Switzerland to Bar International Online Gambling Operators Following Referendum

Hiking in the swiss alps with flower field and the Matterhorn peak in the background.

Swiss voters on Sunday, June 10, approved a referendum that calls for increased controls on several aspects of gambling, including a ban on online services offered by all international operators.

Switzerland’s citizens will find themselves cut off from much of the online gambling world in 2019, following voter approval of a referendum designed to implement new controls and restrictions across the country. Once the new laws go into effect, major international online gambling operators in Europe and around the globe will be barred from offering their service to Swiss gamblers.

Switzerland’s residents will still be able to gamble online, but only at sites that offered by any of the country’s 21 land-based casinos, who until now have been land-based only. Specific regulations within overriding laws have yet to be finalized, but it appears likely from a Swiss government FAQ about the new laws that some international operators may be sub-licensed as third-party software platform providers for future Swiss casino sites.

The new rules will be backed by government-ordered blacklisting of all international operators, a move that drew a significant backlash from net-neutrality and anti-censorship groups in Switzerland. Switzerland’s future online firewalling will form one of the most restrictive online-gambling frameworks in Europe, regardless of the country’s relatively small population (just over 8.5 million).

Anti-censorship advocates forced referendum

Switzerland, like several neighboring European countries, has spent several years formulating new rules to govern the modern online gambling era. The new rules, however, drew hard pushback from Swiss anti-censorship groups, and the youth wings of three left-leaning Swiss political parties, the Young Radical Liberals, the Young Liberals, and the Young People’s Union.

Those three groups gathered the 50,000 signatures required to force the new measures to a vote, despite the rules already having been approved by both houses of Switzerland’s Parliament.

However, gathering enough signatures to force a vote was far different than winning the vote itself. With only 34% of Swiss voters turning out to vote on this and a couple of other initiatives, Switzerland voted to approve the new restrictive rules, by 72.9% to 27.1%.

Problem gambling or protectionism?

Advocates of the tightened online gambling regulations successfully framed the new rules as a consumer-safety issue rather than a protectionist measure supporting Switzerland’s land-based casinos.

“Voters prefer to continue the current policy, only allowing gambling under restrictions”, Justice Minister Simonetta Sommaruga said in a news conference about the results. Sommaruga’s Social Democratic Party is part of Switzerland’s generally right-center ruling coalition.

Christian Democratic Peoples Party spokesman Karl Vogler called the vote a “pragmatic decision by Swiss voters who want to continue funding civil society projects with revenue of the casinos and lotteries”. Vogler’s CDP led a parliamentary push in favor of the new, more restrictive rules.

Before Sunday’s referendum and in support of the new rules, Switzerland’s ruling parties offered research asserting that the country’s gamblers spend roughly 250m Swiss francs ($253m/£189m) each year on “unregulated foreign betting sites”. The “unregulated” label, however, was slapped on all international operators, the vast majority of whom are licensed by white-label jurisdictions elsewhere in Europe.

While this lost-revenue claim appealed to members of Switzerland’s Parliament, opponents of the new rules countered by noting that increasing the threshold for taxable gambling winnings from 1,000 to 1,000,000 Swiss francs will wipe out any revenue increase the government might expect under the new rules.

Further, the Swiss government reports acknowledge that the blacklisting won’t be an impenetrable block and that serious online gamblers will still be able to find workarounds to play on some Swiss-facing sites. That argument, however, ignores the reality that most white-label international online operators will respect the new rules and voluntarily pull their services from the country, leaving only higher-risk operators still offering services to the country.

Both sides also accused each other of accepting funds from sources seeking to shape the vote for their own profitable purposes. Opponents of the new rules assailed Switzerland’s casinos for lobbying and funding pro-firewall Parliament efforts, while those pro-restriction forces claimed that opponents were receiving funding from unnamed international sources, probably a sideswipe at operators incorporated elsewhere in Europe.