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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Charlie Horner (00:01.233)
On Wednesday, members of the European Parliament will take to the halls of the European Parliament in Strasbourg to debate new fiscal initiatives to raise funds for the bloc's 2028 budget. Negotiations and bargaining begins between the representatives of the 27 EU member states, and a unionised tax on online gambling has been endorsed by the Social Democrats of Europe. The EU requires a minimum
two trillion euro budget for its new cycle beginning in 2028 as the block faces multiple generational challenges across defence, an ageing population, the environment, education and workforce upskilling in the age of AI. So, what are the new tax proposals and what does it tell us about the EU's plans? Welcome back to iGaming Daily, supported by Optimove, the creator of positionless marketing.
and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner and today I'm joined by our editor at large Ted Menmure. Ted, how's things?
Ted (01:04.269)
Very well, Charlie, and glad to be speaking on a news development that I think we've been tracking kind of very closely at SBC News and our gaming experts. So a lot of interesting stuff.
Charlie Horner (01:17.607)
Yeah, really really interesting. It's kind of been bubbling under the surface for a little while this and it feels like this week a few truths could be coming home to roost. So what's happening next? Well, what's what's happening later this week in Strasbourg and should the industry be tuning in to watch yet another tax hike on the sector?
Ted (01:37.871)
Well, in terms of tuning into budget deliberation, I think that's down to our audience's stomachs, whether they can really digest. I think it will be about.
five or eight hours of deliberation and what the budget 2028 should look like. But look, it is intriguing. MEPs will debate whether online gambling should become one of the EU's kind of own resources and whether it should kind of apply a unionized tax to the budget cycle that begins in 2028 through to 2034.
It's important to say that this is not a final verdict but it should be viewed as a kind political test as to how member states view gambling and whether Brussels can convince 27 member states to accept a new kind of block wide charge on online gambling and on gambling which to date has been a kind of fragmented sector that has not had any kind of EU oversight audit.
It also kind of asks a lot of questions about where the EU is going and kind of harmonising policies for a sector, a high-risk sector such as gambling.
Charlie Horner (02:57.491)
Yeah, I think you're right on multiple points there, but I think it goes to show how gambling is views by politicians, particularly at the EU level. We know that it's been very fragmented between each member state to make up their own laws, interesting that we could see some harmonization here. how has this unified tax charge come into the spotlight? Maybe we need a bit of a Ted Menmure history lesson here.
Ted (03:21.518)
So yes, so if we go back to February, Romanian VP Victor Nicrescu pitched the idea of putting a unionised tax on gambling income.
across the block of 27 members. And he pushed for a of a gambling levy that has been backed by the block of social democrats in Europe and by that kind of support it's been allowed to go to the halls of Strasbourg. We know, I think, that the tax has been pitched at 1%, but what we don't know is about the technicalities. The other thing here is that, okay, if you implement it across 27 member states,
does that apply to kind of international operators who are going to base that in Malta? Does that mean that they then get double taxed on that revenue because they could be operating across you know three, four, five jurisdictions? Is it taxed on a per-brand basis? Is it taxed per domicile? So there's a lot to kind of
A lot of explaining will have to be done by Vincent de Crescu. Even in communications with them, they're still kind of keeping their hands very kind of closed on what they're showing to Parliament.
Charlie Horner (04:38.919)
It seems very complicated, as you say. There's going to be a lot of technicalities that need to be ironed out and just a bit of guidance on how any tax rise might be applied, regardless of that, the Social Democrats of Europe seem pretty keen and they've lent their support to Negrescu's proposals. Why is this block of, particular, support in such a tax hike?
Ted (05:02.51)
Okay, so we were in contact, or maybe not been in contact with them from February, and just having messages, be it the Social Democrat, that block itself. And its representative believes that the EU now needs to kind of look at kind of fresh funding and also at...
funding proposals or fiscal proposals that generate tax instantly but can also kind of not add to the internal budget. So they view online gambling, and especially its growth and the fact that it's not gonna regulate on a per market basis as an industry that you can apply a unified tax to, but that it won't necessarily expand.
the budget of the debt of the EU, especially coming out of this kind of post-COVID recovery across member states.
Charlie Horner (05:56.576)
And do we know how big the Social Democrats of Europe block is in the Parliament and some of the parties that make up that group and does that give us any more colour of the weight that these proposals have?
Ted (06:13.722)
I mean, look, they do have a presence in there. And again, when we talk about a bloc, it's more current. I think you'll look at, especially in European Parliament, it's more kind of...
of MEPs supporting certain measures. So you can be a left-wing member of that group, right? It's more kind of a, when you look at the MEPs and the structured blocks, it's much more about political alignments and for causes, whether it be the environment, defense, up-skilling, and also...
I think what MEPs are kind of pitching at are the future headwinds of the EU that it must kind of tackle as a bloc of 27 member states.
Charlie Horner (06:56.487)
Yeah, it's really difficult to talk about this just as a gambling issue because the EU is such a huge block and it's facing a lot of challenges, hell of a lot of headwinds at the minute. I think it's probably worth just going over some of those challenges, some of that global geopolitical challenges that the EU faces to explain.
Ted (07:00.983)
Yeah.
Ted (07:08.685)
I yeah.
Ted (07:17.421)
I mean, we could do a whole fuckhead. No, no, I get your point. I've got to go back and say, look, this is as much about negotiations as it is about bargaining. And especially at this level and especially at this kind of entry stage of how does this move forward? What will be interesting to see is what member states as a whole or what kind of political entities and member states support this measure? You know, is it left wing or right wing?
Charlie Horner (07:23.113)
Sure.
Ted (07:46.158)
The budget 2028 is a critical juncture for the EU. And as you said in the introduction, it's looking to raise about two trillion, a minimum of two trillion on its budget. But what the EU is facing now, I think it's going to have generational headwinds of education, healthcare for an aging population, also defence.
And finally, it's kind of the upskilling of its labor force in the age of AI, which is a, you know, it's a problem throughout all kind of continents. So you've got these kind of big, big tectonic shifts happening in the globe and it's how the EU and its budget will react to them.
Charlie Horner (08:30.079)
And I think one other thing is the potential expansion of the block itself as well, which could happen in that 2028 to 2034 cycle. yeah, a lot of challenges. It's going to be a big budget and we'll take a quick break and we'll come back and talk about how gambling might fit in to fill in that gap.
Ted (08:37.282)
yeah.
Charlie Horner (08:55.815)
Welcome back to iGaming Daily, today we're talking all about proposals to impose a levy on online gambling across the EU. Ted, how much is the proposed levy set to raise? We've outlined all of the challenges, I'm sure a gambling levy can't fill all those gaps, so what's it being earmarked for?
Ted (09:15.457)
You know? But according to Negrescu and the Social Democrats, I mean, they're pitching it at the levy contributing like two to four billion per year. However, they do say that that is on an optimized model. Now, Negrescu did outline that there are liabilities facing...
the online gambling sector across the EU, primarily that of illegal gambling in the black market. And he, I mean, this is kind of, you know, a punchy statement, but he believes that if you apply a tax, it will begin kind of a process to, for member states to kind of tighten controls against the black market and illegal gambling. And especially to kind of apply kind of the first layer of a critical control against the black market in
intrusion into European markets. I'm not sure how effective that is, however you know they have actually kind of, they haven't sidelined that the online gambling faces an exposure to the black market which you know is a good, you know at least they are kind of considering it.
Charlie Horner (10:29.223)
Yeah, I think we need to take a pause there because I think that goes against everything that we've heard from individual nation states over the last couple of years. That you raise taxes and that would help battle the black market. I thought the general wisdom was that it was the complete opposite, that you would raise taxes on the regulated sector, therefore prices would become worse and players would go to the black market. what...
Are there any studies or any is there any evidence to suggest that that's that's the case and Negrescu has evidence for that or is this just is it just vibes?
Ted (11:07.211)
No, I wouldn't say it survives. I think that any budget, looking at it as it stands, think they're very looking at it very much from the top down.
And yes, if this was to be implemented, they'd be looking to raise like 27 to 28 million across a seven year cycle. the other, I think the most important element for the social democrats is that they're pitching this as a self-funded, a self-funded scheme that can instantly impact the budget's of engine.
So I think for them that's kind the most important element of why they're kind of targeting online gambling.
Charlie Horner (11:54.72)
Mm-hmm. Oh, yeah, we know there's so many regulated markets across Europe. So if you're going to target an industry that has exposure across the block, then I guess online gambling is an easy target. We know it's an easy target anyway because of some of the criticism that the industry faces. So do you think it's a case of the industry just is something that politicians can go for quite easily?
Ted (12:22.248)
It's funny because in researching this article and these features and this topic, what comes to mind is that I think the EU is looking to extend its fiscal pull. And how does it work? And how can it work as a bloc?
and it's not just a case of online gambling. there are a lot of kind of ideas that will be pitched to it. One will be on carbon revenues, tobacco, e-waste, internet data.
and the other as always crypto assets and you know how do you charge your stable coins and your crypto markets. So again I think the European Parliament wants to of amplify its ideas on kind of fiscal policies and how they extend to markets rather than what does each nation kind of contribute at the pot every kind of cycle.
Charlie Horner (13:24.639)
It sounds like Wednesday is going to be one hell of a debate. I'm jealous that you're going to be able to sit through all of that Ted. Let's look at the reaction of the industry stakeholders. Have we heard from say the MGA or Gaming Malta or the European Gaming Embetting Association? What's the general consensus here?
Ted (13:30.578)
Hahaha
Ted (13:46.105)
Well, as you expect, I mean, anytime you mentioned tax, yes, everyone is strongly opposed to this scheme. I think what doesn't help it is that it's still very much kind of in the technical side of how is it going to be applied. There's still kind of no kind of transparency in its kind of methodology.
And also where kind of this sits with the wider kind of EU policies on gambling. why should any formal harmonization in gambling start with taxation? Why kind of start on our duty of care, on conduct, on industry kind of standardization with regards to products? Stuff where the EU can really harmonize frameworks related to iGaming and also...
as a high risk industry, we continue to talk about for the last 10 years, but nothing has happened.
Charlie Horner (14:47.071)
So is that this is the first sort of intervention if you like on online gambling from from the EU. There not been any attempts to standardize things such as advertising, products or other parts of the industry that might have a little bit more industry buy-in other than we're coming for your revenue.
Ted (15:10.74)
I mean, look, we've seen this time and again, and you've just got to go and look at the kind of EU courts and the amount of gaming litigations that it's faced in last 10 years, be it Austria-Malta, Germany-Malta, the Netherlands versus Malta, also...
operators kind of fighting back against kind of certain parts of regimes being uncomfortable with like market launches so there's always kind of a point of rupture in iGaming. I don't think that an iGaming tax should be the first point of harmonization or the first kind of deliberation on how can you unify iGaming laws.
It'd be interesting to see if that is recognized in next week's debate. And I think that it could be a good platform to actually, for one MEP to bring that forward. And it would carry support across the floor, because in terms of the same time, you're looking at a European Union that needs to kind of align, certainly on healthcare and wellbeing. So again,
I think that here it's that we're starting to see or what the industry, forget about the tax, what the industry should really be focusing on here is that, is it kind of platforms or pathways to talk about kind of greater issues that it's involved with? And like you said, it shouldn't just be looked at as a kind of this income engine.
the safety of an online gaming market should be looked at it from in terms of welfare, helping public health and also kind of the eradicating criminalities.
Charlie Horner (16:55.379)
Yeah, yeah, certainly. How do you think that this debate will go on Wednesday in Shresberg? I guess we're still in the early stages of these proposals. We're not expecting any finality out of this, are we?
Ted (17:11.848)
It's again, I mean, one thing I've learned in the last five years is how kind of culture conflict the gambling is, right? And, you know, we come at it and certainly we've done this before. We kind of, take kind of like a UK view to it, but it is kind of still very conflicting debate across multiple markets, right? And especially online gambling.
What I'm kind of looking to see is which MEPs kind of criticize gaming, which, and from what countries, and what aspects of gaming as a whole are being kind of poked at.
Charlie Horner (17:50.623)
Sure, sure, yeah. Well, all eyes on Strasburg on Wednesday, Ted. Thanks a lot for taking the time to break this one down. I'm sure we'll be back talking about this one soon and we'll certainly be reports on SBC News and iGamingXpert regardless. And I think here, just in the UK, Ted, we'll just bask in the sunshine that we don't have to be involved in that anymore, shall we?
Alright, well thanks a lot Ted. Thanks to Optimo for supporting the show as always and to our audience. Thanks for tuning in to today's episode of iGaming Daily and come back tomorrow to keep up to date with all the latest global gambling news.