New Swiss gaming regulation: Federal Council publishes draft

Casino, betting, lotteries

On 21 October 2015, the Swiss Federal Council released its new draft of a revised gambling law for deliberation in parliament. Under the current legislation, the relatively new casino industry faces fierce competition from foreign online operators: Switzerland's regulatory regime almost fully bans the organisation or operation of online games of luck for money. This resulting in substantial gambling revenues leaving the country.

New: only one bill instead of two

The proposal of the Swiss Federal Council does not the potential to substantially change the Swiss gambling market: To a large part, it does not change the current control and enforcement practises. From a formal point of view, it however does bring substantial changes. Currently, the Swiss regulations distinguish between two kinds of gaming, i.e. casino games (games of chance such as roulette, blackjack, etc) and bets/lotteries. While Casinos (terrestrial and online) as well as cash games of chance are governed by the 1998 Federal Gaming Act (FGA), any other games – such as lotteries, bets and bingo – are governed by the Swiss Lottery Act (SLA). Skill games and prize competitions (as far as they do not fall under the SLA because participation is combined with a purchase obligation) do not fall under these federal laws but are regulated by cantonal law. Principally, skill games and such prize competitions may freely be organised subject to certain cantonal restrictions.

Content: Close to the existing regulation

The proposed bill refers those two decrees in one Federal law and thereby guarantees a coherent gambling regulation in Switzerland. Other than that, the content of the new draft remains both close to the current law as well as to the first draft published in spring 2014: Casinos still require a concession from the federal government and are supervised by the federal government. The lotteries, sports betting and skill games will also in the future require a cantonal authorization and are under the supervision of the cantons. The net gains of lottery and sport betting services have - like today - to be used in full for charitable purposes. In addition, it should still be allowed to play for money in private without permission. Also should sweepstakes and contests to promote sales remain permitted to the extent they are free of charge.

The new features of the draft are, essentially, the following:

New: Online gambling ban removed

According to the proposed Gaming Act, the provision of online gambling services based on a concession is allowed. However, only a holder of a license for a terrestrial casino qualifies to apply for an online license. As only a limited number of terrestrial licenses may be granted, foreign online gaming providers are well advised to enter into early strategic alliances with Swiss casinos in order to be able to enter the Swiss market.

New: Blocking of foreign operators

Said advice is also of economic relevance, as without such alliance Switzerland may become a lost market to foreign providers. The Federal Council intends to technically block the access to foreign online gaming providers if their services have not been licensed in Switzerland. Thereby, the Federal Counsel argues that such measures are required to protect the Swiss players from unregulated foreign offers.

So far, only a few critical voices rejected the proposed technical blocking measure which strongly interfere with personal rights and restrict the individual to freely access the internet. However, as technical measures may easily be circumvented, the Swiss operators will still have to compete in a global market, which will not be possible under the proposed regime.

New: Poker Tournaments outside casinos

Furthermore, the draft legislation provides for the possibility to organise small poker tournaments outside the scope of casino licenses.

New: Stronger Players Protection

The new act also proposes to strengthen the player's protection and contains a number of provisions to guarantee secure and transparent gaming operations. The proposal also contains a number of provisions to guarantee secure and transparent gaming operations.

New: Full Tax Exemption

The different tax treatment of casino and lottery games are eliminated (currently gains from lottery and sports betting need to be taxed whereas gambling gains are tax exempted. The draft regulations provides for an exemption of all money games.

What is next?

Is is currently not know when the draft will be discussed in parliament but from past experience, it may be expected that the real test for the draft Money Gambling Act is yet come. In particular, we expect that the proposed online gambling regime, including the foreseen blocking measures, will lead to lengthy discussions and may be subject to substantial changes. The new Money Gaming Act is not expected to enter into force prior to 2019.

Draft Gaming Law (German) (PDF)

* Dr. Andreas Glarner

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