The Swiss Parliament deliberated on the new draft of a revised gambling law in two sessions takin place on 1 and 15 March 2017. A short overview on the most important outcome of the discussions which shall be implemented into the new gambling law.
Online concession only for Swiss casinos
In the future, Switzerland will grant licenses for online gambling. However, such licenses shall only be granted to operators terrestrial Swiss casinos. In particular, foreign operators will not be allowed to offer any online gambling services in Switzerland (moreover, access to the websites of these providers shall be blocked, see below). Also, it shall not be possible to acquire a pure online concession. In a nutshell:
- Who will be able to apply for an online gambling concession: Only holders of a licence for a land based casino will qualify to apply for an online gambling concession. Moreover, in order to be able to extend an existing terrestrial concession to online gambling services, the applicant will have to establish the commercial viability of the planned service.
- Will suppliers to operators need licensure? No. For the time being, the draft Money Gaming Act does not introduce a licence requirement for suppliers. However, suppliers will need to provide their services to licensed operators. In order for the Swiss authorities to approve such collaboration, the Swiss operator will need to provide evidence that its foreign supplier has “a good reputation”. It is yet unclear what test the Swiss authorities will apply with regard to these criteria and to what ex-tent past business activities will be taken into consideration in this assessment.
Blocking of foreign operators
The Parliament decided to block the access to foreign online gaming providers on a technical level. The technical measure being discussed is the implementation of IP-Blocking by Internet Access Providers. This issue was heavily disputed given that the proposed technical blocking measure strongly interferes with personal rights and restricts the rights of individuals to freely access the internet. Nevertheless, the majority of the Parliament eventually followed the argument that such measures are required to protect Swiss players from unregulated foreign gambling services. This despite the fact that experts agree that technical measures may easily be circumvented and thus IP-Blocking does not constitute an effective way to protect Swiss players.
If the new law enters into force (see below "What is next?"), the Federal Council will need to decide on the details of the implementation of the blocking measures. It is thus too early to discuss details on how IP Blocking will eventually be enforced. However, we currently have the following expectations:
- Timing: The new regulations are unlikely to enter into force prior to 2019 or 2020.
- Blacklisting: Once enforced, the supervising authorities will maintain a blacklist for relevant operators. Internet Access Providers will have the obligation to block access of Swiss users to the blacklisted websites.
- User may continue to access foreign sites: However, the new regime does not aim to prohibit the use of foreign gambling services in Switzerland. Swiss user may therefore without risk circumvent the blocking measures to continue to use the services of foreign gambling providers.
- Global competition for Swiss providers: Consequently, new Swiss operators will still have to compete with global players for the Swiss market, but without having the possibility to provide services to players outside of Switzerland.
Tax exemption for all money games
As proposed by the Federal Council, the Parliament decided that all money games shall be exempted from taxation. One argument was that the net profit arising out of a night spent at the casino shall not be determined and that therefore, it is practically impossible to tax such gains. Another argument was that it would lead to unequal treatment by treating gains arising from lottery and sport betting differently than those arising from casinos. Further, the Parliament argued that an exemption would improve Switzerland’s international competitiveness which may also bring increased revenues to Switzerland.
Reduced taxes and charges for so-called "mountain casinos"?
Another issue was whether the casinos in Davos or St. Moritz should receive a special treatment with regard to taxes and charges as so-called "mountain casinos". The measure is aimed at strengthen the touristic attractiveness as well as the peripheral region’s economy. In its deliberation, the National Swiss Federal Council took a different view to the one of the Council of States and proposed to reduce taxes and charges by three-quarter instead of one-third. The issue therefor remains unsolved and needs further discussion in the Council of States.
Poker Tournaments outside casinos
Furthermore, the draft legislation provides for the possibility to organise small poker tournaments outside the scope of casino licenses.
Stronger Players Protection
The new act also proposes to strengthen the player's protection and contains a number of provisions to guarantee secure and transparent gaming operations. The proposal also contains a number of provisions to guarantee secure and transparent gaming operations.
Money arising out of Lottery Funds also for foreign countries
In the same way, the Parliament decided that money arising out of Lottery Funds shall also be used for international non-profit purposes and not only for Switzerland.
What is next?
The new Money Gaming Act will now go back to the Council of States for deliberation of the open issues.
As soon as a final agreement on all aspects of the new Money Gaming Act is reached, it will be published in the Swiss Federal Gazette. Swiss Law provides citizens with the opportunity to launch a public referendum if they oppose the law. For the referendum to go ahead, only 50’000 eligible voters must provide their signature within 100 days after the law has been published in the Federal Gazette. If the criteria are met, the electorate can vote on the disputed law. For the law to be put into force definitely a (simple) majority of all the votes cast is needed.
Considering the strong opposition the law, in particular the decision on the IP blocking, faced in the parliamentary debate, we consider that a referendum is a possible scenario. This would further delay the implementation of the new act by approx. 2-3 years.