09 November 2009

ECJ and Gambling: New referral from Austria

Reference for a preliminary ruling from the Bezirksgericht Linz (Austria) lodged on 31 August 2009 -
Criminal proceedings against Jochen Dickinger, Franz Ömer

Case C-347/09

Questions referred:

1. (a) Are Articles 43 EC and 49 EC to be interpreted as, in principle, precluding legislation of a Member State, such as Paragraph 3 in conjunction with Paragraph 14 et seq. and Paragraph 21 of the Austrian Law on Gaming (Glücksspielgesetz), under which

- a licence for lotteries (e.g. lotteries, electronic lotteries, etc.) may be granted to no more than one applicant for a period of up to 15 years, such applicant being required, inter alia, to be a capital company established in Austria, prohibited from establishing branches outside Austria, having a paid-up nominal or share capital of at least EUR 109 000 000 and which may, in the circumstances, be expected to achieve the best yield in terms of federal taxation;

- a licence for casinos may be granted to no more than 12 applicants for a period of up to 15 years, such applicants being required, inter alia, to be public limited companies established in Austria, prohibited from establishing branches outside Austria, having a paid-up share capital of EUR 22 000 000 and which may, in the circumstances, be expected to achieve the best yield in terms of taxation for the regional authorities?

These questions arise specifically against the following background: Casinos Austria AG holds all 12 casino licences, which were granted on 18 December 1991 for the maximum period of 15 years and which have since been extended without a public tendering procedure or notice.

(b) If so, can such legislation also be justified for reasons relating to the public interest in a restriction of betting activities if the licensees in a quasi-monopoly are themselves pursuing a policy of expansion of games of chance, and employing intensive advertising in order to do so?

(c) If so, must the referring court - in its examination of the proportionality of such legislation, which aims to prevent criminal offences by monitoring operators active in this sector and thereby steering gaming activities towards a regime in which they will be subject to checks - take account of the fact that the legislation also covers cross-border service providers who, in any event, are subject in the Member State of establishment to the strict conditions and checks associated with their licence?

2. Are the fundamental freedoms of the EC Treaty, in particular the freedom to provide services under Article 49 EC, to be interpreted as meaning that, irrespective of the continuing responsibility, in principle, of the Member States for the regulation of criminal law, rules of a Member State's criminal law are nevertheless to be assessed by reference to Community law if they are liable to prohibit or impede the exercise of one of the fundamental freedoms?

3. (a) Is Article 49 EC, in conjunction with Article 10 EC, to be interpreted as meaning that the checks carried out in a service provider's State of establishment, and the safeguards provided there, must be taken into account in the State in which those services are provided, on the basis of the principle of mutual trust?

(b) If so, is Article 49 EC to be interpreted further as meaning that, where the freedom to provide services is restricted for reasons in the public interest, consideration must be given to whether sufficient account is not already taken of this public interest in the legal provisions, checks and investigations to which a service provider is subject in the State in which he resides?

(c) If so, must consideration be given - when examining the proportionality of a Member State's rules imposing penalties for the cross-border provision of gaming services without a licence granted in that Member State - to the fact that the regulatory interests upon which the State in which the services are provided relies in order to justify the restriction of the fundamental freedom are already sufficiently taken into account in the State of establishment in strict authorisation and supervision procedures?

(d) If so, must the referring court take account - in the context of its examination of the proportionality of such a restriction - of the fact that, in the State in which the service provider resides, the degree of control exercised by virtue of the provisions in question actually exceeds that of the State in which the services are provided?

(e) Moreover, does the principle of proportionality in the case of a prohibition - on pain of criminal penalties - of games of chance that is imposed for regulatory reasons, such as the protection of players and the fight against crime, require the referring court to make a distinction between providers who offer games of chance without any authorisation whatsoever, and those who are established and licensed in other Member States of the European Union and who conduct their activities in the exercise of their freedom to provide services?

(f) In the examination of the proportionality of a Member State's rules prohibiting the cross-border provision of gaming services without a licence granted or authorisation given in that Member State, on pain of criminal penalties, must account be taken, lastly, of the fact that, as a result of objective, indirectly discriminatory barriers to entry, it has not been possible for a provider of games of chance who is duly licensed in another Member State to obtain a licence in the first Member State, and the licensing and supervisory procedure in the State of establishment offers a level of protection that is at least comparable to that of the first Member State?

4. (a) Is Article 49 EC to be interpreted in such a way that the temporary nature of the service provision precludes the service provider from equipping himself with a certain infrastructure (such as a server) in the host Member State without being deemed to be established in that Member State?

(b) Is Article 49 EC to be interpreted further as meaning that a provision directed at support services within a Member State which prohibits them from facilitating the provision of services by a provider established in another Member State also amounts to a restriction of that service provider's freedom to provide services if the support services are established in the same Member State as some of the recipients of the service?

25 October 2009

EGR: Online gambling ban in Germany could be overturned

GERMANY'S ONLINE GAMBLING ban is under threat after one of the 16 German states that ratified the treaty underpinning the ban demanded its cancellation at the weekend.

The agreement between the ruling coalition Christian-Democratic Party (CDU) and the Liberal Party (FDP) in Schleswig-Holstein, the northernmost of Germany’s 16 Lander, was published on Saturday and called for an end to the German Interstate Treaty on Gambling and its replacement with new regulation.

The leader of the FDP and the coalition in Schleswig-Holstein, Jürgen Koppelin, said that if the other German states failed to agree on a new uniform regulation to replace the Treaty, which came into force on 1 January last year, the coalition would seek to introduce an intrastate licensing system.

German gaming lawyer Martin Arendts of Arendts Anwalte said that “the argument that only a monopoly can protect customers, prevent problem gambling and guard against fraud would not hold any more,” which would undermine the monopoly position of the other German states.

Although the coalition is only reported to have commented on the potential impacts of such a move on the land-based gaming industry in the state, such as privatising state-owned casinos, Arendts told EGRMagazine.com that any new licensing system would necessarily have to apply to online gaming and betting, all forms of which except horse race betting are currently banned.

The European Gaming and Betting Association has consistently argued that the protectionist monopoly position of Germany’s Interstate Treaty on Gambling contravenes European Union law under Article 49 of the Treaty of Rome by restricting the rights of its members, such as Bwin and Unibet, to provide online gaming services.

Arendts also highlighted that Schleswig-Holstein only ratified the Interstate Treaty on Gambling in December 2007 for “fiscal reasons,” having previously favoured a separate Interstate Treaty on Sport Betting that would have provided licenses for private bookmakers.

A failure by all the German states to ratify a new regulation by 1 January 2012, when the existing treaty expires, would also render the current state gambling monopoly unenforceable.

Stephen Carter
eGaming Review

17 October 2009

Coalition agreement in Schleswig-Holstein demands cancellation of the German Interstate Treaty on Gambling

by Martin Arendts, attorney-at-law

Kiel/Germany – According to the coalition agreement between the Christian-Democratic Party (CDU) and the Liberal Party (FDP), published on 17 October 2009, Schleswig-Holstein, one of the 16 German states (Länder), will cancel the Interstate Treaty on Gambling (Glücksspielstaatsvertrag) and thereby end the state monopoly on gambling.

According to Jürgen Koppelin, leader of the Liberal Party Schleswig-Holstein, other German states might follow the example of Schleswig-Holstein. If the Germans states can not agree on a new uniform regulation, CDU and FDF announced to consider a licensing system. According to the coalition agreement, the now state-owned casinos in Schleswig-Holstein will also be privatised.

Originally, Schleswig-Holstein did not agree to the Interstate Treaty, but favoured an alternative model, a separate Interstate Treaty on Sport Betting, providing licenses to private bookmakers. Due to “fiscal reasons” the state finally ratified the Interstate treaty on Gambling in 2007.

28 September 2009

Administrative Court of Mainz assesses constitutional deficits of sports betting monopoly

by Martin Arendts, Attorney-at-Law

The Administrative Court of Mainz, Germany, noted yet again constitutional deficits of the state’s sports betting monopoly. In the case at hand, the judges therefore granted exemption from judicial execution to the defendant (order of 4 September 2009, file number: 6 L 770/09.MZ).

Thus the defendent, represented by ARENDTS ANWÄLTE, may continue to collect and forward offers of sports bets to a bookmaker, licensed in the EU member state Austria. This may happen under the usual requirements, i.e. to point out possible addictiveness and to prohibit the participation of minors. Hence the plaintiff, the State Rhineland Palatinate, was unsuccessful in its attempt to amend an interim order in favour of the betting shop, issued in 2007.

The Court pointed out that the monopoly organiser of sports betting, Lotto Rheinland-Pfalz GmbH, does not meet the requirements as formulated in § 10 Abs. 3 GlüStV (Interstate Treaty on Gambling), or the criteria outlined by the Federal Constitutional Court in its decision from March 28th 2006. The aforementioned statute and court decision, both highlighted that it was necessary to reduce the number of receiving offices effectively, in order to comply with § 1 GlüStV. The state’s legislation, however, only specified an effective reduction of receiving offices till 2011. The Court therefore made it clear that this would not suffice. Furthermore it disapproved of the exact wording of the satute in question, as it only provided for a vague guideline.

16 September 2009

right2bet petition

The right2bet petition:

I hereby state my support for right2bet and their aim for all EU citizens to have the right to choose which EU licensed online betting provider they use, irrespective of which Member State they operate from.

I, the undersigned, wish to bring to your attention the following:

- I want the right to use the Internet to bet online across borders of all EU Member States.

- I want the right to use websites of EU licensed online gambling operators that give me more fun, better odds and better games.

- I do not want to have to go outside the EU to use sites which may be unlicensed and whose origins I know nothing about.

- I want you to take firm action against governments of EU Member States that will still not allow me (and other citizens of the EU) to exercise this freedom.

- I want to know that responsible gambling will be encouraged. I want to know that my children cannot access these sites.

- I want the Commission to take action against Member States that do not allow me to bet with EU-licensed operators that meet the highest standards in consumer and child protection, socially responsible gambling and crime prevention.

- I want you to take action to remove the existing barriers to EU consumers exercising their rights to purchase online services across EU Member States borders.


13 September 2009

Deutscher Lotto- und Totoblock: European Court of Justice strengthens German gambling regulation

• Last remaining doubts over German Interstate Gambling Treaty cleared up
• Foreign sports betting to remain illegal in Germany
• Gambling monopoly in Portugal is legitimate

Erwin Horak, President of the Bavarian State Lottery Administration and Chairman of the Legal Committee of the German Lotto- und Totoblock, said he was satisfied with the ruling by the European Court of Justice (ECJ) on gambling which was announced today. The ruling strengthens the nation states of the European Union. The judges decided that freedom to provide services may indeed be restricted in the case of gambling. The EU states may ban online gambling services because different and more severe risks of fraud apply to online gambling.

The object of the case (C-42/07) brought before the ECJ was the legal regulation of sports betting in Portugal. The specific matter at hand was the legitimacy of a law which grants the sole right to offer lottery and sports betting services in Portugal to a non-profit organisation. According to the ECJ ruling, the member states may decide for themselves how to regulate this industry. The gambling authorisation granted in one member state does not have to be recognised by the other member states. As such, foreign sports betting will remain illegal in Germany.

The European judges had already stressed repeatedly in recent years that restrictions in the gambling industry may be legitimate for overriding reasons in the public interest such as the protection of consumers. The German Federal Constitutional Court had also thoroughly examined and confirmed the legitimacy of the Interstate Gambling Treaty on 14 October 2008 and 20 March 2009.

“There are no longer any remaining doubts at all over the legitimacy of the German Interstate Gambling Treaty in terms of European law. I am very optimistic about the German cases which are still awaiting resolution,” said Erwin Horak. “Today’s decision is another signal to the federal states that they are on the right track. The ruling is also a heavy blow for the commercial gambling industry. As of today, there is no longer any hope for an unregulated gambling market which has no borders and is oriented solely towards the profits of illegal providers,” added Horak.

press release of Deutscher Lotto- und Totoblock

08 September 2009

bwin / Santa Casa: ECJ delivers judgment in the bwin/Portuguese football league versus Santa Casa case

Today, the European Court of Justice (ECJ) rendered its judgment in a case involving bwin and the Portuguese football league versus the Portuguese monopolist Santa Casa da Misericórdia de Lisboa (Santa Casa). Santa Casa claimed that bwin´s sponsorship agreement with the Portuguese professional football league and accompanying advertising activities were illegal because of Santa Casa’s monopoly in providing on and offline lottery and betting services in Portugal.

According to the ECJ, the Portuguese monopoly on the Internet may comply with Community law under certain conditions, but restrictions imposed by a Member State “must be suitable for achieving the objective or objectives invoked by the Member State concerned, and they must not go beyond what is necessary in order to achieve those objectives. Lastly, in any event, those restrictions must be applied without discrimination.”

Sigrid Ligné, Secretary General of the EGBA: “Given the stringent anti-fraud regulations applicable to EU licensed operators which ensure a high level of integrity, transparency and traceability over online gaming transactions, we do not believe those conditions are met. Several jurisdictions in the EU already prove that it is possible to guarantee a high level of consumer protection and have a well regulated and competitive online gaming market at the same time.”

Today’s judgment must also be seen in the context of the increasing number of Member States that are now in the process of rethinking and redrafting their gaming legislation. As has been obvious for all other consumer markets before, none of the Member States currently drafting legislation has chosen a monopoly model to regulate this modern Internet based market.

press release of EGBA

Online gaming: ECJ rules in bwin v Santa Casa

The European Court of Justice (ECJ) today published its judgment in the preliminary ruling proceedings bwin and Liga Portuguesa de Futebol Profissional v the Portuguese monopoly Santa Casa da Misericórdia de Lisboa. In these proceedings, the ECJ assessed whether the Portuguese sports betting and lottery monopoly and its extension to include the internet is compliant with EU law.

In particular, the ECJ examined “whether the freedom to provide services precludes the Portuguese legislation in so far as the latter prohibits operators such as bwin, established in other Member States where they lawfully provide similar services, from offering games of chance via the internet in Portugal.” In its decision, the Court finds “that the Portuguese legislation constitutes a restriction on the freedom to provide services.”

The Court also maintains “that restrictions on the freedom to provide services may be justified by overriding reasons relating to the public interest. However, the Court notes that the restrictive measures that Member States may impose must satisfy certain conditions: they must be suitable for achieving the objective or objectives invoked by the Member State concerned, and they must not go beyond what is necessary in order to achieve those objectives. Lastly, in any event, those restrictions must be applied without discrimination.”

The ECJ concludes that prohibiting private online gaming providers from offering games of chance via the internet is compatible with Community law. However, the Court overlooks the fact that respectable private online gaming providers such as bwin are just as able to control gaming in the internet as state monopolies.

Internet warrants greater security than brick-and-mortar gaming
Using this IT-based medium, highest security standards can be met to warrant customer protection and fraud control in particular. As founding member of the European Gaming and Betting Association, bwin helped develop the compulsory Code of Conduct for private online gaming providers. This Code stipulates strict controls which, given the transparency of the internet, have proven more efficient in the internet than in traditional brick-and-mortar gaming and, in particular, conclusively prevent any type of fraud. The European Sports Association, whose efforts also serve to prevent betting manipulation, has successfully been able to implement this.

Internet Gaming is Market Reality – It’s time for legislators to act
Today’s decision once again underscores that a modern regulation of online gaming is indispensable in order to protect consumers. Co-CEO Norbert Teufelberger comments on this ECJ decision: ”Internet legislation contains technical requirements and the Commission must be notified of these before they come into force. This was not done in the present case. As the national court did not consider the notification issue, the ECJ refrained from addressing the matter. It will therefore have to be resolved in the national proceedings. In so doing, the national court will surely go by the statements of Advocate General Bot who pointed out that no penalties could be imposed as no notification had been made.” And he added: ”A legal vacuum has emerged in the European gaming sector because of the rapid pace of technological progress. Among other things, this is borne out by over a dozen preliminary ruling proceedings still pending before the ECJ as well as numerous infringement proceedings against EU Member States which the European Commission has so far put on hold. As a transparent company listed at the stock exchange, it has therefore always been our ambition to change this situation as quickly as possible and to offer our line-up in a regulated environment governed by legal security.”

Co-CEO Manfred Bodner continues: “Online gaming has become a market reality. There is urgent need to develop a legal framework in tune with the times to warrant the interest of consumers, the state and operators. Court rulings will not be able to fill in for a regulation in the medium and long run.”

Norbert Teufelberger specifies: “Only a regulated online gaming market with a diversified and attractive line-up of games will provide adequate security against the risks of a black market which in fact not only opens up the floodgates to crime but also passes up on consumer protection. This is why a growing number of Member States, including Great Britain, Italy or France, have reacted. We are confident that Portugal will also set the course for an attractive regulated online gaming market.”

Background information on the ECJ proceedings bwin and Liga Portuguesa de Futebol Profissional (LPFP) v the Portuguese monopoly Santa Casa da Misericórdia de Lisboa (SCML):
In August 2005, bwin signed a sponsoring agreement with LPFP for a period of four playing seasons. In view of Portuguese law, which grant SCML sole authority to negotiate sports bets, SCML filed a number of lawsuits, including infringement proceedings, against bwin and LPFP. An administrative penalty was imposed on bwin and LPFP and they lodged an appeal. The court entrusted with the case in Portugal referred a list of questions on the interpretation of the Portuguese gaming monopoly under EU law to the ECJ.

What are preliminary ruling proceedings?
The Court of Justice works together with all courts in the Member States. They are responsible for the application of Community law. To ensure the effective and consistent application of Community law and to prevent diverging interpretations, national courts can (and in some cases must) address the Court of Justice and request it to interpret Community law in order to verify compatibility of their national legislation with Community law. A preliminary ruling may also requested for verification of the validity of a Community act.

See http://curia.europa.eu

further inquiries

Press Officer
Kevin O'Neal
Telephone: +43 (0)50 858-240 10
Fax: +43 (0)50 858-16
E-mail: press@bwin.org

Investor Relations
Konrad Sveceny - Head of Investor Relations
Telephone: +43 (0)50 858-200 17
Fax: +43 (0)50 858-16
E-mail: investorrelations

06 May 2009

Gambling: EJC to decide on disparate taxation of different forms of gambling

Reference for a preliminary ruling from the Bundesfinanzhof (Germany), lodged on 11 February 2009 - Leo-Libera GmbH v Finanzamt Buchholz in der Nordheide

(Case C-58/09)

Referring court


Parties to the main proceedings

Claimant: Leo-Libera GmbH

Defendant: Finanzamt Buchholz in der Nordheide

Question referred

Is Article 135(1)(i) of Council Directive 2006/112/EC 1) of 28 November 2006 on the common system of value added tax to be interpreted as meaning that Member States are permitted to have a rule under which only specified forms of (race) betting and lotteries are exempt from tax, and all 'other forms of gambling' are excluded from the tax exemption?


1 - OJ 2006 L 347, p. 1.

30 April 2009

Federal Constitutional Court: Number-of-units taxation standard of the Hamburg Gaming Machines Tax Act incompatible with the principle of equality

Order of 4 February 2009 – 1 BvL 8/05 –

The judicial referral concerns the constitutional admissibility of the number of units as the standard for the taxation of coin slot machines pursuant to § 4.1 of the Hamburg Gaming Machines Tax Act (Hamburgisches Spielgerätesteuergesetz - SpStG), which was valid until 1 October 2005. Under this provision in its version relevant to the original proceedings, the tax rate is DM 600 per gaming machine and calendar month. Neither the amount brought in by the gaming machines nor the stakes made by the gamblers is taken into account when assessing the tax.

From January 1999 to February 2000, the complainant and plaintiff in the original proceedings operated two amusement arcades in which at first 18, later 16 coin slot machines were located. The plaintiff submitted respective gaming machine tax statements while at the same time lodging objections; the objections were denied by the Tax Office, the defendant in the original proceedings. The complainant brought action against this before the Hamburg Finance Court (Finanzgericht Hamburg). By its order of 26 April 2005, the Hamburg Finance Court stayed the proceedings and submitted to the Federal Constitutional Court the question as to whether § 4.1 of the Hamburg Gaming Machine Tax Act violates the general principle of equality.

The First Senate of the Federal Constitutional Court reached the conclusion that § 4.1 SpStG is incompatible with Article 3.1 of the Basic Law (Grundgesetz - GG), but not void. Taking the number of units as a standard of taxation results in an unequal burden on the gaming machine operators because it is structurally unsuitable to guarantee the necessary connection to the gamblers' amusement expenses. While the previous case-law of the Federal Constitutional Court and of the Federal Administrative Court (Bundesverwaltungsgericht) still regarded the number-of-units standard as a constitutionally valid and unobjectionable basis for the levying of the tax, this can no longer be justified according to the state-of-the art technical standards, as the Federal Administrative Court and the Federal Finance Court (Bundesfinanzhof) have meanwhile found. The Gaming Machine Tax Act can, however, continue to be applied for the assessment periods until 1 October 2005.

In essence, the decision is based on the following considerations:

The legislative competence of the Free and Hanseatic City of Hamburg for issuing the Gaming Machine Tax Act results from Article 105.2a GG. As a local tax on expenses, the Hamburg Gaming Machine Tax Act meets the requirements of this provision on competence; the choice of the taxation standard and the question of whether the tax may be shifted to the gamblers have no influence on the legislative competence.

The provision submitted, however, violates the general principle of equality (Article 3.1 GG) because taking the number of units as a standard has proven unsuited for levying the gaming machine tax, thereby placing an unequal burden on the gaming machine operators in an unjustifiable manner. It is, however, not the lack of the possibility of shifting the tax to the gamblers which makes the tax fail.

The point of reference of the entertainment tax in the shape of the gaming machine tax is the commercial organisation of gaming with slot machines. The organiser of the entertainment is the person liable to pay the tax. All the same, it is the individual gambler's entertainment expense on which the tax is levied because the entertainment tax is aimed at burdening the gambler's economic performance which is expressed by the use of his or her income for the entertainment. As the Federal Constitutional Court has already decided several times, this makes the individual, real entertainment expense the most appropriate standard for such a tax.

However, constitutional law does not restrict the legislature to applying such a standard, i.e. a standard which is oriented towards reality. When opening up a tax source that concerns the individual's entertainment expense, the legislature has a far-reaching freedom of drafting. This especially applies, inter alia, to the choice of the standard of taxation. Article 3.1 GG sets a limit to the legislature's freedom of drafting only where a plausible reason for equal treatment or unequal treatment is lacking, which would make it arbitrary.

If in entertainment tax law, the legislature, however, chooses a substitute standard or a probability-oriented standard instead of the reality-oriented one, it is restricted in its choice to a standard that makes a certain entertainment expense at least probable. The need of justification for choosing a substitute standard increases the more the further the standard which is chosen in the individual case is removed from the actual reason for the burden. The substitute standard of a gaming machine tax must have, at any rate, at least a loose connection to the gambler's entertainment expense because the substitute standard makes use of the legislative latitude with regard to the closeness of tax assessment to reality; this latitude, however, does not provide an exemption for the necessary orientation of the tax, as regards its content, towards the reason for the burden.

The standard provided in § 4.1 SpStG, which is based on the number of units, transgresses this latitude and thus leads to an unequal burdening of the gaming machine operators. According to the submitting court's findings, the standard has proven generally unsuitable in the territory of the Free and Hanseatic City of Hamburg because it is structurally unsuitable to guarantee the necessary connection to the gamblers' entertainment expense. There is no longer a valid justification for using the substitute standard nevertheless.

The application of the number-of-units standard according to § 4.1 SpStG leads to the equal treatment of facts that are essentially unequal. According to this standard, the tax on the operation of coin slot machines is the same, irrespective of the entertainment expense incurred by the users of the gaming machines at the different machines in the respective taxation period; the only difference that is made is the one between the operation of gaming machines in amusement arcades and in other locations. As regards the ranges of variation as regards the amounts brought in by the gaming machines that have been ascertained, they are so significant that there can no longer be any question of a sufficient connection, which is necessary for an entertainment tax, between the taxation standard and the taxable entertainment expense in the area of application of the Hamburg Gaming Machine Tax Act. With variations of several hundred per cent of the amounts brought in, variations which exist not only in individual cases but almost as a general rule, any correlation between the - mere - operation of slot machines and the gamblers' entertainment expense is lacking, irrespective of whether the expense is measured according to income brought in or according to the stake per game.

Earlier assumptions made by the Federal Constitutional Court to justify the suitedness of the number of units as a taxation standard for gaming machines (see Decisions of the Federal Constitutional Court (Entscheidungen des Bundesverfassungsgerichts - BVerfGE) 17, 476; 31, 8), which was followed by the older case-law of the administrative courts and finance courts, can no longer be upheld in view of the technical and economic development in this field and the concomitant possibilities of obtaining information. This particularly applies due to the fact that since 1 January 1997, only the operation of coin slot machines with a tamper-proof counter has been permissible, which has made it possible since that date to ascertain the gamblers' expense with sufficient reliability.

Apart from this, the unsuitability of the number of units as a standard for levying the gaming machine tax is not due to the special characteristics of the factual or legal situation in Hamburg but obviously has structural reasons with a view to the present situation on the gaming machine market. The number-of-units standard must
therefore deemed generally unsuitable for assessing the gaming machines tax because at best in more or less coincidental combinations of individual circumstances can it ensure the sufficient connection between tax assessment and the gambler's entertainment expense, which is required by the precept of the equality of tax burdens. In recent times, for instance, no positive evidence could be produced for the required connection to the figures compiled, which should at least be a loose one. Apart from this, the difficulties involved in producing the evidence of this content-related connection, and the insecurities as regards the existence of the connection - assuming that it could be established in the individual case - are so serious that neither the person liable to pay the tax nor the ultimate taxpayer can be reasonably expected to accept the use of such a standard; it is also not practicable for the tax administration.

Other factual reasons, in particular practicability, the assumption of an internal compensation of burdening among the gaming machine operators, the pursuit of steering objectives and the possible lack of a different, admissible method, cannot justify retaining the number of units as taxation standard in this factual situation.

It is also not apparent that a standard which is closer to reality were not available be because a standard that would be more strongly oriented towards the gamblers' expense would not be compatible with Community law.

Thus the unconstitutionality of the tax assessment challenged in the original proceedings follows from the inadmissibility of the number of units as taxation standard. However, it does not additionally result from the impossibility of shifting the tax towards the gamblers. If the tax is geared towards the tax burden being shifted from the person liable to pay the tax to the ultimate taxpayer, this is sufficient, even if the shift does not successfully take place in every individual case. No indications are apparent for a shift being factually impossible. By contrast, even under the application of § 4 Abs. 1 SpStG, the entrepreneurs retained the possibility of working towards an increase in turnover, for instance by choosing suitable locations for the amusement arcades, and by designing and equipping them accordingly, and by restricting their own cost to what is absolutely necessary in order to be able to earn not only what is needed for paying the tax, but also for making a profit.

The unconstitutionality of § 4.1 SpStG does not result in its nullity. What is established is only the incompatibility of the provision with Article 3.1 GG. The gaming machines tax can be levied according to the number-of-units standard set out in § 4.1 SpStG for a transitional period until the entry into force of the Gaming Entertainment Tax Act in Hamburg on 1 October 2005.

10 March 2009

European Parliament: No political support for an EU harmonised legislation for online gaming and betting

Press relesa of EGBA

Today’s adoption of an own initiative report by the European Parliament on “The integrity of online gambling” is overshadowed by the support of a wide range of Members of the European Parliament (MEPs) to an alternative report.

The alternative report was backed by MEPs representing at least 9 Member States and the three main European political parties. It seeks to approach online gaming and betting in a more practical way, in line with the cross-border nature of the sector and taking into consideration both the challenges and opportunities offered in this area by the Internet technology.

The European Gaming and Betting Association (EGBA) welcomes this alternative report, which reflects an important move within the European Parliament towards more workable solutions.

The confusing majority report lead by Danish socialist MEP Schaldemose, indeed calls on the Commission to “carry out studies and make appropriate proposals” while insisting at the same time on “the Member States right to regulate (the online gaming sector) in accordance with their traditions and cultures”. This report being split between a national or a community approach, therefore fails to make any clear recommendation on actions to be taken.

What is clear however is that no harmonised EU legislation is foreseeable in the near future due to lack of political will of both Member States and the European Parliament. This was first evidenced by the discussions within the Council initiated recently by the French Presidency and now by clear divisions amongst MEPs expressed in the context of the own initiative report.

So what’s next?

The establishment of a European Code of Conduct, supported by the alternative report, currently appears as the best practical option in the near future to ensure that EU licensed operators offering their services cross-border abide throughout the EU to a common and consistent set of responsible standards.

Sigrid Ligné, Secretary General of the EGBA said “Today’s vote shows that we cannot expect an EU harmonised legislation to be adopted in the near future. This clearly means that it is the rules of the Treaty and the case law of the Court of Justice that continue to apply and that will prevail for our sector in the years to come”.

The only tangible EU initiatives in the pipeline to enforce the right of EU operators to a non-discriminatory market access are the current infringements which were launchedby the Commission some years ago. These infringements need now urgently to be brought to the next level with all non-cooperative Member States including Germany, Sweden or Denmark.

06 March 2009

With the Acquisition of Expekt and Bet-at-home, French Group MANGAS GAMING Enters the Top 5 Online Sports Betting Players in Europe

press release of MANGAS GAMING

Paris - MANGAS GAMING, French leading group in online gaming and sports betting, which operates Betclic, active in France and Southern Europe, announces the two following transactions:

- The acquisition of all the operations of Expekt, a major
online sports betting company, addressing primarily the Scandinavian
and Northern European markets. Expekt is also a major player in online

- The acquisition of a controlling stake in Bet-at-home from
its founders. Bet-at-home, a Frankfort listed company, is an online
betting and gaming operator mainly present in Central and Eastern
Europe. A public offer will be launched shortly to acquire the shares
held by Bet-at-Home's minority shareholders.

Both transactions benefit from the full support of the management of the acquired companies.

With these acquisitions, MANGAS GAMING, enters the top 5 online sports betting operators in Europe, with gross gaming revenues amounting to around 200 million euros in 2009, over 4 million registered clients and a staff of about 500 people.

Present in more than 25 countries, the group now benefits from a balanced breakdown of its activities over continental Europe while maintaining a strong focus on local market expertise, and offers its services through websites in 24 different languages.

MANGAS GAMING, managed by Isabelle Parize, plans to pursue its pan-European development in a fast-growing industry.

Both transactions, which remain subject to customary regulatory approvals, will be financed through the existing resources of MANGAS GAMING, which is co-controlled by Financiere Lov, Stephane Courbit's patrimonial holding company, and Societe des Bains de Mer (SBM).

Lazard acted as exclusive financial adviser to MANGAS GAMING in these transactions.

04 March 2009

Referral to ECJ with regard to the jurisdiction for claims against bookmakers

Reference for a preliminary ruling from the Cour d'appel de Liège (Belgium) lodged on 29 December 2008 - Real Madrid Football Club, Zinedine Zidane, David Beckham, Raul Gonzalez Blanco, Ronaldo Luiz Nazario de Lima, Luis Filipe Madeira Caeiro, Futebol Club Do Porto S.A.D., Victor Baia, Ricardo Costa, Diego Ribas da Cunha, P.S.V. N.V., Imari BV, Juventus Football Club SPA v Sporting Exchange Ltd, William Hill Credit Limited, Victor Chandler (International) Ltd, BWIN International Ltd (Betandwin), Ladbrokes Betting and Gaming Ltd, Ladbroke Belgium S.A., Internet Opportunity Entertainment Ltd, Global Entertainment Ltd (Unibet)

(Case C-584/08)

Language of the case: French

Referring court

Cour d'appel de Liège

Parties to the main proceedings

Appellants: Real Madrid Football Club, Zinedine Zidane, David Beckham, Raul Gonzalez Blanco, Ronaldo Luiz Nazario de Lima, Luis Filipe Madeira Caeiro, Futebol Club Do Porto S.A.D., Victor Baia, Ricardo Costa, Diego Ribas da Cunha, P.S.V. N.V., Imari BV, Juventus Football Club SPA

Respondents: Sporting Exchange Ltd, William Hill Credit Limited, Victor Chandler (International) Ltd, BWIN International Ltd (Betandwin), Ladbrokes Betting and Gaming Ltd, Ladbroke Belgium S.A., Internet Opportunity Entertainment Ltd, Global Entertainment Ltd (Unibet)

Questions referred

The questions relate to the interpretation to be given, in the specific field of the internet, to Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. 1

Where, as in the present case, the alleged harm is caused by websites and

(a) none of the companies being sued, which run the websites in question, has its company seat in Belgium,

(b) none of the websites in question is hosted in Belgium,

(c) none of the claimants is domiciled in Belgium,

(d) the betting websites are available to Belgian internet users, who can place their bets on those sites, to the same extent as they are available to internet users in other contracting States since they are '.com' websites which have the purpose of extending their market to the whole of Europe, and they do not have the extension '.be' which is specific to Belgium,

(e) those websites are available in a number of languages without the two most commonly used languages in Belgium always being among them,

(f) those websites offer, inter alia, bets on Belgian matches, in the same way as for foreign championships,

(g) the use of a particular technology or canvassing technique aimed at the Belgian public has not been proved,

(h) the number of bets placed by the Belgian public is entirely marginal in comparison with the total number of bets taken by those sites, since, according to the figures submitted by the bookmaking companies for 2005, which were not disputed, all the Belgian betting on football matches represents less than 0.25% of the bets taken on the websites 'bwin.com', 'willhill.com', 'betfair.com', 'ladbrokes.com', 'sportingbet', and 'miapuesta', while 'vcbet.com' refers to 40 Belgian bettors among all the bets placed with it,

1. should it be held that the alleged harm occurred or is liable to occur in Belgium, so that the Belgian courts have jurisdiction to hear the actions relating to that harm because the websites in question are directed, inter alia, at the Belgian public?

2. or should it be held that the alleged harm occurred or is liable to occur in Belgium, so that Belgian courts have jurisdiction to hear the actions relating to that harm, only if the existence of a sufficient, substantial or meaningful connection between the tortious events pleaded and Belgian territory is established?

3. if so, what are the relevant criteria to be taken into consideration in assessing whether such a connecting factor exists?


1 - OJ 2001, L 12, p.1.

17 February 2009

EGBA: Online gaming and betting industry sends sports integrity message to the EU

Licensed online operators underline the traceability and transparency of the internet to safeguard the integrity of sports

At the EGBA’s ‘Responsible Gaming Day: Integrity & Sport’ event at the European Parliament today, key stakeholders called on the EU to make fact-based decisions when addressing the role of the Internet in sports integrity.

The event, in its second year at the European Parliament in Brussels, was attended by MEPs, the EU Czech Presidency, regulators, academics, representatives from the sporting world (UEFA, FIFA) and leading industry figures. Delegates discussed the role of the Internet as a tool to improve consumer protection and fraud prevention, with a particular focus on the field of sports betting integrity.

Norbert Teufelberger, Chairman of the European Gaming and Betting Association (EGBA) said: “Experts made it clear today how the Internet can be used for transparency, prevention and integrity purposes in the gaming and betting industry”.

With one of the morning sessions addressing the concerns around online problem gaming, Prof. Dr. Howard Shaffer from the Harvard Medical School, stressed: “The internet allows us now to scientifically study the actual gaming behaviour of players rather than rely on what they say or remember. The findings have shown us that the overwhelming majority of players gamble online in a very moderate and mild way”.

With the afternoon session focusing on the connection between integrity and sports, Norbert Teufelberger added: “The discussion today has shed more light on the various risk factors and respective responsibilities of the different stakeholders in the sport chain to maintain integrity”.

Christofer Fjellner, conservative MEP from Sweden, added: “Today’s experts showed that the Internet offers more possibilities rather than less in terms of preventing fraud and match fixing”.

All relevant sports stakeholders stressed in any case the need for greater cooperation and shared responsibility. This was echoed by Paul Scotney, Director Integrity Services and Licensing of the British Horseracing Authority “Keeping the sports clean can only work if there is meaningful cooperation between the sports sector, the regulators and the betting operators”.

Khalid Ali, Secretary General, European Sports Security Association (ESSA) then clarified how existing tools provided by the sports betting industry are helping sport federations maintain the highest standards of sporting integrity: “Our early warning alerts mean that we can work hand in hand with sports regulators and prevent the possibility of sport manipulation. The information provided to the sports federations is free of charge, with all the costs being borne by the online operators that are members of ESSA.”

You can find more details of the event on: www.ResponsibleGamingDay.eu

16 February 2009

EGBA hosts second Responsible Gaming Day at the European Parliament

Expanded 2009 event to focus on Integrity & Sport

Following on from a highly successful inaugural event in 2008, the European Gaming and Betting Association (EGBA) is hosting a second ‘Responsible Gaming Day’ at the European Parliament in Brussels on Tuesday, 17 February. The event aims to facilitate a major EU policy discussion, with this year’s theme focusing on the key gaming issues of ‘Integrity and Sport’.

The ‘Responsible Gaming Day: ‘Integrity and Sport’ will be an opportunity for public and private sector stakeholders to examine the key issues of integrity in gaming, sport and bookmaking ethics and how to tackle potential fraud within the sports betting sector. The issue of integrity remains a top priority for private European online operators, who are committed to ensuring a highly secure gaming environment for their customers.

The ‘Responsible Gaming Day: Integrity & Sport’ will features keynote speeches by the Czech EU Presidency, Norbert Teufelberger, EGBA Chairman and Co-CEO of bwin, MEPs from Sweden, the UK, the Netherlands and Petter Nylander, CEO of Unibet. This year’s programme addresses the key issues around online gaming, ethics in sports bookmaking and the tools and safeguards available to tackle risk in sports betting. It will include prominent speakers from the European Commission, private and state-owned industry, academia and leading sporting associations and clubs.

“Our second Responsible Gaming Day comes at time when online gaming and related sporting issues are being debated at the highest levels of the EU” said Norbert Teufelberger, Chairman of the EGBA. “We aim to encourage all parties to enter into dialogue to ensure the best practice in the field of responsible gaming informs modern EU policy developments.”

You can find more details of the event on: www.ResponsibleGamingDay.eu

For further information or comment please contact:

Sigrid Ligné
+32 (0) 2 256 7527

13 February 2009

Online gaming and betting: Proposed changes to Finnish lotteries act raise European Commission concerns even further

Brussels, 12 February 2009

The European Gaming and Betting Association (EGBA) welcomes the European Commission’s decision to issue formal Comments (1) against the proposed changes to the Finnish lotteries act. These changes, if implemented, would increase the extent of the breach of EU law that is already the subject of an EC infringement procedure.

The European Commission has already objected to the existing Finnish gaming legislation back in March 2007 when it issued a “Reasoned Opinion” the last procedural stage before a referral to the European Court of Justice.

The new draft provisions introduce even further restrictions on indirect marketing of gambling services for operators without a Finnish license, as well as fines and prison sentences of up to two years for both media and online gaming companies operating or marketing such activities. These additional restrictions are, however, not aimed at enhancing consumer protection in a consistent and systematic manner as they will not apply to the Finnish government’s own gambling activities which will still be allowed to conduct extensive and aggressive marketing campaigns. RAY (the Finnish Slot Machine Association) has even announced its intention to launch an internet poker site later this year.

According to Sigrid Ligné, EGBA Secretary General: “This shows all too clearly that the Finnish authorities have for the past two years - during which the Commission has been delaying Finland’s referral to the ECJ - enhanced their protectionist legislation rather than removed it”.

She concludes that: “The rights of EU licensed gaming and betting operators as well as those of Finnish newspapers and media have been ignored for too long and the situation is only deteriorating. The Commission’s patience has clearly not paid off. We now call on the Guardian of the Treaty to defend our rights and to bring Finland to the ECJ.”

The Finnish changes to the lotteries act were notified to Commissioner Verheugen’s services and Member States under Directive 98/34/EC in November 2008. The notification procedure is aimed at preventing Member States from creating new barriers to the internal market freedoms by giving the opportunity to the Commission and Member States to evaluate the content of a draft law before it is adopted.

(1) Comments issued by the European Commission in the context of the notification procedure mean that it considers that the text submitted raises issues or requires further details for clarified interpretation.

For further information on the Commission notification procedure, please see:

For further information or comment please contact:

Sigrid Ligné
+32 (0) 2 256 7527

About EGBA:

The EGBA is an association of the leading European online gaming and betting operators Bet-at-home.com, bwin, Digibet, Expekt, Interwetten, PartyGaming and Unibet. EGBA is a Brussels-based non-profit making association. It promotes the right of private gaming and betting operators that are regulated and licensed in one Member State to a fair market access throughout the European Union. Online gaming and betting is a fast growing market, but will remain for the next decades a negligible part of the overall European gaming market in which the traditional land based offer is expected to grow from € 85 Billion GGR in 2008 to € 93 Billion GGR in 2012, thus keeping the lion’s share with 88,1% of the market. Source: H2 Gambling Capital, January 2009.


06 February 2009

Court of Appeal of Versailles orders access to the Reasoned Opinion and the hearing of the Secretary General for European Affairs

Online Gaming and Betting/ Unibet-MrBookmaker case: The Court of Appeal of Versailles orders access to the Reasoned Opinion and the hearing of the Secretary General for European Affairs

The access to the Reasoned Opinion, previously refused by the instructing judge, has been requested by the defendants for months as a key piece of evidence. This confidential document lists all the violations of EU law that the European Commission holds against the French gambling legislation, in particular with regard to the Française de Jeux and PMUs monopolies on online sports and horse betting.

The Court of Appeal of Versailles today issued long awaited decisions in the criminal proceedings initiated in 2007 against Petter Nylander, CEO of the online gaming company Unibet, listed on the Stockholm Stock Exchange and holding licences in Italy, Malta and the UK, and Didier Dewyn, former CEO of Mr Bookmaker.

By deferring its judgement allowing the litigants to have access to the Reasoned Opinion addressed by the European Commission to France on June 27, 2007 (1) and seeking to hear for the first time in this case, a high civil servant, Gilles Briatta, Secretary General for European Affairs, the Court of Appeal reaffirms existing doubts regarding the compatibility of the French gaming legislation with European Law.

EGBA welcomes these decisions as an important development in the cases against Petter Nylander, Didier Dewyn and other European CEOs, who have been subject to arrests - including the use of an European Arrest Warrant – and indictments.

According to Sigrid Ligné, Secretary-General of EGBA, “These decisions raise once more the fundamental question of the legal base of these criminal proceedings. The infringements the European Commission listed in its Reasoned Opinion against the French Law shall also allow it to evaluate the compliance of the forthcoming draft bill with European law.”

The decisions follow the judgement of the Court of Appeal of Versailles dated January 18, 2008 in the proceedings engaged against Didier Dewyn, which requested additional information regarding the compliance of the French Law with EU Law and in particular access to the Reasoned Opinion addressed by the European Commission to France.

EGBA recalls that doubts regarding the French legislation’s compliance with European law have not only been voiced by the European Commission, but have also been confirmed by the Court of Cassation on July 10, 2007, by the State Council on May 9, 2008 and finally by the French Government itself in the context of the announced reform of the gambling law. To maintain an indictment based on the alleged infringement of such legislation would imply accepting the concept of preventive indictment, which is impossible under French law.

The EGBA recalls that these decisions come at a time when the European Commission has been waiting for 21 months for a new French bill which is expected to put an end to the multiple infringements of EU law and in particular to the “criminal sanctions [that] have been threatened or imposed on the chief executives of sport betting companies licensed in other Member States” (http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/909&format=HTML&aged=0&language=EN&guiLanguage=en). If the draft bill is not formally notified to the European Commission services in the shortest timeframe possible, the European Commission may move to the contentious stage of the infringement proceedings and refer the matter to the European Court of Justice.

press release of EGBA European Gaming & Betting Association