Gaming Law 2019

Last Updated November 25, 2019

Switzerland

Law and Practice

Authors



PLANZER LAW is a boutique law firm specialising in gaming & entertainment and online & technology businesses. The Zurich-based team further holds strong expertise in general business law and (white-collar) criminal law. PLANZER LAW represents the interests of large global leaders as well as small innovative start-ups, with clients benefitting from highly specialised expertise, a truly international perspective on legal matters and an outstanding global network of practitioners, experts and scholars. PLANZER LAW notably provides strategic, regulatory and legal advice on all EU/EEA and Swiss gaming matters to all stakeholders, such as B2Cs, B2Bs, PSPs, affiliates and regulators. The firm further supports companies in the implementation of compliance programmes (eg, AML, responsible gaming, data privacy). Numerous B2Cs and B2Bs have used the firm’s services in seeking and concluding partnership agreements with domestic operators

On 1 January 2019, a new Gaming Act and four related ordinances entered into effect: the Gaming Ordinance; the Casino Ordinance; and two Anti-Money Laundering Ordinances. The enforcement measures against unlicensed operators have only been applicable since 1 July 2019. 

Under the new act, only domestic casinos and lotteries can operate online gaming offers legally. These incumbent operators, however, can co-operate with international B2Bs and B2Cs, provided that certain legal requirements are met. 

At the time of writing, only four licensed websites of domestic casinos have gone live. There is continued and substantial interest from both international B2Bs and B2Cs, as well as domestic casinos, in business co-operation. This is not surprising given the high value of the Swiss online gaming market and the only recently acquired experience of the domestic casinos in the online sphere. Accordingly, the potential revenues in a market with only few licensed offers are estimated to be very high.

The above-described legislative change constituted a complete overhaul of the legislative framework, replacing the formerly applicable Casino Act and Lottery Act with the new Gaming Act ("Geldspielgesetz"). For the first time, legislation was passed that comprehensively addresses remote forms of gaming as well as skill gaming. 

The regulatory authorities expect unlicensed online operators to geo-block customers from Switzerland, and started to send out warning letters prior to 1 July 2019. After that date, the authorities were entitled to use administrative enforcement measures, namely blacklisting and domain blocking. Accordingly, on 3 September 2019 the two regulatory bodies published their first blacklists, which featured a rather small number of Internet domains. Updated versions of these lists are published on the regulators’ websites. 

Betting

Large-scale betting services can be offered exclusively by the two public lotteries, namely Swisslos and Loterie Romande. 

Bingo

Large-scale bingo services can be offered exclusively by these two public lotteries. 

Casino

Casino services can be offered exclusively by the licensed bricks and mortar casinos. 

Lotteries

With few exceptions, large-scale lottery services can be offered exclusively by the two public lotteries. 

Fantasy Sports

Fantasy sports are likely to qualify as skill games, in which case a skill game operator is required to apply for a licence from the regulator ComLot. 

Social Gaming

Social gaming does not fall within the ambit of the Gaming Act if it does not include a consideration and/or prize. 

Poker

Similar to casino games, online poker services can be offered by the licensed bricks and mortar casinos, which can partner with other domestic casinos and international poker operators and thereby offer shared liquidity. 

Other Relevant Sectors

With the entry into effect of the Gaming Act, all games of chance and games of skill are, in principle, regulated and can also be offered online, subject to certain conditions and exclusive rights. So-called major (or large-scale) games ("Grossspiele") include lotteries, sports betting and games of skill if they are operated online, automatically or interregionally (between Cantons). With few exceptions, the two public lotteries hold the exclusive right to offer online games in the areas of lotteries and betting. By contrast, any skill gaming operator can apply for a licence, provided that it also seeks establishment in Switzerland. Under strict conditions, media publishers and shops may organise lotteries and games of skill without a licence or authorisation. 

Overall and with few exceptions, similar exclusive rights and conditions apply in the land-based sector as in the online sector (see 2.1 Online). 

Betting

Large-scale betting services can be offered exclusively by the two public lotteries, namely Swisslos and Loterie Romande. 

Bingo

Large-scale bingo services can be offered exclusively by these two public lotteries. 

Casino

Casino services can be offered exclusively by the licensed bricks and mortar casinos. Currently, there are 21 licensed casinos in Switzerland. 

Lotteries

With few exceptions, large-scale lottery services can be offered exclusively by the two public lotteries. 

Fantasy Sports

Fantasy sports are likely to qualify as skill games. If they are operated online, automatically or interregionally (between Cantons), a licence from ComLot is required. 

Social Gaming

Social gaming does not fall within the ambit of the Gaming Act if it does not include a consideration and/or prize. 

Poker

Similar to casino games, the licensed bricks and mortar casinos can offer land-based poker services, but no longer have the exclusive right to do so. The Cantons (regions) can permit so-called small poker tournaments and grant authorisations to operators who wish to organise such tournaments. 

Other Relevant Sectors

Please see the comments under 2.1 Online, which apply in similar terms also for the land-based sphere. Skill gaming operations only require a licence if they are organised online, automatically or interregionally (between Cantons). Under strict conditions, media publishers and shops may organise lotteries and games of skill without a licence or authorisation. 

In September 2017, the Swiss parliament passed a fully revised Gaming Act. A referendum was organised against the act, but the voters adopted the act and, on 1 January 2019, it entered into effect with four related ordinances: the Gaming Ordinance; the Casino Ordinance; and two Anti-Money Laundering Ordinances. 

The Gaming Act serves as the legal framework for all games that involve a consideration and prizes. It brought significant changes as it regulates online games, for example, and replaces all formerly applicable gaming laws (mainly the Lottery Act and the Casino Act). 

Primary Law

  • The Gaming Act ("Geldspielgesetz", "Loi fédérale sur les jeux d’argent", "Legge federale sui giochi in denaro") was passed by the federal parliament on 29 September 2017 and entered into force on 1 January 2019. 

Secondary Law

  • The Gaming Ordinance ("Geldspielverordnung", "Ordonnance sur les jeux d’argent", "Ordinanza sui giochi in denaro") was passed by the federal government on 7 November 2018 and entered into force on 1 January 2019. 
  • The Casino Ordinance ("Spielbankenverordnung – EJPD", "Ordonnance du DFJP sur les maisons de jeu", "Ordinanza del DFGP sulle case da gioco") was passed by the Federal Department of Justice and Police (EJPD) on 7 November 2018 and entered into force on 1 January 2019. 
  • The Money Laundering Ordinance ("Geldwäschereiverordnung – EJPD", "Ordonnance du DFJP sur le blanchiment d’argent", "Ordinanza del DFGP sul riciclaggio di denaro") was passed by the Federal Department of Justice and Police (EJPD) on 7 November 2018 and entered into force on 1 January 2019. 
  • The Money Laundering Ordinance ("Geldwäschereiverordnung – ESBK", "Ordonnance du CFMJ sur le blanchiment d’argent", "Ordinanza del CFCG sul riciclaggio di denaro") was passed by the Federal Gaming Board (ESBK) on 12 November 2018 and entered into force on 1 January 2019. 

These federal laws must also be implemented in the cantonal laws, which is currently pending. 

While the Gaming Act does not define "gambling" as such, it addresses "money games" in Art. 3(a), which are defined as games in which a prize or something of monetary value can be expected in exchange for a stake (money or money-worth) or by the conclusion of a legal act or transaction (German version: "Spiele, bei denen gegen Leistung eines geldwerten Einsatzes oder bei Abschluss eines Rechtsgeschäfts ein Geldgewinn oder ein anderer geldwerter Vorteil in Aussicht steht"; French version: "les jeux qui, moyennant une mise d'argent ou la conclusion d'un acte juridique, laissent espérer un gain pécuniaire ou un autre avantage appréciable en argent"; Italian version: "i giochi che, fatta una posta pecuniaria o concluso un negozio giuridico, prospettano la possibilità di una vincita in denaro o di un altro vantaggio pecuniario"). 

There is no specific definition of land-based gambling. Please see 3.2 Definition of Gambling

There is no specific definition of online gambling. Please see 3.2 Definition of Gambling

The key offences that can be committed are as follows:

  • operating, organising or providing casino games or major games ("Grossspiele") without the necessary licences or authorisations (Art. 130(1)(a) Gaming Act); 
  • providing the technical means for the organisation of casino games or major games, being aware of the intended use, to persons who do not hold the required licences or authorisations (Art. 130(1)(b) Gaming Act); and
  • obtaining a licence or authorisation by way of providing false information or in similar deceptive ways (Art. 130(3) Gaming Act). 

According to Art. 130(1) Gaming Act, a person who intentionally commits the criminal offences of organising casino or major games, or providing the technical means for such operations, shall be punished with a custodial sentence of up to three years or a fine. According to Art. 130(2) Gaming Act, the penalty shall be imprisonment for up to five years or a fine of not less than 180 daily rates if the offence is committed with a commercial interest or as an organised form of crime. Finally, Art. 130(3) Gaming Act states that a fine of up to 180 daily rates shall be imposed on anyone who deliberately obtains a licence or authorisation by way of false information. Other criminal offences such as advertising only qualify as misdemeanours and are subject to a maximum fine of CHF500,000. 

The laws have been passed at federal level, but the Cantons still need to implement them into cantonal laws. Switzerland is currently revising its data protection laws (Federal Law on Data Protection) to align them with the EU’s General Data Protection Regulation (GDPR). In September 2017, the federal government adopted a draft bill on a new Data Protection Act, inspired to some extent by the GDPR. This government bill is currently under review by the federal parliament. 

The Federal Gaming Board (ESBK) has regulatory oversight over the casino sector. The Lottery and Betting Board (ComLot) is an inter-cantonal authority that has regulatory oversight over the lottery and betting market on behalf of the Cantons (regions). The Federal Department of Justice and Police (EJPD) and the cantonal supervisory authorities also hold certain regulatory powers. 

Switzerland largely follows a protectionist approach in the area of games of chance, with the incumbent domestic operators enjoying exclusive rights or privileges. Overall, the Gaming Act installed a regulatory regime in which licensed land-based operators can also offer their games online. As was already the case under the old law, the market is split into three sectors: lottery and betting; casino; and skill. The two public lotteries – Swisslos and Loterie Romande – continue to enjoy far-reaching exclusive rights in the lottery and betting sector. Similarly, only land-based casinos can legally operate casino games. The exclusive rights of the lotteries and casinos apply in relation to both land-based and online games, with few exceptions, such as for land-based small poker tournaments. Furthermore, the Cantons (regions) continue to hold the powers to regulate skill games in more detail. 

Following the completion of a vetting procedure undertaken by the Federal Gaming Board, the federal government grants licences to successful applicants. Since these licences represent so-called "concessions", applicants have no enforceable right to be granted a licence. In the lottery and sport betting sectors, the Cantons have granted Swisslos and Loterie Romande the exclusive right to offer these games. In relation to online games, the Gaming Act foresees the possibility for international B2Cs and B2Bs to serve as business partners to the casinos and lotteries. 

According to Art. 9 Gaming Act, the federal government shall extend the casino bricks and mortar licence to also include the right to conduct casino games online if the applicant fulfils the conditions set out in Art. 8(1)(a)(1) - (4) and (b) - (d) in regard to the online offering. International business partners of domestic casinos and lotteries cannot be granted a licence, and do not need one. The licence application and/or extension is done through the domestic operator. In the skill gaming sector, by contrast, international operators do not need to co-operate with incumbent domestic entities and can apply independently for a skill gaming licence. 

According to Art. 12 Gaming Act, the licence for casino operations is valid for 20 years. In special circumstances, the federal government may provide for a shorter or longer period. The licence may be extended or renewed. With regard to major games ("Grossspiele"), the operator’s licence and game authorisations ("Veranstalter- und Spielbewilligung") may be limited in time and renewed; the same is true for small games ("Kleinspiele"). 

According to Art. 8 Gaming Act, a licence for casino operations may be granted if:

  • the applicant: 
    1. is a public limited company under Swiss law and its share capital is divided into registered shares; 
    2. presents a security concept and social concept;
    3. submits economic viability calculations that credibly show that the casino is economically viable; 
    4. sets out the measures to be taken to create the conditions for the proper assessment of the casino duties; and 
    5. presents the economic benefits of the casino for the region in a report; 
  • the applicant and its main business partners, as well as their beneficial owners and the holders of shares and their beneficial owners have  a good reputation and provide a guarantee of proper business conduct and independent management; 
  • the applicant and the holders of shares and the beneficial owners of the shares and, at the request of the Federal Gaming Board (ESBK), the most important business partners have sufficient funds of their own and can prove the lawful origin of the available funds; 
  • the bylaws, the organisational structure and the contractual obligations guarantee the proper and independent conduct of the casino business; and 
  • the Canton and municipality in which the location is located support the operation of a casino. 

Major games such as lotteries, sports betting and skill gaming require inter-cantonal authorisation and are subject to supervision by the inter-cantonal authority ComLot. Small games only require cantonal approval. While the Gaming Act further outlines the conditions under which operations of (large-scale) lotteries and betting can be authorised, the Cantons have de facto monopolised this sector, and ComLot cannot grant further licences to other applicants. The conditions outlined under Art. 22 Gaming Act are therefore of interest primarily to skill game operators. Such authorisation can be granted if the operator: 

  • is a legal entity under Swiss law; 
  • enjoys a good reputation; 
  • outlines its economic situation; 
  • discloses any financial or other form of participation in other companies; 
  • proves the lawful origin of the available funds; 
  • guarantees impeccable management and its independence vis-à-vis third parties; 
  • has sufficient funds and guarantees that the winnings are paid out to the players; and 
  • has a security concept and a social concept. 

Key Differences Between Application Requirements for Land-Based and Online Operators

According to Art. 9 Gaming Act, the federal government may extend the land-based casino licence to include the right to conduct casino games online if the applicant fulfils the conditions set out in Art. 8(1)(a)(1) to (4) and (b) to (d) in regard to the online offer. Such application may also be submitted during the ongoing licence term. Various technical requirements must be met in order to be allowed to offer online casino games. According to the Gaming Ordinance, the Federal Department of Justice and Police (EJPD) can issue technical requirements notably in relation to games, jackpots, online gaming platforms, jackpot systems, the electronic accounting and control system (EAKS) and the data recording system (DZS). It is noteworthy that the international business partners of land-based casinos and lotteries do not need to seek establishment in Switzerland, but online skill gaming operators need to seek establishment in order to qualify for a licence. 

Key Application Requirements for Directors, Owners or Senior Management

The main business partners of casinos must, inter alia, fulfil the following criteria: 

  • Good reputation: the main business partners must, in principle, fulfil the "good reputation" criterion. Beyond a mere fit and proper test, former market activities in Switzerland are considered to be relevant, by law. The regulator has interpreted this criterion strictly in relation to casino partnerships.
  • Sound business conduct and independent management: the law demands that the main business partners must guarantee sound business conduct and an independent management.
  • No outsourcing of important tasks: the law obliges casinos to fulfil the central activities of all the important tasks by themselves. These important tasks, defined by law, cannot be outsourced to the international business partners. White label solutions in particular are not permissible under Swiss law. 
  • No revenue share based on gross gaming revenues (GGR) or turnover: the law prohibits the compensation of business partners based on GGR or turnover. Game providers only are exempted from this rule, and their remuneration must be appropriate/reasonable according to the law. 

Key Application Requirements for Shareholders, Including Disclosure Thresholds

Shareholders and their beneficial owners need to enjoy a good reputation and provide a guarantee for proper business conduct and independent management. Moreover, shareholders and the beneficial owners of the shares need to have sufficient funds of their own and be able to prove the lawful origin of the available funds. According to Art. 13 (b) and (c) Gaming Act, the casino licensee reports the name or company name and address of shareholders holding more than 5% of the share in relation to capital or votes, and any amendments to the share in relation to capital or voting rights as well as the identity details referred to above to the Federal Gaming Board.

There are no specific application windows for online licences in Switzerland. By contrast, land-based casino licences run for a duration of 20 years, in principle, after which existing and new applicants can apply for a licence. 

There are no fixed licensing costs defined by law for any game categories. The Federal Gaming Board must assess whether the application meets the legal criteria. According to Art. 102 Gaming Ordinance, the costs ultimately depend on the time and effort spent by the regulator to assess the application, and vary between CHF100 and CHF350 per hour. 

According to Art. 106 Gaming Ordinance, the supervisory costs consist of the costs of the Federal Gaming Board and of the services of other offices that it uses. The Gaming Ordinance outlines the details of the calculation, and the amount is defined on an annual basis by the Federal Department of Justice and Police (EJPD). 

In regard to lottery games and betting, the 2005 Inter-Cantonal Convention on Lotteries and Betting addressed the licensing and supervision of the Swiss lottery and betting market. According to the Convention, ComLot collects administrative duties to cover its activities in supervising the betting and lottery market. There is a yearly fee, which depends on the gross gaming revenues of the lottery operators, as well as fees for decisions and services. Furthermore, the Cantons can charge duties for granting licences and exercising supervisory tasks as well. In addition, the lotteries pay an annual levy of 0.5% of the gross gaming revenues earmarked for the prevention and treatment of gambling addiction. 

According to Art. 7 Gaming Act, the casinos are geographically distributed as evenly as possible among the interested regions within Switzerland. The law further requires that the respective Canton and the municipality in which the casino premises are to be located support the operation of a casino. Moreover, the licence can only be granted if the applicant clearly outlines the economic benefits of the casino for the region at hand. 

While the Gaming Act did not alter the essence of the regulatory regime applicable to land-based casinos, it did bring certain regulatory easement – for instance, in relation to casinos in the mountain areas that only need to staff table games part of the year. In relation to the public lotteries, their portfolio has been substantially widened and they are permitted to offer a more attractive sports book than before the legislative overhaul. Finally, online skill gaming operators will now have to apply for an inter-cantonal licence as well. 

According to the law, casino licences are granted for 20 years, in principle. Currently, there are 21 casinos throughout Switzerland, mostly (co-)owned by a few casino groups. Upon the termination of the licences, the federal government reopens a public tender, which is open for both existing and new applicants. There is no enforceable right for applicants to be granted a licence since the government can decide on the number of “concessions” that it distributes. For more details, please see 4 Licensing and Regulatory Framework. The Cantons have monopolised thearea of lottery and sports betting, and only two licences are granted to large-scale lotteries: Swisslos for the German and Italian part, and Loterie Romande for the French-speaking part of Switzerland. In relation to skill gaming operators, ComLot will have to establish a licensing practice in the coming months and years. 

International B2Cs and B2Bs can enter into business agreements with domestic casinos and lotteries. However, irrespective of their services, these partners do not need to get a licence, nor can they qualify for a licence. If they are considered as main business partners, they will need to fulfil the so-called good reputation criterion, the assessment of which also covers former market activities in the grey market. For more details, please see 4 Licensing and Regulatory Framework

The use of affiliates is not addressed by the Gaming Act, nor are there specific licences available for affiliates. 

The law obliges the casinos to fulfil the central activities of all the important tasks by themselves. Notably, white label solutions are not permissible. 

The Gaming Act brought significant changes to the online sphere, enabling the whole range of online games to be offered, in principle. 

Unlicensed online operators are expected to geo-block customers from Switzerland. If the regulatory authorities (Federal Gaming Board and ComLot) become aware of an unlicensed Switzerland-facing website, they can send a warning letter to the operator and/or put the website on their blacklist. Swiss Internet Services Providers are then requested to block these websites. Updated blocking lists are published by both ESBK and ComLot on a regular basis. At the time of writing, these measures were not (yet) effective, as the authorities have encountered problems in implementing them and have shown little appetite to use criminal law as a means of enforcement against unlicensed websites. Although payment blocking was discussed during the long legislative process, payment blocking measures were not adopted by the parliament and are therefore not in use. 

Responsible gambling is among the central goals defined by the Gaming Act, whereby the population shall be appropriately protected from the "dangers" stemming from gambling and gaming. The law further demands that online casino games and major games ("Grossspiele") shall be accompanied by appropriate measures of player protection. Applicants for a casino licence as well as the lotteries must submit both a security concept and a social concept; the latter must notably outline how the casino intends to ensure the protection of players not only from problem gambling (in a medical sense) but also from excessive gambling (that is, beyond a customer’s financial means). The operators must outline which measures they intend to implement to inform players and to identify problem gamblers early on, and must outline which measures they will adopt regarding self-control, game limitation and moderation, the application of exclusions, the training and continued education of the staff in charge of implementing the social concept, and the collection of data to evaluate the effectiveness of such measures. In doing so, the casinos and lotteries regularly collaborate with researchers and prevention and treatment centres. 

Gambling management tools include the possibility of self-exclusion as well as exclusion by the operator, both online and in bricks and mortar casinos. The law further requires that the online player has easy access to information regarding his/her gaming behaviour. When opening a player account, the online player is required to define maximum amounts of what he/she is willing to wager per day, week or month. This requirement is mandatory for casinos, but not for operators of major games. The player can further define a cool-down period, during which he can choose not to play a certain category or any type of game. Operators are further required to provide specific information to players and to identify problematic gambling behaviour early on, and act swiftly and appropriately. Finally, prevention and treatment centres also pursue their own efforts and provide online self-control tools to players. 

According to Art. 67(1) Gaming Act, the casinos and the operators of major games ("Grossspiele") are subject to the Money Laundering Act ("Geldwäschereigesetz", "Loi sur le blanchiment d’argent", "Legge sul riciclaggio di denaro"), which was passed by the Federal Parliament of the Swiss Confederation on 10 October 1997 and entered into force on 1 April 1998. 

The provisions of that law were further outlined and detailed in secondary law, in theMoney Laundering Ordinance ("Geldwäschereiverordnung", "Ordonnance sur le blanchiment d’argent", "Ordinanza sul riciclaggio di denaro"), which was passed by the Swiss Federal Council on 11 November 2015 and entered into force on 1 January 2016. 

Furthermore, the following ordinances apply specifically in the gambling and gaming sector as lex specialis: 

  • the Money Laundering Ordinance ("Geldwäschereiverordnung – EJPD", "Ordonnance du DFJP sur le blanchiment d’argent", "Ordinanza del DFGP sul riciclaggio di denaro"), which was passed by the EJPD on 7 November 2018 and entered into force on 1 January 2019; and
  • the Money Laundering Ordinance ("Geldwäschereiverordnung – ESBK", "Ordonnance de la CFMJ sur le blanchiment d’argent", "Ordinanza della CFCG sul riciclaggio di denaro"), which was passed by the ESBK on 12 November 2018 and entered into force on 1 January 2019. 

AML requirements from other Financial Action Task Force jurisdictions apply in Switzerland similarly as well. The Gaming Act deals with AML in its fourth chapter. However, the thresholds that trigger enhanced customer due diligence (CDD) obligations are significantly higher in Switzerland compared to the 4th AML Directive of the EU (which applies to both the land-based and remote gambling sectors), as illustrated with the example of online games. According to Art. 68 Gaming Act, the online player must be identified in accordance with the provisions of the AML Act if monthly stakes or the individual or aggregated winnings per month reach a significant value. The Federal Gaming Board defines that value for the casino sector and the EJPD defines it for the major game sector. Casinos must apply the enhanced CDD measures (identification and registration) if the player reaches the threshold of CHF4,000 within 24 hours, with one or more transactions, either by pay-ins to his player account or pay-outs to his bank account. In the area of major games, which include online lottery, betting and skill gaming, the threshold for enhanced CDD (identification and registration) applies if the player reaches CHF15,000 by way of pay-ins to his player account or CHF10,000 and CHF25,000 respectively by way of pay-outs to his bank account (depending on the odds that applied to the game), in one or several transactions within 30 days. 

Art. 69 Gaming Act specifically stipulates that casinos and operators of major games ("Grossspiele") may not accept or issue bearer cheques. While they may accept cheques made out in their name, they have to verify the identity of the person issuing the cheque and register the transaction. Winnings can be made available to the players on a deposit account, but no interest can be paid on this deposit account. Finally, it is prohibited for casinos to issue any written confirmation of winnings to the players.

The Federal Gaming Board (ESBK) has regulatory oversight over the casino sector, and the Inter-Cantonal Lottery and Betting Commission (ComLot) has regulatory oversight over the lottery and betting market on behalf of the Cantons. The same powers apply accordingly in relation to advertising and the regulatory oversight of it. Finally, it is possible that, in certain constellations involving publishers of TV, radio or Internet programmes, the Federal Office of Communication ("Bundesamt für Kommunikation" – BAKOM) may have regulatory oversight as well. 

Neither the Gaming Act, its ordinances nor the Federal Act against Unfair Competition define the term "advertising". The Swiss judiciary rightly noted that Swiss law did not define advertising and accordingly referred to a definition provided by the Federal Commission on Fair Trading ("Lauterkeitskommission"): "Commercial communication shall mean any measure taken by competitors or third parties who systematically influence a majority of people in their attitudes to particular goods, works, services or business relationships for the purpose of concluding or preventing a transaction" (Judgment of 15 June 2017 of the Cour de Justice de Genève: ACPR/397/2017, pt. 4.2). 

In order to be able to conduct casino or major games, a licence/authorisation is required in accordance with the requirements of Art. 8 and 22 Gaming Act. One of the key regulatory requirements concerns the composition and submission of a security concept ("Sicherheitskonzept") and a social concept ("Sozialkonzept"). The way a licensed operator wishes to communicate commercially and responsibly with its customers and potential customers should  be addressed in the social concept.

The following provisions deal with advertisements: Arts. 22(1)(i), 74, 131(1)(b) and (c) Gaming Act, and Arts. 27(2) and 76-78 Gaming Ordinance. The key provisions will be dealt with further in the following sections. 

Advertising restrictions apply to licensed operators. According to Art. 74 Gaming Act, gaming operators may not advertise in an obtrusive or misleading manner, and advertising may not be directed at minors or persons who have been banned. The Gaming Ordinance further details what misleading and obtrusive practices mean. 

According to Art. 77(1) Gaming Ordinance, advertising messages are considered misleading in particular if they give distorting information about the chances of winning or possible winnings, or convey the impression that:

  • knowledge, ability, skill or other characteristics of the player influence the chances of winning, without this being the case due to the nature of the game; 
  • the chances of winning are increased by longer or more frequent play; 
  • money games are an appropriate means of solving financial or personal problems; 
  • participation in gambling is an alternative to a working life; or
  • increased participation in gambling is an appropriate means to compensate losses already incurred. 

According to Art. 77(2) Gaming Ordinance, the following in particular shall be regarded as obtrusive: 

  • telephone sales activities; 
  • sales activities in residential premises or their immediate vicinity, on public transport and at marketing events related to excursions or similar events; 
  • personally addressed advertising via electronic channels without the possibility of opting out or unsubscribing; and
  • advertising by means of push messages based on the electronic localisation of a mobile device of the player or other forms of personally addressed advertising via electronic channels based on such localisation. 

Pursuant to Art. 74(3) Gaming Act, advertising for games not licensed in Switzerland is prohibited. The same goes for indirect advertisement – ie, the advertising of free gaming offers. According to Art. 76 Gaming Ordinance, advertising for games that do not require any stake or do not result in the distribution of winnings is subject to the restrictions and prohibitions set forth in Article 74 Gaming Act, if: 

  • the games are offered by an operator whose main offer consists of games involving stake and prize; and
  • the player can detect a connection between games without stakes and winnings and games including stakes and winnings offered by the same operator. 

Pursuant to Art. 131(1) Gaming Act, a fine of up to CHF500,000 can be imposed on anyone who intentionally advertises games that are not authorised in Switzerland, or advertises licensed games by aiming the advertising at minors or persons who are barred from playing. 

According to Art. 13 Gaming Act, the licensee must notify the Federal Gaming Board (ESBK) of: 

  • all significant changes to the licensing conditions; 
  • the name or company name and address of shareholders holding more than 5% of the shareholder capital or the votes;
  • any changes in shareholder capital or voting rights, or in the identity information referred to under 4.6 Application Requirements

As already noted, Art. 13(b) Gaming Act requires the licensee to notify the Federal Gaming Board (ESBK) of the name or company name and address of shareholders holding more than 5% of the shareholder capital or votes. Furthermore, Art. 7(1) Gaming Ordinance holds that “beneficial owners” are persons whose direct or indirect participation in the applicant’s shareholder capital amounts to at least 5%, as well as persons or groups of persons associated with voting rights who hold at least 5% of all voting rights. The same provision requires that persons holding a participation as referred to in paragraph 1 shall inform the ESBK whether they hold the participation for themselves or on a fiduciary basis for third parties, and whether they have granted options or similar rights to others for such participation. 

Please see 10.2Change of Corporate Control Triggers

The Federal Gaming Board (ESBK) is the supervisory authority in the casino sector and monitors compliance with casino regulations and licensing requirements; it also takes enforcement actions against illegal gambling. Pursuant to Art. 97(1)(d) Gaming Act, the ESBK co-operates with domestic and foreign supervisory authorities. Its powers of enforcement are of both administrative law and criminal law nature. As per administrative law, the ESBK can send warning letters to unlicensed online operators and put their websites on a blacklist; Internet Service Providers are then required to block these websites. As per criminal law, the ESBK can prosecute illegal gambling offers by opening criminal proceedings and collaborating with other domestic enforcement offices. 

In the lottery, betting and skill gaming market, similar legal norms exist for the Inter-Cantonal Lottery and Betting Commission (ComLot). According to Art. 107(1) Gaming Act, ComLot takes actions against illegal gambling and co-operates with domestic and foreign supervisory authorities. It can take the same enforcement actions of an administrative law nature as the ESBK (warning letter; blacklisting; domain blocking). While ComLot can conduct administrative proceedings independently (eg, in relation to compliance with AML rules and the security and social concept), it cannot do so in the field of criminal proceedings; it can only inform and support the law enforcement authorities. 

The new criminal law sanctions have been available by law since 1 January 2019, and the new administrative law sanctions since 1 July 2019. While these sanctions are readily available to the authorities, their use or the effects of their use have been limited so far. 

Blacklisting and domain blocking measures could have been applied since 1 July 2019 but have experienced delays in practice. The first blacklists by the Federal Gaming Board (ESBK) and the Inter-Cantonal Lottery and Betting Commission (ComLot) were only published on 3 September 2019, and included a rather limited number of websites. Similarly, at the time of writing, the effectiveness of the domain blocking measures has been limited as some of the listed websites could still be accessed. Moreover, at least one domestic Internet Service Provider appealed a decision regarding the original blacklist. How effective these administrative sanctions will prove to be in practice remains to be seen. 

As per criminal law sanctions, the regulatory authorities have thus far shown little appetite to use these enforcement means against unlicensed online operators. This is not very surprising, since the applicability of Swiss criminal law and the enforceability of such decisions abroad is uncertain. 

Financial penalties can be enforced rather easily within the territorial boundaries of Switzerland. In other words, financial penalties against licensed or unlicensed operators based in Switzerland are enforceable, and it can be expected that they will be enforced. By contrast, if the Swiss authorities were to hand down financial penalties against unlicensed operators based abroad, their enforceability would be uncertain. There are both legal and practical difficulties that can be expected. 

Some online social games have experienced major success. In Switzerland, they are not addressed directly by regulation. Under certain conditions, they can fall under the category of major games. According to Art. 3(e) Gaming Act, major games include lotteries, sports betting and games of skill that are carried out automatically, intercantonally or online. If the social game at hand includes game features that involve both a consideration and prizes, it would require a licence from ComLot. Free gaming features by contrast do not require a licence. 

eSports have grown tremendously around the world. The question of whether eSports are sports is the subject of much discussion, including in Switzerland, where the regulatory authorities have not taken a final stance on the issue of eSports. The Inter-Cantonal Lottery and Betting Commission (ComLot) published a statement online, noting that no general definition of eSports could be provided. In their view, eSports may have the characteristics of gaming and gambling, as well as sports. On some occasions, it may be clearly localised in an arena; in other instances the event may also take place online or in mixed forms. 

The Federal Office of Sport (BASPO) takes the view that eSports do not currently qualify as an official sport, as they were simply not understood as sports in the social perception. In BASPO's view, eSports were also in conflict with the Sports Promotion Act ("Sportförderungsgesetz"), which sets out the aim of sports promotion in its Art. 1, namely to increase sports and exercise activities.

Fantasy sports are not addressed directly by the Gaming Act. According to Art. 3(d) Gaming Act, skill games are games in which the outcome depends entirely or predominantly on the skill of the player. If the predominance of skill in a (daily) fantasy sport game can be shown, it should qualify as a major game under Swiss law and, more precisely, as an online skill game that requires a licence from ComLot. 

The broad definition of skill gaming in Art. 3(d) Gaming Act is further detailed in Art. 2 Gaming Ordinance. A skill game is a game that meets the following conditions in particular: 

  • skilful players can win more than other players over a larger number of game units; 
  • in blind play mode, the probability of winning is low; 
  • players have several options for influencing the course of the game; and 
  • playing successfully requires skills of a certain complexity. 

It can be expected that skill gaming, certainly online, will continue its success. It can easily be observed that millennials are not craving pure games of chance, but are looking for games of skill or games of a hybrid nature.

It is often argued that blockchain can revolutionise the gaming and gambling sector. Indeed, if properly applied, there are potentials for transparency and efficiency. Since transaction data is immutable, there is more reliability and transparency, and with faster and cheaper financial movements, the player experience can become smoother and gaming operations more efficient. Along with some other nations, Switzerland was quickly identified as a Crypto Nation and has been at the forefront of hosting blockchain and cryptocurrency initiatives. This also has to do with a crypto-friendly regulatory environment. 

The Gaming Act and its ordinances do not exclude the use of blockchain technology or cryptocurrencies. At the end of the day, casinos and other licensed operators interested in using blockchain and cryptocurrencies would have to be able to convince the regulator that the strict legal requirements can be met with these means. These requirements relate, for instance, to the security concept ("Sicherheitskonzept") and AML rules and player protection. According to Art. 42(2)(b) Gaming Act, the casino must ensure that a control system is operated that verifies and documents all transactions of stakes and winnings. And, of course, in relation to the verification of player age (minors) and AML enhanced CDD obligations, it would have to be shown to the regulator that anonymity was not an issue.

As already mentioned, the Gaming Act and its ordinances only entered into force on 1 January 2019. The Cantons are currently in the process of implementing the new federal regulation into their cantonal laws along with the necessary amendments – for instance, regarding small games and poker tournaments. According to the Gaming Act, these cantonal reforms must be implemented by 1 January 2021. 

According to Art. 120(2)(a) Gaming Act, the progressive tax rate for land-based casino operations shall be set between 40% and 80% of the gross gaming revenues (GGR) ("Spielbankenabgabe"). The Gaming Ordinance regulates the tax rate in more detail. Pursuant to Art. 114(1) Gaming Ordinance, the basic tax rate regarding GGR generated in terrestrial casinos is 40%, and is applied on GGR up to CHF10 million. For every additional CHF1 million, the marginal tax rate increases by 0.5%, up to the theoretical maximum rate of 80%. 

According to Art. 120(2)(b) Gaming Act, the progressive tax rate for online casino operations shall be set between 20% and 80% of the GGR. However, the law foresees that the tax rate can be reduced to half the amount during the first four years of operation. Pursuant to Art. 115(1) Gaming Ordinance, the basic tax rate of 20% is applied on GGR up to CHF3 million. From this value, the marginal tax rate increases by the following steps up to the theoretical maximum tax rate of 80%: 

  • 2% for each additional CHF1 million of GGR between CHF3 million and CHF10 million; 
  • 1% for each additional CHF1 million of GGR between CHF10 million and CHF20 million; 
  • 0.5% for each additional CHF1 million of GGR between CHF20 million and CHF40 million; 
  • 0.5% for each additional CHF4 million of GGR between CHF40 million and CHF80 million; and 
  • 0.5% for each additional CHF10 million of GGR from CHF80 million. 

It should be noted that the financial compensation scheme of a Swiss land-based casino towards the international business partner(s) is subject to approval by the Federal Gaming Board. 

There is no gaming tax in regard to skill gaming; the normal local tax rate applies. Accordingly, the tax competition between Cantons and municipalities applies in this field. 

As regards the public lotteries, their net winnings are earmarked and supposed to go by law to good causes such as sports and culture. 

PLANZER LAW

Badenerstrasse 16
PO Box 1924
CH-8031
Zurich
Switzerland

+41 44 559 42 82

office@planzer-law.com www.planzer-law.com
Author Business Card

Law and Practice

Authors



PLANZER LAW is a boutique law firm specialising in gaming & entertainment and online & technology businesses. The Zurich-based team further holds strong expertise in general business law and (white-collar) criminal law. PLANZER LAW represents the interests of large global leaders as well as small innovative start-ups, with clients benefitting from highly specialised expertise, a truly international perspective on legal matters and an outstanding global network of practitioners, experts and scholars. PLANZER LAW notably provides strategic, regulatory and legal advice on all EU/EEA and Swiss gaming matters to all stakeholders, such as B2Cs, B2Bs, PSPs, affiliates and regulators. The firm further supports companies in the implementation of compliance programmes (eg, AML, responsible gaming, data privacy). Numerous B2Cs and B2Bs have used the firm’s services in seeking and concluding partnership agreements with domestic operators

Compare law and practice by selecting locations and topic(s)

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.