling. It’s a very sensitive topic. So, you have that on the one hand. On the other hand, member states want to have the ability to regulate gambling themselves for a lot of reasons. It is often said that gambling is very culturally specific. Different countries perceive gambling differently and want to take a different level of risk. And obviously, they want to be able to tax gambling in a way that they see fit for their market.
That’s top 3 reasons why there is not really a lot of political will to make a single market for gambling in the EU.
– What kind of opportunities for operators single market brings?
– Operators would be able to have a license let’s say in Malta and offer services everywhere in the EU. You wouldn’t anymore need to have other 27 national licenses, you could have one single license. Obviously, it would be very attractive to operators. Unfortunately, again it’s not realistic in the short terms.
– But is it one of the EGBA’s priorities?
– Ultimately, we would be very much supportive if that would happen. But it’s not one of our primary goals just because we don’t think it can happen soon. Because, as I’ve said, member states want to be free to regulate the gambling themselves and because this is a very politically sensitive topic.
– What are your duties in EGBA? What do you do on a regular basis? Do you communicate with deputies or ministers?
– I’m a Director and a lot of my daily work focuses on communicating with the EU institutions, with regulators, working on policy issues, providing replies to national and EU consultations. Member states are required to notify to the European Commission any new legislation that they are adopting. And we follow that very closely and we also comment to the European Commission on our assessment of new legislation that’s being passed in the member states.
We speak quite a lot with the European Parliament, European Commission, with all the actors here in Brussels. We speak a lot to national regulators when there’s something happening on the policy level. We want to put forward our message both on the EU level and in the Member States. We also do a lot of communication about good practices in the industry. And as I said before we work a lot on best practices and promoting those among operators, among the industry with the aim to bring a more consolidated, more unified way of doing things in the sector.
We try to stay a bit ahead of the regulation rather than just following developments.
– Is it easy to communicate with all these deputies, parliament? How do they react on working with EGBA?
– That’s a very good question. Lobbying on gambling is obviously not as easy as lobbying on some other topics. Gambling is very controversial. What I have always tried to do is having a fact-based approach. We’re open to speaking to everyone and we want to bring the facts because there’s quite a lot of misconceptions, myths about the gambling industry that we’re trying to dispel.
I think EGBA has built a very serious reputation here in Brussels. We are of course well aware that we are an industry association and our views are always going to be not 100% academically objective, but we always try to remain objective as much as possible.
– One of our experts, Dainis Niedra from Enlabs, said that there are two huge problems in gambling which are regulation and human resources. And regulation is always a beast. In Russia, many betting companies’ CEO says it’s hard to make a dialogue with the government, parliament etc. Is the situation the same in Europe?
– I said that there are times when people don’t want to talk to you. I can add that it’s quite a rare thing. In general lobbying in Brussels means that most of the times you have a chance to give your opinion. It doesn’t mean this opinion will be taken on board, of course, but we’ve always been well accepted as a reliable partner because of our trustworthy reputation in Brussels. It is important for the industry to be heard by policymakers otherwise how to regulate without hearing from the industry how things function in practice and what works and what does not.
– Which EU member is the best in terms of regulations? The UK maybe?
– Let’s start with Malta because Malta is a very big gambling hub. Sometimes I get the comments that probably their regulation lacks supervision and it’s probably very easy to get a license. That’s actually really not true. The Malta Gambling Authority is a very serious one. They have a lot of experience also because of the sheer number of licenses they have. Their regulation is quite good in the sense that it’s quite balanced. They have very good measures to protect consumers and they also have a realistic view of what companies would need in order to offer an attractive product so that players wouldn’t go to the black market.
The UK is one of the oldest regulated jurisdictions in Europe. They used to have a very industry-friendly regulation, but now we see that they’re tightening the rules quite a lot. Maybe going a little bit far in the opposite direction. Denmark also has a very good regulation. I believe the UK and Denmark have around 99% and 95% rate of channelling respectively. That means their regulation is so attractive that 99%/95% of people within their jurisdiction gamble on the regulated offer. That’s very high! That’s excellent! It means there’s a good balance that has been achieved there. They should be, however, careful not to throw off that balance, because if they overregulate, the level of channelling goes down. It’s a very delicate process to be able to achieve this perfect level of balance between consumer protection and industry-friendly regulation.
– How big is the European gambling market?
Anyone who is interested can find a lot of data on the EGBA website. In 2018 our members had 16,5 million customers. The GGR of these companies was €5,41 billion. If we talk about all the gambling companies in the EU, the numbers were much higher with GGR of €22,2 billion. I think it was almost 50% of the world’s market. We predicted an increase to €29,3 billion in 2022, but the pandemic has obviously changed this.