• 04 Aug 2023
  • Industry News

EU's Plan to Unify the Online Casino Industry with eID

The European Union has long pursued harmony across various sectors, including cucumbers and now, casinos. With the council's approval, the revolutionary EU-wide digital identity (eID) is inching closer to becoming a reality. In this article, we will delve into the most relevant aspects for online casino players and explore the potential impact of this development.

A Single European Digital Identity for Online Casinos

Several EU countries already utilize some form of digital identification system. However, most of these systems are primarily intended for government use, such as tax agencies or healthcare. As a result, players who wish to engage in online casino activities often find themselves required to submit copies of their passport or driver's license.

The EU is actively working towards establishing a unified European Digital Identity (eID) that would function seamlessly across borders, even in commercial contexts. The proposed eID could store vital information about individuals, including their name, age, address, email, IBAN bank account numbers, and even COVID vaccination status.

Vasiliki Panousi, Manager of EU Affairs at the European Gaming and Betting Association (EGBA), identifies four key benefits of the eID for online casinos:

Harmonization of Know Your Customer (KYC) & Anti-Money Laundering (AML) processes for operators.
Assistance in combating fraud and underage gambling.
Efficient verification processes to enhance the player experience.
Protection of vulnerable individuals from excessive spending.

This new proposed law builds upon the eIDAS regulation of 2014, which laid the groundwork for cross-border online transactions. The council announced its version of the law ("general approach") in December 2022. Now, it's up to the European Parliament to follow suit. Once both EU institutions approve, negotiations will commence to create the final version.

While the exact public availability of the eID remains uncertain, Vasiliky Panousi highlights the Commission's target of achieving 80 percent eID wallet usage among EU citizens by 2030.

Online Gambling Landscape in Northern Europe

Online gambling holds varying degrees of market share across European countries. For instance, Spain sees online gambling accounting for less than 20% of its total gambling market revenue, with traditional lottery ticket sellers dominating.

On the contrary, Sweden boasts the highest online market share in Europe, with 80% of the revenue coming from online gambling. Similar trends are observed in other Nordic countries and the Baltics, with online market shares ranging from 60% to 75%.

To tap into the revenue stream, local governments are keen on establishing their own license systems for online casinos and betting sites. These licenses allow authorities to impose taxes and fees on operators while enhancing player protection and control.

The Landscape of Licensing Systems

Europe currently boasts around 20 different online casino licenses. Finland, a nation with a long-standing state gambling monopoly, is contemplating a shift to a license model similar to Sweden's implementation in 2019.

Norway, though not part of the EU but a member of the EEA, clings to its monopoly. The country employs payment blocks and similar measures to dissuade Norwegian casino enthusiasts from accessing foreign sites.

While most license providers cater to their own country, exceptions include the Malta Gaming Authority and Eesti Maksu ja Tolliamet (Estonian Tax and Customs Board), which offer international licenses for the European Economic Area and beyond.

Challenges and Future Implications

The idea of a single EU market for online gambling remains distant, with no signs of immediate realization. Nonetheless, the EGBA's collaboration with CEN aims to establish standards for online gambling, encompassing responsible gambling policies.

Many license providers offer self-exclusion tools for players who wish to take a break from online gambling. However, the current system makes it easy for players to continue playing abroad, potentially resulting in some adverse consequences. The European eID could address this issue but may inadvertently drive players to casinos licensed outside the EU, which may not prioritize customer protection as strongly as EU-licensed casinos.

While electronic identity verification is not new to the casino industry, the EU-wide eID solution, once available, may have an impact on foreign casino payments. For example, popular instant transfer providers like Trustly and Zimpler bid farewell to foreign-licensed casinos in 2022, leading players to face manual verification processes. The introduction of the eID may influence withdrawal processing speeds in the future.

As the eID journey unfolds, it remains to be seen how this EU initiative will shape the online casino industry and its interaction with player preferences and market dynamics.

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