The Political Economy of Online Gambling in the European Union

This dissertation addresses the tripartite question concerning the relationship between a globalizing capitalist market economy, a territorial states system and a supranational European Union. Specifically, this study explains how different societal actors approach the question of the vertical division of competences between the supranational EU institutions and the Member States while juxtaposing this in the pursuit of desired models of socio-economic regulation. Whereas previous studies have paid attention to issues concerning the form of integration, this study seeks to contribute to more nuanced discussions concerning federalism by focusing on issues of content. It also challenges the view that economic globalization is an exogenous development arguing that what is understood as economic globalization can in fact be traced back to specific national policies that are enacted in order to facilitate the state s international competitiveness, thus making economic globalization an endogenous process. The empirical part of this dissertation addresses the emergence of a cross-border online gambling market in Europe. Although such a de facto market exists, its existence has not been recognized de jure by the European Union. This untenable situation results from EU Member States having diametrically opposing views concerning the legality of this market. In order to explain this development, this study takes a step back and asks how the cross-border online gambling market emerged in Europe. This study employs the process-tracing method in order to identify critical turning points that were necessary for the emergence of this market. It is argued that it was the neoliberal export-oriented competitiveness policies of the Malta and Gibraltar tax havens, enacted following the suggestions of the cross-border online gambling industry, which was a necessary condition for the emergence of the de facto market. The cross-border online gambling operators incorporation in Malta and Gibraltar guaranteed these operators access to the Single Market as they were protected by the fundamental freedoms enshrined in the EU Treaties. The successful business operations subsequently enabled interest representation for these operators and the ability to challenge the protectionist gambling regimes of Member States by making complaints to the EU Commission. As the Guardian of the Treaty, the EU Commission launched infringement proceedings against over a dozen Member States. Partially as a result of these infringement proceedings many Member States have opted for what is called controlled liberalization , thus allowing gambling to be organized for private profit. This nudges the socio-economic regulation of gambling towards neoliberalism. Several contrarian EU Member States, including Finland, are still strongly protectionist thus displaying their commitment to social democratic socio-economic regulation and have decided to fight the liberalization trend that has become prevalent in the field of gambling services. They have resisted the EU Commission s attempts to bring gambling into the Single Market program de jure. Gambling has been omitted from the EU s binding secondary legislation because of the resistance displayed by these protectionist Member States. This resistance has included bringing gambling issues to the EU Council, the EU s multilateral forum, so as to produce non-liberalizing EU level initiatives and regulation of gambling services. It is telling that those Member States, primarily Malta and the UK, who have championed the Single Market perspective for gambling, have fought against such developments. This study confirms the support of neoliberal societal actors for so-called negative EU integration, i.e., the dismantling of national barriers. The novelty of this study is to contribute to recent theoretical discussions by confirming, as these recent discussions have suggested, that following the transnationalization of business activities, social democratic societal actors would not only resist negative integration, but also work towards social democratic multilateralism, i.e., a specific form of so-called positive integration. This has been true in gambling services as was described above. However, this study also confirms the EU s bias towards negative integration, finding that the individual Member States policy space in regulating gambling services is being diminished due to the EU s fundamental freedoms and the EU Court s judge-made law. The protectionist Member States have had to resort to organized hypocrisy in order to protect the de facto socialized or nationalized means of production of gambling services in order to thwart the liberalization trend. Although the reasons for protection are in reality mostly financial, the EU Court and the EU Commission only accepts non-financial overriding public interest reasons for protection. As the stated reasons for protection of protectionist Member States are in fact hypocritical, this study finds that, although there are several potential futures, the most likely future scenario will be the slow neoliberalization of gambling services in the European Union with the sector s de jure inclusion in the Single Market program as the end result.Tämä väitöskirja käsittelee globalisoituvan kapitalistisen markkinatalouden, territoriaalisen valtiojärjestelmän sekä ylikansallisen Euroopan unionin välistä suhdetta. Empiirinen tutkimus vastaa seuraaviin kysymyksiin: miten kansainväliset rajat ylittävä verkkorahapelimarkkina muodostui Euroopan unionin alueelle? Miksi tätä kansainvälistä verkkorahapelimarkkinaa ei ole tunnustettu sitovalla EU-tasoisella lainsäädäntöinstrumentilla? Tutkimushypoteesin mukaan rajat ylittävä verkkorahapelimarkkina ei olisi voinut kehittyä Euroopan unionin alueella ilman Maltan ja Gibraltarin rahapelialaa varten luomia verotus- ja sääntelyjärjestelmiä. Pääasiallisesti laadullisen empiirisen tutkimuksen aineistona on käytetty litteroituja haastatteluita, virallisia asiakirjoja, Eurostatin ja Tilastokeskuksen tilastoja sekä sekundaarilähteitä. Prosessin jäljitys tutkimusmenetelmänä mahdollisti niiden kehityskulkujen kuvailemisen ja selittämisen, jotka olivat johtaneet tutkimuskohteena oleviin lopputuloksiin. Tutkimustulokset viittaavat siihen, että Maltan ja Gibraltarin merkitys verkkorahapelialan kannalta on ollut aiemmin ymmärrettyä keskeisempi. Vertikaaliset toimivallanjakokiistat unioni-instituutioiden ja jäsenmaiden välillä sekä jäsenmaiden keskinäiset erimielisyydet niin kansallisen kuin EU-tasoisen rahapelipolitiikan sisällöstä selittävät rahapelialaa koskevien sitovien unionitasoisten lainsäädäntöinstrumenttien olemattomuuden