Switzerland votes to block int’l online gambling operators


switzerland-online-gambling-referendumSwitzerland has voted overwhelmingly in favor of (a) allowing local casinos to offer online gambling and (b) blocking the domains of these casinos’ internationally licensed online competitors.

On Sunday, nearly three-quarters (72.9%) of Swiss voters cast their vote in favor of their country’s new gambling law, which was approved last fall but was immediately challenged by the student wing of the Free Democratic Party, who successfully gathered enough petition signatures to force a referendum under Swiss law.

The gambling law, which will now take effect at the start of 2019, grants land-based casinos the right to expand their operations online, while local internet service providers will be required to block the domains of any gambling site that doesn’t secure a partnership with a local casino.

Advance polling had shown that the ‘No’ side was winning the argument with younger voters, who feared establishing a precedent that would allow the government to block other domains it found objectionable.

But older voters proved susceptible to the ‘Yes’ side’s claims that allowing international sites continued access to the market would hamper the government’s ability to fund social programs, including pension funds. Overall turnout for the vote was low, only around 34%, suggesting general apathy toward the issue.

Casino operators couldn’t wait to celebrate, with Swiss Casinos Group CEO Marc Baumann issuing a statement urging the government to waste no time putting the new gambling law into effect. Prior to Sunday’s vote, a local parliamentarian had accused Baumann of attempting to bribe him with a board seat in exchange for publicly advocating for the ‘Yes’ campaign.

Swiss Casinos Group already runs a free-play online casino (Swissonlinegames.ch) and Baumann said last month that his company was “examining cooperation with a foreign company” regarding a real-money gambling site.

Switzerland’s requirement for a local land-based partner is similar to Belgium’s online gambling landscape, so it’s maybe no surprise that Belgium’s Ardent Group (formerly Circus Groupe) took a 44% stake in Stadtcasino Baden AG’s Casino Davos property last month, specifically citing the potential to launch online casino operations in Switzerland.

Switzerland has a tough slog ahead in attempting to force its online gamblers to patronize only locally authorized sites. For one thing, domain-blocking has proven to be a sieve in the other markets where it has been attempted.

Secondly, Swiss online gambling operators are scheduled to be taxed on a sliding scale that starts at 20% of revenue and tops out at 80%. The more successful a Swiss site becomes, the higher its taxes and the greater its difficulty in presenting an offer that can compete with internationally licensed sites.

Swiss Federation of Casinos president Beat Vonlanthen told local media that the government will attempt to cushion that tax blow by offering Swiss casinos a tax break of up to 50% for the first four years, thereby allowing them to lure in a sufficient volume of steady customers before pulling the bait-and-switch on pricing.