Date: 18.07.2024

by Adam Dworak

Montenegro to Reassess Ban on Digital Payment Systems for Betting

Montenegro’s government recently enacted laws banning digital payment methods, including Apple Pay and PayPal, for online gambling services. This move has faced immediate criticism from the country’s betting sector, which argues that the ban could hinder Montenegro’s efforts to join the European Union (EU).

Reevaluation of the Ban

Several months after the law’s implementation, the government is reconsidering the mandate. Market insiders have informed SBC that revisions to the law are expected later this year.

The government is responding to both public and industry criticism over the limitations imposed on payment options.

Impact on Payment Options

The ban affects not only Apple Pay and PayPal but also other forms of mobile banking, IPS, and e-banking, which are seen as essential for modern financial transactions.

Customers are currently forced to use cash or specific terminals to fund their online betting accounts, a move that many believe infringes on EU/EC competition rights.

Industry and Public Reaction

The betting industry has been the most vocal opponent of the ban. Operators argue that it disrupts the most crucial aspect of their business—transactions—and increases consumer exposure to black market activities.

Montenegro Bet, the country’s betting industry trade association, responded strongly in the early stages of the law’s application, submitting a petition with over 25,000 signatures to the National Assembly, prompting a legislative review.

Legal and Economic Concerns

Some operators have been preparing legal action since the ban’s implementation, with a lawsuit being prepared for the International Court for Settlement of Investment Disputes. They accuse the government of corrupt practices and unequal market access.

Beyond the betting industry, the ban poses economic risks. Betting is a small but significant sector in Montenegro’s economy, employing around 2% of the workforce.

Montenegro Bet warns that the ban could lead to job losses, exacerbating the unemployment rate, which stands at 15%. The sector’s loss would also reduce tax revenue for the state.

EU Integration and Regulatory Challenges

On a broader scale, the ban could complicate Montenegro’s EU accession efforts. Since 2012, Montenegro has been negotiating to join the EU, having applied in 2008.

The emphasis on cash transactions contradicts EU anti-money laundering rules, which prefer digital payments, and clashes with the EU’s European Digital Identity (e-ID) program aiming to standardize electronic identification.

Industry Trends and Future Considerations

The law also opposes a global trend towards cashless payments in the gambling industry, endorsed by regulatory commissions for better protection against problem gambling. Countries like Australia have adopted policies favoring cashless transactions for these reasons.

Legislators will need to consider the economic, political, and industry implications of the ban, alongside the petitions and potential legal actions, when reassessing the law later this year. The outcome of this reevaluation remains uncertain.