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Cyprus

KNOWN as compulsive gamblers, Cypriots are now being well served by the explosion of online gambling shops offering anything from blackjack to jackpot, doubtless linked to the huge amounts of cash involved in the industry.

A top lawmaker said recently that the turnover in the Cypriot online gambling industry in 2008 was about €2.5 billion, a figure that chairman of the House Legal Affairs Committee Ionas Nicolaou expects to double by 2012.

The mushrooming online casinos – spotted on ever growing numbers of street corners throughout the free areas - do not have the atmosphere of the real ones but avid gamblers can still engage in their favourite games, including roulette, blackjack and jackpot through a computer screen.

All one has to do is be an adult, walk in, pay the minder the amount you want to bet and sit in front of a screen. The attendant enters the credits and the game is on.

Online roulette is supposed to be live, with a window box in the corner of your screen showing the spin as it happens.

Cyprus prohibits casino gaming but there is not much the authorities can do about these establishments as the service they offer is provided to them remotely, coming through the internet from other countries that allow these forms of gambling.

People in the industry suggest that it would make more sense for the government to allow these operations and collect taxes.

But the current administration has refused to licence real casinos on ideological and ethical reasons and is now looking for ways to put a halt to the operation of online gambling.

In trying to prohibit the practice, the government should tread carefully as it could infringe the free movement of services.

Nicoalou said Cyprus will base its law on a recent decision by the European Court of Justice in the case of Portugal.

In its September 2009 decision, the European Court of Justice held that Article 49 EC – on the free movement of goods, services and capital - allows a member state to prohibit internet suppliers of online gaming, gambling and betting services established in other member states, in which they lawfully provide similar services, from offering games of chance via the internet within the territory of that member State.

Cyprus will effectively set up a committee that “will essentially be authorised to give licenses and it will not give any out to online casinos,” Nicolaou said.

He seemed certain that the law will go through and online casinos will have to close down.

But the sheer number of these establishments and the investment that went into them leaves some room for doubt that this law will be effective.

One owner suggested that there will be lawsuits against the state while many will defy the authorities, others will go underground.

And online gambling in Cyprus is huge. One of the providers of online gambling, who has a 30 per cent market share, turned over around €680 million in 2008, Nicolaou said.

In 2008, JCC, the processor of credit card transactions, recorded €100 million in payments on online gambling.

Shops offering online gambling make their profit through commission on the betsand, in turn pay rights to the companies based in other EU countries.

However, it is not all rosy.

“The money now is less; it is like kiosks; it is a fad,” said Marios Gregoriou (not his real name) who owns a small online gambling joint in central Nicosia.

“The pie is only one,” he told the Sunday Mail.

Ninety-five per cent of these places are legal but there are also ones operating illegally, taking away a slice of the pie.

There are machines in coffee shops, hidden upstairs, and other unlicensed places, Gregoriou said.

“It is these places they need to crack down on,” he said.

Gregoriou suggested that the surge in online casinos in the government-controlled areas has taken away business from the casinos in the occupied north.

“At least the money stays here (in the south),” he said, even if the government does not take a cent.

While the government is contemplating which measures to take, gamblers will soon be moving to new methods.

“In the next few years people will be betting with their mobile phones,” Gregoriou said.