RGA challenges new online gambling taxation proposals in Greek Courts

The Remote Gambling Association (RGA), the largest trade association for remote gambling operators in the world, has submitted a legal challenge to the Greek Government’s taxation regime for remote gambling. The action in the Greek Council of State was co-signed by bet365, Betfair and William Hill.

The new tax regime will require licensed gambling operators who have been active in the Greek market to pay taxes retrospectively on any revenues earned from Greece-based customers from 1 January 2010 until the new licences have been awarded. In addition licensed gambling operators will be required to pay a retrospective 10% withholding tax (WHT) on winnings for the year up to 16 December 2011. This provision is equivalent to a market entry fee that will have to be paid by all of the operators who have until now been unable to obtain a licence to operate in Greece.

The RGA’s action seeks an annulment of the Ministerial Decision to introduce retrospective gross gambling revenue tax and a tax on customers’ winnings. The action is founded on the grounds that the proposed taxation measures are unconstitutional as they contravene the right to conduct a business activity and are disproportionate. Furthermore, the proposals do not accord with the principle that international treaties supersede conflicting provisions of Greek law.

The proposal of what are unconstitutional and non EU-conforming tax obligations on remote operators came at the same time as the Greek Government granting OPAP, the incumbent monopoly gambling operator for offline games, an extension of its existing licence for an additional 10 years. This extension, for the period from 2020 to 2030, was granted in a wholly uncompetitive and non-transparent fashion. Furthermore, OPAP currently pays no gambling tax on its offline activities, whereas online operators will be required to pay 30% GGR, and its customers are not subjected to a 10% withholding tax (on winnings under €100).

In October and November 2011 the RGA filed two separate complaints with the European Commission regarding the recently adopted Greek online gambling law – one on its own on the grounds of State Aid, and the other one jointly with the EGBA on internal market grounds. The complaints detail a range of non-EU compliant barriers to new market entrants and request that the Commission, as guardian of the EU Treaties, addresses these discrepancies as a matter of urgency.

The RGA will continue to lobby the Greek Government, on the basis that its actions are not in line with fundamental EU law and Greek domestic laws. Crucially, implantation of the proposed taxation regime and other anti-competitive conditions within the new online gambling legislation will ensure that potential market entrants will be driven out of the Greek market. This will in turn see the potential tax take of the Greek government shrink, while at the same time Greek consumers will be encouraged to bet outside of what will be an uncompetitive and unviable market.

Clive Hawkswood, CEO of the Remote Gambling Association said:

“The RGA believes that the opening of the Greek on-line gambling market is a welcome step. However, the taxation regime proposed will create a huge and uncompetitive financial burden for potential licensees. There is no doubt that implementation of current proposals will see the newly regulated market fail to the detriment of the Greek government and Greek consumers. There is still time to amend the Ministerial Decision and for the tax rates to be reviewed and I hope the Ministry of Finance will be willing to discuss viable alternatives with us.

“At the same time, we await the European Commission’s response to the two complaints filed so far, and we urge them to ensure that fundamental EU market principles are upheld in Greece.”