27 March 2007

Online Gaming and Betting Operators Expand Trade Association

Today, the European Gaming and Betting Association (EGBA) has been launched in Brussels. The organization replaces the European Betting Association building on the strong foundations laid since EBA’s launch in 2003. EBA has been acknowledged by authorities throughout Europe as a strong voice bringing to the forefront national and European debates regarding the rights of regulated European-licensed operators to offer cross-border services.
In the context of fast-growing and changing markets, legal developments and an intense public and political debate, new challenges have emerged.

In the footsteps of EBA, EGBA aims at promoting the implementation at European level of a competitive, fair and regulated market accessible to operators applying high-level standards with regard to consumer and minor protection as well as other aspects of responsible gaming. The EGBA believes that consumers should have access to a greater choice of regulated European operators and access to the highest possible standards in protection and care, which is more likely to be achieved through regulated competition than in a monopoly environment.

Established in Brussels, EGBA groups the leading cross-border online gaming and betting operators fully established and licensed in Europe, several of which are publicly listed. All the members of EGBA (Bet-at-home.com, bwin, Carmen Media Group, Expekt, Interwetten, PartyGaming, and Unibet) abide by a Code of Conduct listing a common set of strict rules enforcing socially responsible internet gaming and betting. These standards, audited by specialized external bodies, supplement each member’s national licensing requirements imposed by its home European regulator.

EGBA aims at continuing a constructive dialogue with all stakeholders including regulators, EU and national authorities, state operators and consumers. Sigrid Ligné, the new Secretary General of EGBA, comments “It’s time now that all stakeholders put on the table their real concerns and expectations. EGBA has a strong commitment to lead the way to a regulated and transparent European market for the benefit of consumer choice and protection.”

To facilitate common understanding and interactive dialogue, EGBA is launching today its website at www.egba.eu .

22 March 2007

EBA supports European Commission decision

The European Commission issued Reasoned Opinions against three Member States (Denmark, Finland, and Hungary) and has decided to extend its investigation in the legislation of Germany and of The Netherlands. None of them have shown any indication or willingness to reconsider their monopolistic restrictions.

These cases are the next step to the Letters of Formal Notice issued on 4th April 2006 against seven Member States (Denmark, Finland, Germany, Italy, The Netherlands, and Sweden) for restrictions in their legislation in the provision of sports betting services in contradiction to Article 49 of the EU Treaty (freedom to provide services) and European Court of Justice (ECJ) case law that fundamentally establishes sports betting as a cross-border service.

It is no surprise that the replies which these Member States have given were deemed inadequate by the European Commission. None of them have shown any indication or willingness to reconsider their monopolistic restrictions or to engage in a process of constructive dialogue with other stakeholders. On the contrary, some of these Member States have introduced even more restrictive legislation against private European licensed operators while at the same time allowing for their state-owned or state controlled operators to expand and advertise their products and services.

ECJ case law, and most recently the Placanica ruling of 6th March 2007 [Case C-338/04], imposes strict limitations for the existence of monopolies and restrictions in national gambling legislation. Such restrictions are only acceptable for reasons of general public interest, however most national legislations allow state-run companies to raise revenue by product expansion and massive advertising campaigns, but forbid competition. These laws and practices cannot be reconciled with the strict EU legal requirements. The European Commission appears to have serious doubts as well, as demonstrated by the decision taken today.

press release European Betting Association

15 March 2007

McCreevy denies German monopoly claims

The European Union's internal market commissioner Charlie McCreevy has denied claims that the EU was preparing to uphold Germany's proposed monopoly on sports betting in the country. Martin Stadelmaier, the head of the state government office in Rhineland-Palatinate, told German newspaper Sueddeutsche Zeitung that the monopoly would be approved by next week, albeit with conditions.

Germany's states have proposed banning private sports betting companies until 2010, during which time they will develop a system by which private betting companies can obtain concessions.

McCreevy responded by saying that a decision on the matter had not yet been made.

Gaming Industry News

07 March 2007

EBA on the Placanica decision

European Court of Justice ruling welcomed by EBA. Will Member States finally take heed?

Brussels, 6th March 2007: Today, the European Court of Justice (ECJ) delivered its final ruling on Placanica (Case C-338/04) which puts a further nail in the coffin of the state-monopoly model in the gambling sector. This is a landmark decision building further on the jurisprudence of the ECJ in Gambelli (C-243/01) and one which the European Betting Association (EBA) hopes has the potential to act as a guide to those EU Member States and National Authorities which must adapt their national legislation and regulatory models so as to become compliant with the EU Treaty of Rome. As a consequence of this ruling, EBA calls upon various Member States to abolish their gambling monopoly models and to allow open and fair competition from licensed and regulated European-licensed operators. Furthermore, all attempts at intimidation and criminalisation of these businesses and their executives and local suppliers are to cease immediately, while practical solutions which are compatible with European law are sought.

The Placanica case, as the case of Gambelli preceding it, arose from the question whether the Italian law restricting betting activities only to those people or companies licensed in Italy was compatible with the EU principles of freedom of establishment and freedom to provide services. The Gambelli ruling had clarified in 2003 that the restrictions imposed by Member States on their gambling markets will be only compatible with Articles 49 (freedom to provide services) and 43 (freedom of establishment), if they were justified on the very limited grounds of public order, security or health or on these overriding rulings of public interest while they must not exceed the means necessary to achieve such an objective or be applied in discriminatory manner. Specifically, an objective relating to enriching the public purse was deemed an illegitimate one for these purposes and Placanica re-iterates this so as to remove any doubt on the issue. Italy is not the only Member State where the Gambelli ruling has, to date, gone unheeded, as numerous other similar cases concerning other Member States are still pending at the ECJ.

The Placanica ruling clarifies Gambelli and is even more explicit about the ECJ’s opinion on this matter. Former ECJ Advocate General Siegbert Alber comments on this latest ruling: “Monopolies cannot and should not be the only means of regulating gaming. Granting licences can serve the same purpose. The reasons given in the Placanica case for Italy’s monopoly are much more honest than the pronouncements made by other Member States. At least Italy admits that its approach is designed to increase revenues and to combat illegal gaming.”

It is also not enough for compliance to simply open up licensing applications to all without considering the necessity of the conditions. A system that requires a local license and local corporate and server presence and other such conditions without proper consideration of alternative ways to achieve the legitimate public policy objectives will also likely fall foul of the Treaty. The EBA believes there is a workable route toward the recognition of the standards and licenses of other EU licenses and solutions for ensuring that cross-border enforcement can work without requiring internet businesses to establish themselves in every European Member State. That is, after all, what e-commerce is all about and there is no reason why this should not work in this sector.

EBA expects Placanica to give the European Commission further undisputable legal arguments and unquestionable justification to pursue infringement proceedings against Member States for illegal restrictions in their gambling markets. It is hoped that the European Commission will pursue with increased vigour and speed all pending complaints of infringement in this area for the benefit of the legitimate operators who suffer daily financial damage and their Executives who are being treated as criminals in various European jurisdictions.

Furthermore, pretending that online betting and gaming is not a popular form of entertainment that adults across Europe want to have the option of indulging in, from their choice of licensed and regulated European provider, is no longer sustainable. A competitive market among licensed and regulated operators in an innovative and technology driven business is the only way to deliver the highest levels of consumer value and consumer protection.

The EBA believes that the legal position has been further clarified and that all the necessary guidance is now there to enable governments to revisit their policies in this area. The EBA hopes that governments looking for long term solutions that are compliant with European law protect the interests of consumers and enable a regulated European industry to develop in partnership with governments as opposed to in conflict with them, now see and seize the opportunity for a dialogue with the industry.

EU court prohibits Italian gambling restriction

International Herald Tribune

By Eric Pfanner

Tuesday, March 6, 2007

The top European court on Tuesday prohibited Italy from prosecuting bookmakers based in other European countries, a ruling that private-sector gambling companies hailed as a milestone in their efforts to pry open European betting markets from the grip of state-run monopolies.

Online operators have used licenses from one European Union member state to try to operate in neighboring countries, arguing that such activity was permitted by the EU's single market.

But EU members like France and Germany, where national gambling monopolies provide a lucrative revenue stream, have tried to curb their activities. While stopping short of the approach in the United States, where some foreign Internet gambling executives were arrested and one was charged, they have moved against several online operators.

The decision Tuesday "will open up the European market, the German market certainly," said Martin Arendts, a lawyer in Grünwald, Germany, who works with a number of gambling companies.

"It's a big step further than the Gambelli decision," he added, referring to a 2003 case in which the European Court of Justice said European countries could not block cross-border gambling operators simply to defend state-run providers, but could do so in order to protect society from the perceived ills of gambling.

In its ruling Tuesday, the court, in Luxembourg, said Italy could not use criminal law to try to stop three people who operated local gambling shops where customers could place bets that were transferred to a British gambling company, Stanleybet International.

The court left some gray areas, however.

The ruling applies only to sports betting, and it stops short of explicitly endorsing the idea that holders of a betting license in one EU country should be able to operate without borders, lawyers said.

The advocate general, an official who provides legal opinions for the court, had urged the court to make a decision authorizing such activity.

The German federation of state lottery systems, Deutscher Lotto- und Totoblock, said the decision vindicated its position, noting that Germany was in a different situation than Italy, where the government recently allowed some private gambling operators to set up in competition with the state-run provider.

"The situation in Italy is completely different from the one in Germany," said Friedhelm Repnik, head of the gambling organization in the state of Baden-Württemberg, which is part of the national grouping. "There, there is a partial opening of the market; here, a clear state monopoly, whose central justification is the protection of gamblers and the prevention of addiction."

The decision could cast doubt over efforts by the authorized lottery operators in the individual German states to try to put in place a treaty to enshrine their monopoly status, Arendts said.

European governments have said they want to maintain control over online gambling because they can best protect consumers from possible problems linked to Internet betting, even if they do not object to gambling in principle.

But they have generally stopped short of the approach in the United States, where President George W. Bush last year signed into law a prohibition on financial dealings with Internet gaming companies. (...)

Several German states have banned Bwin Interactive, based in Vienna, from taking bets within their borders. Last year, French authorities arrested two executives of Bwin as they appeared at a news conference to announce a sponsorship deal with Monaco, the soccer club.

"The kind of things that happened in France are now clearly out of the scope of European law," Konrad Sveceny, a spokesman for Bwin, said of the ruling. "It is clearly another big step toward opening up the European gaming market. In the light of this judgment, state monopolies are no longer tenable." (...)

06 March 2007

Private Gaming Operators on the Placanica Decision

Various I-gaming companies have both noted and welcomed today's judgment handed down by the European Court of Justice (ECJ) in the Placanica case, which suggests state gambling monopolies are in contravention of EU legislation providing for the free movement of services. The case, an ongoing dispute over Italian legislation prohibiting the cross-border provision of betting services before the ECJ, is precedent-setting in the eyes of many industry observers, including Unibet CEO Peter Nylander, who in a prepared statement vehemently remarked: "We are now all looking forward to the creation of a new, modern gambling market within EU. The time for monopolies is over."

05 March 2007

European Court of Justice to pronounce long-awaited Placanica decision on 6 March 2007

The European Court of Justice (ECJ) is going to pronounce its long-awaited decision in the joined cases Placanica et al. (Cases C-338/04, C-359/04 and C-360/04) on Tuesday, 6 March 2007, at 9:30 a.m. The operators and agents affected as well as numerous courts expect a further clarification of the legal situation with regards to the cross-border provision of sports betting.

As for the Gambelli and the Zanetti decisions, the facts of this decision are based on criminal proceedings against betting agents having transferred contracts for sporting bets from Italy to a British bookmaker, in this case, Stanley International Betting Ltd.

The three cases to be judged within the preliminary ruling proceedings were brought before the ECJ by the Tribunale Larino and the Tribunale Teramo which expressed doubts as to the justification for the Italian licensing system and its criminal sanctions.

The reason for bringing these cases before the ECJ was a decision pronounced by the Italian Cassation Court (Corte suprema di cassazione). Despite the ECJ’s Gambelli decision rendered in 2003, in its decision no. 23271/04, the Italian court held that it was not the (national) judge’s task to decide on the adequacy and the proportionality of criminal sanctions. The license granted to the British bookmaker could only be attributed territorial character.

The Italian courts bringing the cases before the ECJ expressed severe doubts as to the compatibility of this argumentation with Community law. In its Gambelli decision, the ECJ expressly required the national courts to examine the adequacy and the proportionality of criminal measures taking into account the bookmaker’s surveillance in his country of origin.

The ECJ’s Advocate General published his comprehensive legal opinion on the case on 16 May 2006. He came to the conclusion that the bookmaker’s surveillance in his country of origin was sufficient. The Italian approach to invoke the territorial character of the bookmaker´s permit was in violation of the principle of full and accurate transposition of Community law. Invoking the principle of mutual recognition, the Advocate General explicates: “In case an operator from another Member State meets the legal conditions set forth in this state, the authorities of the state in which the service is rendered must act on the assumption that this is a sufficient guarantee for his integrity.” For the rest he considered the Italian provisions to be discriminating, so that they were not applicable for this reason alone. Furthermore the provisions were not proportional as well.

It remains thrilling to see, whether the ECJ is going to follow the Advocate General’s opinion. On the one hand, the case concerns a highly political subject, so that the ECJ might want to avoid a clear statement. If the ECJ would follow the Advocate General’s opinion, this would have considerable financial implications (for Germany as well) since it would effectively mean the end of the state monopoly. On the other hand, the ECJ is probably not going to tolerate that a national high court (in this case the Italian Cassation Court) disregards the Gambelli criteria it had laid down only shortly beforehand. With regards to thousands of proceedings pending before national courts laying down the law from Luxembourg would be more than desirable.

German Gaming Law updated No. 64

Private Sports Betting Operators to be licensed in Schleswig-Holstein ?

The Christian Democratic Party (CDU) in the parliament of the State of Schleswig-Holstein wants to open the market for sports betting to private operators by introducing a new licensing model. With this in mind, the Christian Democratic Party proposed a dual interstate treaty system dealing with lotteries and sports betting separately.

According to a proposal elaborated by Hans-Jörn Arp (CDU), private operators are to be licensed on conditions regarding the protection of minors and addiction prevention. Operators are to add warnings about problem gambling on the slips. A system of limits is to restrict the amount of the wager and a special file restricting addicts from betting is to be installed on a federal level. The states were to profit from this model as well. Private operators are supposed to pay a part of their revenues as license fees to the states. The money could then be used to “fund public or tax-deductible goals”.

The Christian Democratic Party plans to introduce its draft for parliamentary debate after consultations with its coalition partner, the Social Democratic Party (SPD). The proposals could thus become integral part of a new Interstate Treaty, which could already be introduced for the conference of the state prime ministers in Berlin on 22 March 2007.

Hans-Jörn Arp, member of the Schleswig-Holstein parliament, spoke out very critically against the draft for a new Interstate Treaty on Gambling as proposed by the other states. He already fears that the state Toto- und Lottoblock could break apart: “After the evaluation of the draft of the Interstate Treaty more and more former advocates of the monopoly start to understand what a bad deal this is. The unity of the Toto- und Lottoblock (association of state operators) regarding this Interstate Treaty is about to break apart. And rightly so: the new Interstate Treaty on lotteries destroys our developed lottery system more severely than any licensing model ever could.” The CEO of Lower Saxony’s Toto-Lotto, Rolf Stypmann, had summed it up very precisely: Due to the new Interstate Treaty on Gambling Lotto and Toto are threatened with extinction because of the monstrous and impracticable regulations. He almost felt stigmatised as a drug trafficker. Even old and established Toto was now considered dangerous. Hereto Arp: “Against this background, it would be more than understandable, if the Toto- und Lottoblock will refuse to offer sports betting in the future. But this also means: The states’ revenues from levies and fees will drop as dramatically as the means for the funding of culture and sports.”

ifo Research Report on the German Sports Betting Market

In view of the Federal Constitutional Court’s decision of 28 March 2006 regarding the sports betting market, the report issued by the ifo Institut für Wirtschaftsforschung (Institute for Economic Research and Analysis) generates four scenarios describing how the German sports betting market could develop under different legal frameworks until 2010.

It addresses the different market operators – especially Oddset, foreign remote sports betting operators, stationary betting agents and horse-betting operators – separately. The scenarios are used as a starting point for the input-output analysis, which is used to assess added value-, tax-, and employment effects connected to the respective activity of the sector.

Auswirkungen des Bundesverfassungsgerichtsurteils zum Sportwettmarkt auf die deutsche Volkswirtschaft (The Effects of the Federal Constitutional Court’s Decision regarding the Sports Betting Market on the German Economy) by Lars Hornuf, Günter Britschkat, Robert Lechner, Dr. Gernot Nerb, ifo Forschungsberichte München: ifo Institut für Wirtschaftsforschung, 2006; 51 S.; 40,- EUR. ISBN 978-3-88512455-9