Could Austria find a way to liberalise online gambling after all?

Imogen Goodman examines the implications of Austria’s newly formed coalition government on the future of online gambling in the nation. While some stakeholders express optimism about potential reforms, others question whether this government will deviate significantly from the gambling policies of its predecessors.

Since the elections in October of last year, Austria’s political landscape has undergone a tumultuous transformation marked by protracted negotiations and uncertainty. The conservative People’s Party (ÖVP) engaged in coalition talks with various opposition parties over a grueling five-month period but failed to secure an alliance after two attempts. This ongoing political instability casts shadows over the nation’s aspirations for liberalized online gambling.

In February, negotiations between the ÖVP and the right-wing populist Freedom Party (FPÖ) collapsed, prompting the conservatives to collaborate with the Social Democrats (SPÖ) and the Liberal Party (NEOS). After intense discussions, these three parties released their coalition agreement on February 27 and were sworn in as Austria’s government on March 2.

Operating under the slogan “Do the right thing for Austria,” the coalition government aims to establish stability and address the country’s significant financial deficits. However, for the gambling industry, the coalition’s new program raises vital questions regarding the potential reform of Austria’s online gambling monopoly.

Key Questions Facing the Gambling Industry

Within the coalition agreement, specifically on pages 28-30, the government outlines its vision for restructuring the gambling landscape in Austria, emphasizing the “further development of the gambling monopoly” and intensified actions against illegal operators.

Austria currently operates within a fragmented regulatory framework, where online and land-based gambling activities are subject to a monopoly license, while sports betting is managed at the level of the nine federal states. The pivotal question remains: Will the new government pursue a liberalized framework allowing multiple licensees in the upcoming tender process? With the current monopoly license set to expire in 2027, stakeholders are eagerly awaiting clarity on the future.

At present, the market is essentially restricted to a single “legal” operator: Win2day, a subsidiary of Austrian Casinos, which holds a 15-year license for lottery and online casino offerings. In addition, various Malta-based operators such as Tipico, Interwetten, and Bwin are active in the region but lack local licenses.

Will Austria Maintain Its Gambling Monopoly or Embrace Liberalization?

The phrase “further development of the gambling monopoly,” or Weiterentwicklung, can be interpreted in multiple ways. While some view it as a signal to maintain the status quo, others, like the Austrian Betting and Gaming Association (OVWG), see it as an opening for future reforms. OVWG Vice President Simon Priglinger-Simader posits that time constraints during coalition negotiations may have sidelined the online gambling issue. “Our discussions with policymakers indicate that online gambling licenses had not yet been on the agenda when this government was established,” he stated. A number of influential figures in the new government advocate for modernization of the online gambling market to align with European standards.

Of the three coalition parties, the center-right ÖVP and liberal NEOS support reform, contrasting with the SPÖ’s more cautious stance. This raises concerns that gambling reform discussions may have simply been relegated to a secondary priority.

Echoes of Previous Governments’ Positions

However, not all experts are optimistic about the direction of this coalition. Dr. Arthur Stadler, a founding partner at the Vienna-based law firm Stadler Völkel, warns of numerous similarities with previous administrations and their historical struggles to reach consensus on gambling policies. “The need for liberalization in Austria’s online gambling policy is critical, yet the coalition agreement echoes past governments’ approaches, including reinforced regulations on IP and payment blocking,” Stadler observes. “This trend was evident even four years ago during the coalition with the Greens.”

This continuity highlights the pressing need for a comprehensive overhaul of Austria’s gambling market.

Emerging Opportunities for Gambling Liberalization

Yet, there are emerging signs that the door to liberalization may not be as firmly shut as it appears. The term Weiterentwicklung is mentioned approximately 130 times throughout the coalition agreement, suggesting a push to defer complex discussions to a later date.

Moreover, the coalition outlines several concrete initiatives, including enhanced player protection measures and the establishment of an independent gambling authority to oversee future licensing, forecasting a potential shift toward market liberalization. Priglinger-Simader asserts that these developments only make sense within the context of an evolving regulatory framework, hinting at a future where multiple regulated operators could coexist.

Transforming the Role of the Ministry of Finance

Another favorable development is the coalition’s intent to “debundle” roles within the Ministry of Finance, which currently acts both as a regulator and as a tax collector from the industry. “The areas of player protection, supervision, regulation, licensing, and fiscal interests will be separated,” states the coalition agreement, proposing that regulatory responsibilities shift to an independent supervisory body adhering to international norms.

The SPÖ’s control over the Ministry of Finance, traditionally more skeptical of gambling, further reinforces the potential for this independent body to oversee operations without conflicting interests. According to Stadler, these changes signal a promising shift that could significantly impact the forthcoming licensing process.

Impending Increases in Betting Levies

While the trajectory of online licensing remains unclear, the financial obligations for operators have already been clarified. Recently, the coalition voted to increase the betting levy from 2% to 5%, an increase of 150%, effective April 1. This dramatic tax hike prompts questions regarding how operators will adapt and whether they will transfer these financial burdens to consumers.

The government’s ambition to extract up to €220 million from the gambling sector by 2030 raises skepticism, particularly when the OVWG argues such figures may only be attainable through market liberalization rather than relying solely on tax increases.

The Countdown to Market Liberalization

With the current casino licenses due to expire in September 2027, the clock is ticking for the government to build its new gambling authority and issue licenses effectively while minimizing the risk of legal challenges. The forthcoming tender process is anticipated to be the most contentious yet, necessitating strategic alliances among operators to fulfill regulatory experience requirements.

Challenges are likely, as operators may contest biased or unjust processes in administrative courts, potentially extending the timeline by a year or more. The government faces an urgent deadline to form its new authority within the year, followed by prompt publication of detailed tender guidelines and licensing decisions.

As negotiations continue behind the scenes, those advocating for maintaining the current monopoly and those favoring liberalization are poised for a crucial showdown. “We expect some resolution by September or October,” noted Priglinger-Simader, though the outcome remains uncertain.