Switzerland’s parliament legalized online gambling on October 10. The Money Gaming Act of 2017 revised 20th Century gambling laws and approved Swiss iGaming for the first time ever.
The Money Gaming Act replaced laws which were passed in 1923 and 1998, so the land-based and online gambling laws were updated. Mobile casinos did not exist at the time of the 1998 amendment, while online gambling was in its infancy.
Previously, online gambling operated in a gray area. While previous Swiss gambling laws did not ban online gambling, it did not legalize and regulate the industry. The new law contains the elements of controversy, though.
International Online Gambling Banned
Under Switzerland’s Money Gaming Act, online gambling is legal. At the same time, foreign companies are banned from signing up Swiss players. The law requires Swiss Internet service providers to block foreign websites which sign up real money Swiss gamblers.
At face value, the new law appears to violate the European Union’s laws. The EU Commission requires member nations to allow foreign companies access to industries if it is legalized for domestic companies. If it does not, the EU Commission rules that the law is protectionist and unfair, thus against EU law.
How EU Free Trade Clauses Work
For instance, Switzerland could ban all online gambling, both for domestic Swiss operators and international operators. Conversely, the Swiss parliament could legalize online gambling for domestic and international companies. It cannot ban the one and legalize the other.
The Swiss government pledges to compensate any losses incurred in blocking international companies from allow Swiss real money players on their sites. That offer appears to be to the ISPs and not the foreign online gambling companies. If the Swiss government compensated foreign gambling sites, that might be allowable under EU commerce laws.
Taxes on Land-Based Gaming Winnings
Limitations were placed on how much money the Swiss government could collect in taxes on lottery winnings. Now, Swiss lottery winners only need to pay taxes on the first $1.2 million in winnings.
Brick-and-mortar casino winnings will go untaxed for players who win at the casinos, though land-based casino operators will continue to be taxed. That is similar to the Australian land-based gaming laws, which tax business ventures, but not average citizens who win at the casinos. US government tax player winnings and casinos.
Opposition to Money Gaming Act
Despite the ban on foreign gaming operators, the Money Gaming Act is not without controversy within Switzerland. The Swiss People’s Party, the Green Liberal Part, and the the Free Democratic Party all opposed the bill. The three parties noted that the Money Gaming Act breaches the EU’s polices on “free movement of business services”, which the Swiss government signed in good faith.
The three political parties also complained that the law “adds new restrictions to Internet access”. They argue that it simply is not the government’s business what its citizens do online, so long as those activities do not harm other people.
Showdown with EU Commission
Readers can expect to see policy clashes between the government of Switzerland and the EU Commission over the Money Gaming Act in the coming months and years. Previously, the EU Commission censured Germany, Sweden, Romania, and Greece for their protectionist online gambling policies. In some cases, the EU has forced national governments to comply with the free trade treaties they signed in yesteryear.
Some groups were concerned about the role of expanded gambling on Swiss society. Because of the opposition, the Money Gaming Act contains a variety of responsible gaming, consumer protections, and problem gambling clauses. These are meant to soften the social and economic impact of expanded gambling on the population.