Tighter rules transform Austrian gaming market

First published in the Summer 2011 issue of European Gaming Lawyer

The latest amendment to the Austrian Gambling Act provides a new regulatory framework for the Austrian gaming market.

The changes made therein regarding the issuance of licences serve to effectively bring Austria’s legal framework in line with the European Union standards. Additionally, significant improvements have been made in the areas of player protection and the protection of minors. The new law provides a clear-cut regulatory framework for the gaming industry and allows positive competition within clear-cut rules. The reforms concerning player protection are welcomed by Novomatic since the group has long demanded a clear-cut and modern regulatory framework for gaming in Austria.

Historical background

The 1980s saw the introduction of a number of new lottery products. During the period that followed, all forms of lotteries were held by Österreichische Lotterien GmbH, which was thereafter the sole licence holder for the Austrian lottery market.

The area of casinos developed in a similar fashion. In the late 1960s, Österreichische Spielbanken AG (the later Casinos Austria AG) became the sole licence holder and assumed management of the 12 Austrian casinos that still exist today.

In April 2006, the European Commission initiated infringement proceedings against Austria and six further EU member states due to the gambling market limitations in effect in all these states at that time.

In a policy brief in October 2006 the European Commission addressed the topic as follows: “The Commission has asked questions of the Austrian authorities in relation to national legislation which prohibits the promotion or advertising of casinos licensed and established in other member states. The Commission also has concerns that the legislation in question provides that casinos must act diligently so as to protect Austrian players from excessive losses, but makes no such provision for foreign players. Such a provision is therefore liable to be discriminatory as regards the protection of players as recipients of services.”

In Austria, the EU action resulted in several reforms to the Gambling Act. In the present, final version, the issuance of licences has been reformed on the basis of the Engelmann Ruling; according to the new regulations, operators from outside Austria may receive Austrian licences if they hold a comparable licence. Furthermore, land-based electronic gaming has been given new regulations and player protection measures have undergone massive improvement.

The current amendment to the Gambling Act:

On June 16, 2010, the amendment to the Austrian Gambling Act was passed by the Austrian Parliament. The newly amended law entails significant restructuring of the Austrian gaming market and creates just the sort of fair and clear regulatory framework that has been demanded for so long by many stakeholders; it also provides legal certainty for the entire industry.

The protection of minors as well as player protection, in particular, have been significantly strengthened by this new law. Once the law takes effect (following expiration of the grace periods in 2014 or 2015), numerous measures including obligatory access control, a graded warning system, the establishment of a maximum permissible density of gaming machines and more efficient monitoring thanks to a special task force to investigate illegal gambling, set up by the Austrian Ministry of Finance, will be implemented.

The most significant changes are: 1) AWP gaming receives a new regulatory framework. 2) Poker is now explicitly covered by the definition of “games of chance” (entailing creation of a poker salon concession exclusively for the purpose of running poker games that do not require a human dealer). 3) The number of casino concessions to be issued will increase from 12 to 15. The public tender of such licences will now take place with increased transparency in accordance with European Union legal requirements. 4) Lowering of the casino tax to 30 per cent. 5) Creation of AWP outlets (outlets with at least 10 and a maximum of 50 slot machines)

Land-based electronic gaming

AWP gaming will be allowed both in electronic casino operations and for AWPs in individual locations. The decision as to whether and in what form land-based electronic gaming is permitted remains within the remit of each federal state. The federal government, however, imposes the following limitations: 1) Maximum number of allowed slot machines is based on a per-capita quota in every federal state. 2) Maximum issuance of three permits (valid for 15 years maximum) for each federal state. 3) Mandatory networking of all gaming machines with the server of the Financial Authority (Bundesrechenzentrum – BRZ).

The following table provides an overview of measures for improved player protection in land-based electronic gaming:

Differing approaches by the Austrian provinces

In the past, regulation of land-based electronic gaming had been regulated by the federal states. It was allowed only in the provinces of Vienna, Lower Austria, Carinthia and Styria. Now, due to the new and improved player protection standards, the provinces of Upper Austria and Burgenland have also decided to permit regulated gaming.

Upper Austria is moving more rapidly here, with the search for parties interested in operating gaming machines having already begun in mid-July. Upper Austria will be issuing two licences for the operation of AWP salons, adding up to 362 machines in total per licence, and one licence for the operation of individual machines, allowing for 449 machines in total to be set up in individual locations. These licences will be valid for 15 years. In Lower Austria, as well, the public tender process has already begun.

As specified in the new legal framework, the above mentioned four provinces which have allowed machine gaming have been given grace periods until 2014 (2015 in Styria) in which the existing licences will remain valid. For the two new permit-issuing provinces, Upper Austria and Burgenland, the new rules of the amended Federal Gaming Law apply right from the beginning.

Improved protection of minors and vulnerable players

The 2010 version of the Gambling Act places an emphasis on the protection of minors and player protection: the new law, once in effect, entails mandatory access control measures, proof-of-age using photo IDs, a graded player protection system and more efficient monitoring by the authorities.

Through their pioneering role in the areas of protection of minors and gambling addiction prevention, privately owned gaming providers such as Novomatic have made significant contributions to the entirely new standards that have now been set in this area. In 2007, Novomatic led the way in Lower Austria by installing an innovative and strict electronic access control system which includes player protection measures that are activated depending on the gaming frequency of individual players.

Solid training for prevention representatives

Novomatic’s pioneering role is also manifested in its recent establishment of the ISO-certified Novo Academy, which implements a comprehensive training programme, preparing Novomatic employees to assume the role of prevention agents. In order to guarantee that such training remains state-of-the-art in the future, all employees are required to test their knowledge at regular intervals as well as to obtain the most up-to-date information via an e-learning programme. Novomatic is convinced that these measures will ensure the highest standards of player protection.

Co-operation with player protection organisations

The training programme was developed in close co-operation with experts from the renowned Anton Proksch Institute, Europe’s most modern clinic for the treatment of addictions. Co-operative arrangements of this sort represent an essential aspect of Novomatic’s Responsible Gaming Programme. The constant exchange of experience ensures that the prevention measures implemented are practical and on the cutting edge of scientific research.

Combating illegal gambling

The limitation of licences defined in the new Gambling Act of 2010 is intended to restructure the market by reversing the uncontrolled proliferation that characterised the electronic gaming segment up to now. This limitation will be implemented via a maximum number of machines based on a per capita quota (e.g. one machine per 1,200 residents within a federal province) and minimum required distances between casinos and electronic gaming salons). Another new feature is the planned networking of every single machine with the financial authorities. This measure will make the identification of illegal machines easier, marking an important step in effectively reducing illegal gambling.

Technology-based player protection measures

The amended Gambling Act entails an increase in the amount of money that can be put at stake, but under much stricter rules: the highest permissible bet is €10 per game; jackpots and auto-start buttons, however, are no longer permitted. Furthermore, a cool-off period after two hours and maximum daily playing time must be adhered to.