The Cypriot Parliament is expected in the next few months to enact a new betting law, which is currently in draft form and which was notified to the European Commission in June 2017. This Betting Law of 2017 will repeal Cyprus’ Betting Law of 2012, but nonetheless includes the vast majority of provisions found in the 2012 Law, while adding new provisions across four categories. Christos Ioannides, Partner at LLPO Law Firm in Cyprus, describes the background to the Betting Law of 2017 and the new provisions found within.
It should be remembered that when the Cyprus Betting Law of 2012 entered into force the then newly established National Betting Authority (‘Authority’) only examined what were termed Class A licence applications - namely, physical on-premises betting services applications. In October 2016 the Authority published the respective regulations for online betting services and initiated the examination of Class B licence applications - namely, applications pertaining to online betting services. Today, from a total of 11 applications, the Authority has approved 10 applications, some from as early as January 2017, while one application was withdrawn without being fully examined. Indeed, it is widely accepted that the betting market in Cyprus, especially with the approval of Class B licences, has become a very popular European betting jurisdiction for bookmakers.
Based on the above, in June 2017, the Government of the Republic of Cyprus notified to the European Commission a draft Law entitled the ‘Betting Law of 20171’ (‘draft Law’). The standstill period for the notification of the draft Law elapsed in September 2017 and it is expected that the Cypriot Parliament will enact the draft Law in the coming months. The draft Law provides for the total repeal of the Betting Law of 20122, which is currently in force, with the vast majority of the provisions of the draft Law nevertheless repeating the provisions of the Betting Law of 2012 as it currently applies.
Indeed, a simple comparison between the provisions of the Betting Law of 2012 and the new draft Law suffices in order to conclude that concepts such as:
the establishment, composition and powers of the National Betting Authority;
the types of Class A and Class B licences;
the procedures under which the Authority examines applications for these licences;
the obligations and rights of Class A and Class B bookmakers; and also
the vast majority of the substantial provisions incorporated by the Betting Law of 2012;
remain virtually unaltered.
As such the current legislative regime will be substantially the same even after the draft Law is enacted and enters into effect. As the Government of the Republic of Cyprus pointed out in its notification, it was considered necessary to prepare the draft Law to remedy an infringement pointed out by the European Commission during the ‘structured dialogue’ process relating to the Betting Law of 2012. More specifically, the Betting Law of 2012 included provisions that were more restrictive than those which had been included in the draft law originally notified to the European Commission in 2010 as a ‘draft technical rule3.’
Consequently, the Cypriot authorities decided to notify this draft Law to the Commission thereby repeating the majority of the provisions of the Betting Law of 2012 in the relevant draft Law but also incorporating some new provisions. The new provisions relate to the following four categories:
The addition or amendment of definitions in the relevant definitions section of the draft Law
The draft Law incorporates a number of new definitions. The activity of a ‘betting exchange’ is now specifically defined as a type of electronic bet conducted using online services provided by an intermediary, as part of which players set the odds on the outcomes of events and accept bets from other players, and a percentage of the players’ winnings is paid to the agent as commission. It should be remembered that a ‘betting exchange’ was a prohibited activity under the provisions of the Betting Law of 2012, but the absence of a clear definition left open possible unwelcome interpretations as to which activities fell within the undefined meaning of a betting exchange. The new definition aims at providing a clear and unambiguous reference to operators/bookmakers and competent courts as to what constitutes a betting exchange, and thus avoids future arbitrary interpretations.
The avoidance of such future arbitrary interpretations is also the reason for the new definitions of words such as ‘remote’ and ‘electronic means.’ According to the draft Law the definition of ‘remote’ when referring to bets is provided to mean a bet offered without the contracting parties being present simultaneously, while the definition of ‘electronic means’ means the equipment required for the electronic processing (including digital compression) or storage of data, through which a bet is offered at its starting point and accepted at its end point, that bet being offered, sent and received entirely through telecommunications following a specific order from a bookmaker.
The definition of ‘credit institution’ has also been extended to mean an undertaking that is accepting deposits or other returnable funds and granting credit to player accounts, and which holds the relevant operating licence from a Member State’s competent authority, including a licensed credit institution within the meaning of the Laws on the Business of Credit Institutions. It should be remembered that under the provisions of the Betting Law of 2012, a credit institution did not include undertakings holding an overseas EU licence, and thus such institutions are now considered as being able to engage their services for the benefit of bookmakers.
Similarly, the definition of ‘betting’ has been amended to now include the practice of ‘cash-outs,’ a practice that was not really covered under the wording of the previous definition of what constitutes ‘betting.’
New provisions, primarily relating to the National Betting Authority’s modus operandi
A number of provisions were added relating to the fees and remuneration of the members of the Board of Directors of the Authority4, clarifications setting the Authority’s financial year to commence on 1 January and end on 31 December of the same year5, the obligation of the Authority to keep full and accurate accounts, which shall be audited by the General Auditor of the Republic and submitted to the Minister6, but also the obligation of the Authority within three months of the end of the financial year, to prepare a report and financial statements for the previous financial year, drawn up in line with the International Accounting Standards, and submit them to the Minister.
Similarly, provisions are also made for the budgetary planning and spending (allocation of profits) of the Authority. The Authority’s net profits for each financial year and the Authority’s accumulated surplus from previous years, apart from the 1% levy collected by the Authority in support of mechanisms and programmes destined to protect young people and addicted players, shall be allocated as follows:
1. 20% share of net profit shall be transferred to the capital reserves;
2. 80% share of net profit shall be transferred to the Consolidated Fund of the Republic; and
3. the accumulated surplus shall be transferred to the Consolidated Fund of the Republic.
Provisions relating to Class A and B licence applicants, bookmakers and responsible betting
The provisions relating to the preconditions applicants need to satisfy were also subject to amendment. Namely, the minimum age for an applicant was lowered to 18 from 25 years old. Also as far as the required criminal record of applicants is concerned, applicants will now need to produce a criminal record:
1. from the Republic, and
2. from the country of nationality, in the case of a natural person, or from the country where the registered office is located, in the case of a legal person, and
3. from the country of habitual residence, in the case of a natural person, and
4. from the country where the person concerned carries out its main business or professional activity.
In addition, each Class A or B licensed bookmaker must, by the end of the calendar month following each accounting period, pay to the Republic any amount of betting tax due as well as pay the Authority the corresponding levy. In instances in which the betting tax or levy is not paid by the Class A or B licensed bookmaker in time, a fine is now provided, equal to 5% of the amount of the tax or levy due and the tax or levy plus the fine shall become payable along with default interest calculated based on the relevant default interest rate applicable for the State, which is set by a Decree issued by the Minister of Finance pursuant to the Laws on Single Public Default Interest Rate.
Any fine and interest imposed shall be collected as due betting tax or levy. Where the bookmaker continues to fail to pay the betting tax or levy for the specific accounting period for a period of more than 60 days from the date on which the debt arose, the Authority is now able to seize the amount owed from the bank guarantee that the bookmaker provided on receiving the betting licence7.
Where, with the Authority’s consent, it is proven that the Class A or B licensed bookmaker has paid betting tax or levy higher than the amount due or if the tax assessment changes owing to an administrative action for judicial review as a result of which the bookmaker is in the position of having paid betting tax higher than the amount due, the Authority must refund the excess amount collected to the bookmaker with the relevant default interest referred to in Article 76(1), as applicable, from the first day of the calendar month following the date on which it was collected8.
It is important to also highlight the fact that according to the new provisions a licensed bookmaker may now obtain and use additional webpages, other than the ‘.com.cy’ licensed page, which nevertheless should be the only webpage to be used for the provision of Cypriot licensed betting services.
The new provisions add the possibility for a customer to pre-set the times during which they will be allowed to bet, which the bookmakers must be able to accommodate to assist in enabling responsible gaming/betting.
Provisions facilitating the investigation and prevention of illicit activity
New provisions, which were recommended by the Police to more effectively stamp out illegal gambling/betting, are also incorporated. These provisions aim at facilitating the investigation and prevention of illicit activity. In particular according to the provisions of the draft Law any premises or any place which is entered under the provisions of the draft Law shall be presumed, until proven otherwise, to operate as premises where online casino services are provided or where limited benefit gaming machine services are provided, in any of the numbered example cases9. The numbered example cases comprise of a variety of circumstances in which the Police have often faced difficulty in proceeding with a proper investigation.
Additionally, the Authority or a member of the Police on orders from the Chief of Police may now file an ex parte application with a court at any stage after the charges for offences for infringement of the draft Law have been filed, and the court may issue an order banning betting or the provision of betting services, or the possession or operation of limited benefit gaming machines or the provision of services to operate limited benefit gaming machines or the possession or operation of machines which provide online casino services or the provision of such services, and/or an order suspending the operation of any premises or place associated with the offence being examined; this order may be designated as an order to be returned to the court, if the court is satisfied that:
1. the charges contain a reference to the offences referred to in the respective article of the draft Law10; and
2. there is eyewitness testimony associating the specific person or premises with the offence being examined11.
A court that finds a person guilty of specific offences may, in addition to imposing the sentence, and after having taken into account the extent to which there is a reasonable risk of a new similar offence being committed in the future, order that person:
1. to terminate or suspend any activities or practices or services related to the offence for which he/she has been convicted; and/or
2. close and keep closed any premises connected to the offence for which he/she has been convicted,
immediately or within a reasonable deadline and under conditions which the Court considers necessary or appropriate to set out in the order, for the purpose of ensuring more effective implementation of the provisions of the draft Law and the applicable regulations issued by the Authority.
A person in respect of which an order under the provisions of the draft Law has been issued, who fails or neglects to comply with that order within the time period specified therein, irrespective of whether the Chief of Police commenced enforcement or enforced the order, shall be guilty of an offence and, if convicted, shall be liable to imprisonment for a period not exceeding five years or a fine not exceeding €300,000, or both.
The Authority is further afforded with a catch-all administrative jurisdictional provision in the draft Law to the effect that where the Authority finds that a person has performed an act, or has omitted to do so, either in breach of a condition in a Class A or B bookmaker’s or authorised agent’s licence, or in breach of the draft Law, or in breach of the Regulations, or in breach of the guidelines issued by the Authority, the Authority may impose an administrative fine, the amount of which will depend on the seriousness of the offence but which may not exceed €100,000, on that person regardless of whether that person is criminally liable under the draft Law or under any other legislation.
In addition to the catch-all provision, the draft Law also incorporates specific rules laying out the exact procedure to be followed when an administrative case is being examined12.
Christos Ioannides Partner
LLPO Law Firm, Cyprus
1. Notification No.: 2017/273/CY (Cyprus).
2. Section 100 of the draft Law.
3. EU Pilot 6840/14/ENTR document.
4. Section 6(2) and (3) of the draft Law.
5. Section 10 of the draft Law.
6. Section 11 of the draft Law.
7. Section 75-77 of the draft Law.
8. Section 78 of the draft Law, provided however that no default interest shall be paid if the excess payment is due to an error on the part of the Class A or B licensed bookmaker; if the excess amount collected relates to betting tax, the Authority shall recover that amount from the Republic’s Consolidated Fund and then refund it to the Class A or B licensed bookmaker.
9. Section 93 of the draft Law.
10. Section 94 of the draft Law.
11. Section 94 of the draft Law.
12. Section 95 of the draft Law.