Cyprus: Illegal gambling costing the state billions

23.03.2009, A combination of illegal land gambling and Internet casino availability is costing the economy of the Mediterranean island of Cyprus Euro 2.5 billion a year, reports the Cyprus Mail. The newspaper was quoting a statement to the House Institutions Committee by Finance Minister Charilaos Stavrakis, who was bombarded with deputies’ questions as to why no law exists that bans or regulates online bets.

Cyprus has become a widely used centre for online gambling e-cash processing companies.

Deputies were informed that membership of the European Union means that Cyprus has to tread carefully around any attempt to interfere with the principle of free movement of goods and services between member nations, and this was complicating the situation. Nevertheless, the government is prepared to seek an exception from the principles as far as betting and gambling is concerned in order to protect the local industry.

In 2004, the Finance Ministry commissioned international consultants to draft a law regulating electronic gambling in general, but the proposal became mired in controversy when allegations surfaced that its authors were linked to gambling interests, and the project was shelved.

The ministry is now making a second attempt, the Cyprus Mail reveals. New legislation is currently being drafted that would give Cyprus an exemption from complying with the EU free movement of services requirement as far as betting and gambling is concerned.

Minister Stavrakis says that the bill, which he describes as a long-shot but intends to fast-track, will have to be approved by the European Commission.

“It pains us to see that Cyprus has become a free-for-all when it comes to illegal gambling,” chairman of the House Institutions Committee Ricos Erotokritou told the newspaper, coming out of yesterday’s session.

Currently, the only tool available to Cypriot police is to catch illegal gambling establishments red-handed, reports the Mail. It is known that many sports clubs and cafes double up as betting places.

Despite stepping up their efforts, police openly admit they are fighting a lost cause as illegal gambling on the island has proliferated.

Police officials told the House committee yesterday that penalties for operating an illegal gambling operation are not a sufficient deterrent—offenders pay a Euro 1 500 fine, but make many times that amount in profits. Often, police told deputies, busted owners of such establishments will call their supplier and order new computers - in plain sight of the police - as their equipment is being seized.

Over the past two years, police raids have confiscated some 5 000 computers. They have also located two servers hosting online gambling games, where an estimated Euro 6 million was wagered.

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