Montenegro, a tug of war between modernisation and tradition

Lea Hogg July 16, 2024

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Montenegro, a tug of war between modernisation and tradition

In January 2024, the small Balkan nation of Montenegro found itself at the centre of a global controversy when the government introduced amendments to its gambling laws, effectively banning the use of modern electronic payment methods such as Apple Pay, PayPal, mobile banking, IPS, and e-banking. This move was not just a shock to the citizens of Montenegro, but it also sent ripples of concern through the global financial community, particularly within the European betting and iGaming sectors.

The ban, seen as a step backwards in an increasingly digital world, led to a significant public outcry and industry backlash. The government’s decision was met with widespread criticism, leading to expectations of revisions to the law in August 2024. However, the nature of these changes and whether they will address the concerns raised remains unclear.

Montenegro’s recent amendment to the Gambling Law, particularly Article 68f, which limits deposit methods for online player accounts, has sparked a significant debate. The provision contradicts multiple EU directives and regulations, including the Payment Services Directive (PSD2) and the EU 4 and 5AML Directive. It also opposes the Montenegro – EU Stabilization and Association Agreement, Article 72, which mandates alignment with the EU acquis. The law has operational and economic repercussions, putting 2 percent of Montenegro’s jobs at risk.

Unforeseen consequences of a controversial legislation

The issue gained media attention when the Minister of Finance made a surprising statement, asserting that Montenegro has no obligation to comply with EU rules. This stance was unexpected, especially for a nation actively seeking EU membership and aiming to integrate into the digital business world.

In 2021, the European Commission had urged Montenegro to enhance its efforts against money laundering. However, the January 2024 amendments appear to contradict this directive, potentially isolating the country from EU practices and global financial trends.

Since the start of 2024, Montenegro’s gambling sector has faced significant turmoil. The amendments, which mandate cash or specific terminal transactions, have caused business disruptions and investor uncertainty. A petition to halt the amendments garnered 25,000 signatures in just five days, reflecting the public’s dissatisfaction. Montenegro Bet, the country’s trade association, submitted the petition to the assembly and initiated a constitutional review. They also engaged with international institutions to highlight the negative impacts of the law.

Multiple operators are preparing legal actions, including a lawsuit before the International Court for Settlement of Investment Disputes. They cite corrupt practices and unequal market access facilitated by the new law as the basis for their case.

As August approaches, the industry and public are hopeful for revisions that will align Montenegro with EU standards and global financial trends. The prohibition of advanced online payment methods in favour of cash transactions remains a troubling development requiring urgent attention and action. The world watches as Montenegro grapples with the consequences of its controversial law, waiting to see if it will embrace the future or remain rooted in the past.

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