How is Switzerland Starting to Embrace Online Gambling?

Breaking the Mould: How is Switzerland Starting to Embrace Online Gambling?

While the online gambling market is undoubtedly a growth sector all over the world, with new markets opening up and new projects like the new MGM casino in Japan being planned, there are significant geographical splits that operators must pay attention to.

Although European countries have largely embraced online gambling and created a well-regulated (and not to mention profitable) industry, for example, only three states in the U.S. have followed suit. The global landscape is also continuing to evolve over time, as nations continue to update their laws and embrace online gambling legislation.

Switzerland is the latest to enter the fray, as despite the progressive treatment of online gambling in Europe, the nation's archaic laws have hindered businesses from operating legally. This is now set to change, but how will this impact on the market overall?

All Change: Introducing the New Money Gaming Act

After months of debate and consideration, legislation to update Switzerland's gaming laws recently passed a final vote in the nation's parliament. This will usher in an era of change and progression, and one that is befitting of Switzerland's status as a leading financial and commercial centre.

The new bill, which is called the Money Gaming Act, will merge governance for both the land-based casino and online gambling sector into a single piece of documentation including, of course, roulette. This will not only create consistent and seamless laws, but it will also replace the restrictive pieces of legislation passed historically in 1923 and, more recently, 1998.

So how will this change gambling in Switzerland?

In simple terms, the new bill will officially legalise online gambling, removing the ambiguity that virtual operators have faced nationwide. While the previous legislation did not specifically prohibit these services, there was no regulatory guidance and this enabled overseas operators to target Swiss players and diminish the local industry.

Under the new legislation however, Swiss Internet service providers will be required to block international gaming operators from accessing local players. This will allow Swiss operators to target players and dominate the newly regulated market, while establishing a lucrative stream of taxable income that can then be reinvested into the economy.

Interestingly, the notion of blocking access to international providers has been opposed in some quarters, with resistance being led by several youth organisations including: the Swiss People's Party, the Free Democratic Party and the Green Liberty Party. The main issue appears to be that such an arbitrary move is believed to have violated the fundamental principles of free movement of service, and this is something that will be challenged in the near-term.

The Future for Switzerland and the Market as a Whole

This potential stumbling block could impact on the national market, as the presence of familiar overseas operators could reduce the market share for Swiss firms (and the amount of money generated through taxation). In terms of the tax itself, this will initially be limited to winnings of CHFm1 and above through all sports betting, lottery and online casino activity. Land-based casino betting will remain free from tax liability.

While these details will undoubtedly be subject to change over time, there is no doubt that the bill will remain and revolutionise gambling in Switzerland. Firstly, it will drag the nation kicking and screaming into the 21st century, while also creating a set of agile online gambling laws that brings Switzerland in line with other European countries. The latter point is crucial, as it prevents operators from neighbouring countries from exclusively targeting their players and diverting a significant revenue stream beyond the nation's borders.

Above all else, the new legislation will surely create a huge opportunity for the government to maximise its profits, particularly when you consider the appetite that exists for online gambling in Switzerland and the relatively wealthy nature of national households.

In simple terms, the average household, net-adjusted disposable income per capita is estimated at $35,952 per annum in Switzerland, which compares favourably to the OECD average of just $29,016. The correct positioning of online gambling will therefore tap into this abundant wealth, enabling operators to optimise profits and the public sector to benefit from increased reinvestment into services.