A careful study has been conducted on the new coalition agreement of the Austrian government and whether it will lead to the liberalization of online gambling. Some stakeholders are optimistic about the upcoming gambling reforms, while others believe that the current government's view on gambling is similar to previous administrations.
Since the elections in Austria last October, the political situation in the country has been like a roller coaster, full of ups and downs and twists. During a tough five-month period, the conservative People's Party (ÖVP) held talks with numerous opposition parties, but failed to reach a coalition agreement twice. All this political uncertainty could impact the industry's ambitions to liberalize online gambling.
In February this year, the penultimate chapter of this saga witnessed the breakdown of negotiations between the Austrian People's Party (ÖVP) and the right-wing populist Freedom Party (FPÖ), forcing the conservatives to turn back to the Social Democratic Party (SPÖ) and the liberal NEOS.
After intense negotiations, the three parties announced a coalition government agreement on February 27 and were sworn in as the next government of Austria on March 2.
Under the motto "Doing the right thing for Austria," the government hopes its new plan will bring a period of stability and help fill the country's severe fiscal deficit.
However, for the gambling industry, the new coalition agreement raises many questions while answering others—especially regarding the liberalization of the current online gambling monopoly model.
Urgent Issues Facing the Gambling Industry
On pages 28 to 30 of the Austrian coalition government agreement, the three parties outlined their vision for structural reforms in the Austrian gambling industry, promising to "further develop the gambling monopoly" and combat illegal operators.
Currently, the country's casino industry is highly decentralized, with online and physical casino products offered under monopoly licenses, and sports betting regulated by the nine federal states.
The key issue facing the industry is whether the new government has the courage to open the market to multiple licensed entities in the next tender process. With the current licenses expiring in 2027, the industry urgently needs to know what to do next.
Currently, the market is operated by only one "legal" operator: the Austrian Casinos subsidiary Win2day, which holds a 15-year license for lottery and online casino products. Meanwhile, Maltese-licensed companies such as Tipico, Interwetten, and Bwin are also active in the region but do not have local licenses.
Will Austria Maintain Its Monopoly Position or Liberalize the Gambling Industry?
Depending on whom you ask, the phrase "further development of the gambling monopoly" (in German, Weiterentwicklung) can be understood as maintaining the status quo or as a means of leaving problems unresolved. The Austrian Gambling and Gaming Association (OVWG) believes the latter is correct.
Simon Priglinger-Simader, Vice President of OVWG, pointed out that due to the vague wording of the agreement, time pressure might force negotiators to sideline the issue of online gambling.
"From our discussions with policymakers, we know that the issue of online gambling licenses had not been negotiated when the government was formed," he said. "Many key decision-makers in the new government advocate modernizing the online gambling market according to European standards."
In the ruling coalition, two of the three parties—the center-right Austrian People's Party (ÖVP) and the liberal NEOS—support reform, while the center-left Social Party (SPÖ) is considered to be opposed. After five months of repeated discussions, the issue of gambling reform seems to have been pushed to a "possible" position among many issues.
Similarities with Previous Governments' Views
However, not everyone is optimistic about breaking the current three-party coalition deadlock.
Dr. Arthur Stadler, founding partner of the Vienna law firm Stadler Völkel, believes that there are many similarities between previous coalition governments and the current government, noting that the center-right and center-left groups have always had difficulty reaching a consensus on gambling issues.
"Although Austria should have liberalized online gambling long ago, the coalition agreement in many ways is very similar to the coalition documents of the previous government," Stadler said. "For example, the development of the monopoly framework, as well as IP blocking and payment blocking—these are very similar to the approach taken by the grand coalition of the Austrian People's Party and the Socialist Party over the past decade.
"Even during the four years when the Conservative Party and the Green Party jointly governed, the positions proposed in the coalition agreement have basically not changed."
Stadler stated that all these mean that the Austrian gambling market "urgently needs reform."
A Glimmer of Hope for Gambling Liberalization
However, for those looking forward to a new dawn, there are signs that the door to liberalization has been opened—at least a crack.
First is the frequent use of the word "Weiterentwicklung" ("further development"), which is used about 130 times in the coalition agreement. According to OVWG, this wording seems to be a way to postpone some of the more difficult coalition negotiations to a later date.
The second part involves some more specific plans proposed in the agreement. These plans include new player protection measures and the establishment of an independent gambling authority, which will take over the issuance of gambling licenses from the Ministry of Finance in the future.
Priglinger-Simader stated that only if the Austrian market is assumed to liberalize in the coming years would the new gambling authority and certain player protection regulations make sense. For example, the parties indicated that they would consider introducing "an operator-independent player ID card, which has multiple functions to ensure player protection," including self-exclusion registration.
As the Vice President of OVWG pointed out, this means that the market will have multiple regulated operators, which can participate in any player ID and self-exclusion programs.
Weakening the Ministry of Finance
Another positive sign is the plan to "split" the various responsibilities held by the Ministry of Finance. In addition to acting as the regulator and authority of the industry, the Ministry of Finance is also responsible for taxing the industry; it even owns 33.3% of the shares of the monopoly operators Austrian Casinos and Austrian Lotteries.
The coalition agreement states: "Specifically, the areas of player protection, supervision, regulation, licensing, and financial and ownership interests of the Federal Ministry of Finance will be split." Instead, the licensing and supervisory responsibilities of the Ministry of Finance will be transferred to an "independent regulatory agency" that complies with "international standards."
It is noteworthy that the SPÖ, which is skeptical about gambling, is about to take over the Ministry of Finance, so the move to establish an independent agency might be seen as a strategy to hand over gambling to more neutral management. This should also help quell ongoing accusations of conflicts of interest, which have been prevalent since the controversial tender process in 2012.
Stadler stated that moving towards an independent licensing agency is a "positive signal" and will be of great significance when the next tender process begins.
"There are signs that the market is undergoing a major transformation, closely related to the regulatory shift from a monopoly online casino market to a multi-license framework," he said. "However, the language used in the coalition agreement could have been more explicit. Now is the time for market opening and liberalization."
Austrian Gambling Tax to Increase Significantly?
Although the future of online licensing remains unclear, the financial burden expected by operators has become clearer.
On Friday, the coalition voted to increase the gambling tax from 2% to 5% starting April 1, an increase of 150% over the current tax rate.
Stadler stated: "Compared to Germany, the Austrian gambling market is more attractive, so how operators will respond and whether they will pass this additional tax burden onto customers remains to be seen."
The government views this unpopular industry as a potential cash cow, believing that by 2025, the gambling industry can bring in 50 million euros in revenue, and by 2030, this figure will reach 220 million euros. OVWG believes that simply raising taxes will not achieve the second figure, meaning that legislators must open up the market to achieve the target amount.
Market Liberalization is Imminent
Since the current casino licenses will expire in September 2027, the government has only two and a half years to establish a new gambling authority, issue licenses, and avoid potential legal disputes.
Whether the market opens or not (especially if it does not open), the next tender process is expected to be more intense and challenging than ever.
Stadler stated that operators might form alliances to meet the experience requirements set by the regulatory agency, and if the process is considered biased or unfair, it will undoubtedly be challenged in administrative courts across the country.
Some cases might even be taken to the Constitutional Court, potentially delaying the tender process for a year or more.
All these set a very urgent deadline for the government to try to establish new powers. This work must be completed within the year, and the details of the tender process and the final licensing decisions will be announced shortly thereafter.
In the meantime, lobbying behind the scenes will continue at a rapid pace, with supporters of the current monopoly and opponents of the monopoly fighting fiercely for priority.
"Regardless of the outcome, we may not know until September or October at the latest," Priglinger-Simader said. "But I think it's still an open competition for us."
