Norway Bans Online Gambling Payments

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The Payment Act of Norway, which contains provisions for banning payment processing transactions to unauthorized online casinos, received the royal assent last week. This was expected to be a formality because the act had been passed by the Norwegian Parliament earlier. As per the Payment Act any organization that processes payments for unlicensed online gambling operators will become an accessory to the crime. This would also apply to financial service providers who transfer payments from players to online casinos in Norway. The ban will apply only to local banks and payment processors since Norwegian laws do not apply across borders.

The intent of the Payment Act is to curb the activities of online gambling operators that are hosted in other countries but service Norwegian players. The new law will also aim at making life difficult for local online gambling operators that are functioning illegally. The unstated objective behind this move, which has been in the pipeline for quite a few years now, is to eliminate competition for the state-owned gambling monopoly, Norske Spil. The private European online gambling operators are able to provide better services and are therefore drawing traffic away from Norske Spil.

Though the Payment Act has received royal assent it will come into effect only on June 1, 2010. Ironically it is the same day on which the UIGEA will come into effect in the United States, if not repealed before then. The Payment Act has been modeled on the UIGEA, which also prohibits processing of financial transactions for illegal online gambling.

The European Commission has all along been protesting against this action taken by Norway. EU law clearly states that an online gambling operator licensed by any of the member states can operate in other member states without requiring to be licensed there. The Payment Act is being seen as a major impediment in the EU objective of forming a single unified online gambling market. It must be pointed out that Norway is not a member of the EU. However The European Commission holds that since Norway belongs to the European Economic Area it is constrained to follow the market regulation policies of the EU.

Neither the online gambling operators functioning in Norway nor the financial services sector are giving any importance to the Payments Act. In fact financial institutions operating in Norway have indicated that they will not police online gambling transactions as required of them under this new law. Pontus Lindwall of the Swedish gaming company Betsson says that his operations in Norway will be unaffected. Stephen Ketteley, a partner in the gaming law practice at law firm Berwin Leighton Paisner, has expressed similar views. On the other hand the Finnish Parliament is discussing new laws to strengthen the state owned gambling monopolies in their country.

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