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Specific attributes of gambling services industries in EU

dice-147157Demand for gambling services in the early 21 century and for the past half-century in the European Union – as well as in most other parts of the world – has been and is expanding rapidly, for a number of reasons. Among the more important reasons are:

  1. Increasing amounts of discretionary income among the general population of the EU, especially in the post-World War II era for Western Europe, and since the collapse of the Soviet Union for the former Soviet bloc and Eastern European countries. A significant portion of discretionary income has been allocated to the leisure and entertainment sectors of economies;

  2.  An increased willingness of national and regional governments to authorize and exploit commercial and/or government offered gambling services over the past fifty years for a variety of reasons. These reasons include a greater social acceptance of gambling as a recreational activity among their constituencies, a desire to combat illegal gambling activities and related adverse consequences, and a willingness to exploit and capture economic rents that can emerge from legally sanctioned but market constrained gambling services;

  3. A general liberalization in moral and ethical attitudes about gambling, including a weakening of the influence of organized religions over their congregations in their criticisms or condemnations of gambling as an immoral or socially destructive behavior;

  4. The increasing integration of gambling with other activities that have been growing in popularity – such as professional sporting events, horse and automobile racing, and various contests of skill and luck – into mainstream entertainment outlets, such as television, cinema, print media, and modern electronic communications media;

  5. The explosion of computer, internet, and telecommunications technologies that have permitted the development of new gaming services (such as internet based tournaments, spread betting markets, and betting exchanges,) as well as a wide variety of new delivery channels for gambling services and related activities.

In spite of recent changes in laws in many Member States regarding permitted gambling, many national gambling services industries remain characterized by a vestige of prohibitions, constraints, and conditions that make them highly protected and sometimes eccentric constructions. As a result, many gambling services industries are organized in ways that set them aside from other industries that are subject to European Union principles of harmonization, or “free and fair” trade. These exceptions to EU principles are sometimes justified on the need to protect the public from adverse consequences associated with gambling;

Because of a legacy that had been characterized by prohibition and proscription until quite recent times, most gaming services industries are under-supplied in comparison to what would occur in free, competitive, and unobstructed legal markets in gaming services. This creates a situation where those legislative and regulatory bodies that authorize and oversee legal gambling services can be highly influential in determining the size and extent of permitted gambling in their jurisdictions, as well as in determining the ultimate benefactors (besides consumers) who share in the rewards created by the legal and organizational structures and revenue distributions of gambling service industries. This suggests that the determination of legislative and regulatory terms governing gambling services industries are likely to be characterized by processes that are disproportionately political;

As a result of this political dimension, gaming service providers – and other designated beneficiaries, such as Treasury Departments, Ministries of Finance, amateur sporting organizations, or other specified benefactors or “Good Causes” – can capture substantial economic rents from the excess profits generated in the provision of these services. It also suggests that such beneficiaries will actively participate in “rent seeking behavior” to protect or enhance their shares of the distributions.

Credit © European Union

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