Final Report: Regulation of Online Gambling
16 September 2019
The final report of the study "Regulierungsoptionen für den deutschen Onlineglücksspielmarkt" (regulatory options for the German online gambling market) was published. You can access the study here: Regulatory Report. The study was funded by nine German Bundeslaender.
Most of the existing research on gambling regulation refers to offline gambling. Yet online gambling is quickly becoming the predominant form and, moreover, is markedly different from offline gambling in many respects, which implies that the policy implications cannot readily be transferred from one sector of the gambling industry to the other.
The current regulatory responses to the growth and particularities of online gambling – a product that is essentially homogeneous around the world – are remarkably diverse: For example, Denmark has a laissez-faire approach with a liberal licensing system for online gambling with few restrictions, while Norway, a socio-economically similar neighbor country with a common regulatory history, operates a state monopoly on online gambling and accordingly bans all private operators. Such differences are astounding considering that the social costs of online gambling are unlikely to vary much between countries, and neither are the social values towards gambling, i.e. the weights attached to those costs, all that different among Western cultures. This is confirmed by the similar regulatory goals stated in each jurisdiction. And yet we even see stark differences between regulatory approaches applied within a single nation state, where values and costs ought to be nearly identical. For example, the state of Pennsylvania grants licenses for all sorts of online games while its neighbor state New York prohibits most forms of online gambling.
If we largely rule out variations in social costs and values as explanations of such differences in regulatory approaches, we are left with only two candidates: local political constellations, and insufficient knowledge on the subject matter. The second one is addressed in this research project: it compares different regulatory models for online gambling and their socio-economic implications.