Transcript INSIDE THE EU: THOUGHTS FOR MODERN REGULATION OF INTERNET GAMBLING IN A TRANSATLANTIC PERSPECTIVE. SMART-TECHNew York by Philippe Vlaemminck attorney at law Member of the Brussels.

INSIDE THE EU: THOUGHTS
FOR MODERN REGULATION
OF INTERNET GAMBLING IN A
TRANSATLANTIC PERSPECTIVE.
SMART-TECH
2010
New York
by Philippe Vlaemminck attorney at law
Member of the Brussels bar (Belgium)
Vlaemminck & Partners bvba
EU legal developments: overview
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European Court of Justice:
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Commission:
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Recent landmark case: Liga Portuguesa de Futebol Profissional
Increasing number of preliminary cases at European Court
Several opinions of Advocates General
Infringement cases ( under scrutiny against 10 Member States)
Green Book?
European Parliament ( White Paper on Sport, Schaldemose
report)
Council: discussions in Working Group (FR, SW, SP, B)
List of pending preliminary cases prove need
for legal certainty
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Case C-409/06: Winner Wetten (Germany)
Joint cases C-316/07 e.a. Markus Stoss and others (Germany)
Case C-46/08: Carmen Media Group ( Germany)
Case C-64/08 Engelmann (Austria)
Case C-145/08: Club Hotel Loutraki (Greece)
Case C-203/08: Betfair (the Netherlands)
Case C-258/08: Ladbrokes (the Netherlands)
Case C-212/08: Zeturf (France)
Case C-235/08: Langer (Austria)
Case C-448/08: Sjöberg (Sweden)
C-58/09: Leo-Libera (Germany)
Case C-347/09 Dickinger (Austria)
Case C-…/.. Italian Surpreme Court (Italy)
ECJ judgment in Liga Portuguesa de Futebol
Profissional case (C-42/07) – 8 September 2009
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ECJ extended its previous case law on the validity of an exclusive
right in the gambling sector to an exclusive right system regarding
the online provision of gambling services
Par 67:
ECJ acknowledges that the grant of exclusive rights to operate
games of chance via the internet to a single operator, which is
subject to strict control by the public authorities, may, in circumstances
such as in the proceedings, confine the operation of gambling within
controlled channels and be regarded as appropriate for the
purpose of protecting consumers against fraud on the part of the
operators.
ECJ judgment in Liga Portuguesa de Futebol
Profissional case (C-42/07) – 8 September 2009 (II)
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Most important achievement = ECJ explicitly denied application of
principle of mutual recognition in the gambling sector (par 69):
“in the absence of Community harmonization, a Member State is
entitled to take the view that the mere fact that an operator such as
Bwin lawfully offers gambling services via the internet in another
Member State, in which it is established and where it is in principle
already subject to statutory conditions and controls on the part of the
competent authorities in that State, cannot be regarded as amounting
to a sufficient assurance that national consumers will be protected
against the risks of fraud and crime, in the light of the difficulties
liable to be encountered in such a context by the authorities of the
Member State of establishment in assessing the professional qualities
and integrity of operators.”
ECJ judgment in Liga Portuguesa de Futebol
Profissional case (C-42/07) – 8 September 2009 (III)
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End of off-shore gambling hubs like Malta, Gibraltar, Costa Rica, Antigua,…
Competent authorities in (Member) States of establishment cannot sufficiently
guarantee the integrity and professional quality of operators providing their
services in another MS
(Member) State of residence of the consumer can maintain its own restrictive
conditions and can legitimately prohibit or restrict the access to their territory for
operators established in other jurisdictions
ECJ ruled itself that (Member) State is entitled to prohibit the provision of online gambling
services within its territory by an operator established in another (member) State
ECJ judgment in Liga Portuguesa de Futebol
Profissional case (C-42/07) – 8 September 2009 (V)
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ECJ ruling in Liga Portuguesa de Futebol Profissional case is not
an isolated ruling: it follows the line of the previous case law
related to gambling services
This time the ECJ denied the application of the principle of
mutual recognition in an explicit way!
Impact on all national restrictive regimes, not only limited to
Portugal!
Guideline for political debate on gambling within EU
institutions: no country of origin approach can be accepted!
Opinion AG Bot in Betfair and Ladbrokes cases (C203/08 and C-258/08)- 17 December 2009
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Reiterates right of (Member) States to grant an
exclusive right
Gambling should only be open for competition when
the (Member) State treats it as a normal economic
activity
Supports the application of the precautionary
principle in the gambling sector: (Member) State has
the right to invoke the risk of fraud associated with
gaming as the basis for legislation restricting that
activity, without being required to show that fraud is
actually being committed in its territory
Opinion AG Bot Sjöberg and Gerdin cases (C-447/08
and C-448/08)- 23 February 2010
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Confirms validity Swedish legislation which reserves the right to
organize gambling services only to licensed operators which
carry on their activities under strict supervision of public
authorities
Sweden can grant the exclusive right to state entities or to nonprofit entities under its supervision
Extends Liga Portuguesa ruling to the factual circumstances of
this case: one can no longer argue that the Liga Portuguesa
ruling is limited to Portugal
The findings of the Liga Portuguesa ruling are also applicable
to a lesser restrictive means, as in casu, a prohibition on the
cross border promotion of games organised in other MS
Opinion AG Bot Sjöberg and Gerdin cases (C-447/08
and C-448/08)- 23 February 2010 (II)
Difference with Opinion in Liga Portuguesa ruling:
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Liga Portuguesa: if Member State treats gambling services like
a genuine economic service and aims to maximize profits,
Member State is obliged to open up its market
Sjöberg: if national regime seems appropriate to protect
consumers against the risks of fraud and crime, it can be
compatible with EU law: in that regard it is not important
whether the entity exercises its activities as a normal economic
activity in the light of maximization of profits and whether or
not the regime can achieve its other general interest objectives
(f.e. prevention against gambling addiction)
Economic objective & controlled expansion no longer hurdle in
fight against crime & fraud if Court follows AG
Opinion Mengozzi in Markus Stoss (C-316/07) and
Carmen Media (C-46/08) cases – 4 March 2010
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Consistency of a restrictive gambling policy:
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Assessment needs to be made for each sub sector separately
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From a national viewpoint: regional differences may render system inconsistent
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BUT mere fact that powers in relation to games of chance are distributed among
a number of territorial entities does not in itself jeopardize the consistency of a
policy
Circumstances that need to be taken into account:
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Fact that monopolist induces people to participate in games of chance is not
sufficient to rule that legislation is inconsistent, if
 Promotion is moderate
 Genuinely intended to prevent crime or to channel propensity for gaming in a
regulated and controlled system
 Not aimed to increase the revenue of the public purse
Opinion Mengozzi in Markus Stoss (C-316/07) and
Carmen Media (C-46/08) cases (II)
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Allowing private operators to offer games of chance involving a risk of
addiction which is equivalent or greater than the games subject to the monopoly
is not, in itself, inconsistent in relation to public interest objectives and doesn’t
make the monopoly disproportionate, provided that:
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Public authorities guarantee sufficient supervision of the private operators
“Forms of gaming on offer which are covered by the monopoly are fewer thah
those which migth exist with a private provider
Denial of principle of mutual recognition:
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Free movement principles do not confer upon licence holder the right to offer
gambling services on the territory of other member states
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Especially in relation to off-shore licences
Opinion Mengozzi in Markus Stoss (C-316/07) and
Carmen Media (C-46/08) cases (III)
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Prohibition online gambling is consistent, if
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proportionate and consistent with public interest objectives
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notwithstanding temporary exceptions for certain undertakings which were
operating exclusively
Development in different EU States
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Different EU Member States have replaced or are
in a process of replacing a total prohibition of
Internet gambling by a national regulatory model(
Italy ( concession) , France ( licenses) , Denmark,
Spain, Belgium (license +),… )
The reason behind are:
 Pressure
from EU Commission ( incoherent regulatory
approach of gambling)
 law enforcement has proven ineffective
 Loss of revenues and/or taxes
Unresolved matters: regulatory control?
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If governments wants to control Internet gambling & respect each other,
they must all take measures to keep the offer within their own borders
Different measures prove to be difficult: Geolocation technology, IP
blocking, payment blocking
Other risks & problematic solutions :
 Attractiveness?:
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Controlled expansion possible within own borders
Probably economic objective possible
But, problem of liquidity ( lack of equal opportunities for customers) in
smaller jurisdictions and/or compared to international operating companies
White label connection and foreign player admission:
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What about the control over other connected operators
What about risk of money laundering
What about respect of territoriality principle
An EU solution? A transatlantic solution?
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Inside the EU, if States want to fight fraud and crime in gambling, it seems that States can
expand their gambling policies to Internet gambling and prohibit all cross border supplies
Monopolies and other strongly controlled operators are adequate means for doing so
Most probably the States can pursue an economic objective by doing so and try to maximize
profits which will provide consumers with an attractive alternative to illegal gambling
Law enforcement and administrative injunctions (IP & payment blocking) are necessary, but not
enough
A regulatory framework under EU law could be created whereby licensees can only offer their
games to registered customers who are resident in the concerned EU jurisdiction where they
obtained their license.
Operators can only get a license to connect to others if all connected operators know each
other and have signed up to such multi party contract as all regulators in the involved
jurisdiction may require providing all necessary guarantees for the integrity of the games and
financial transactions ( the so-called “EuroMillions model” -approach)
Further coordination could be done through an EU wide Gambling Regulators Committee set
up under EU law
In the absence of GATS commitment on the EU side and on US side, and if the involved
authorities would consider it appropriate and in accordance with their laws, such regulatory
approach could be widened through a transatlantic agreement.
Thank you for your attention!
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Disclaimer : Nothing in this presentation can be considered as legal advice and/or used
for such purposes and/or may be relied upon in any discussion between parties and/or
with government authorities, nor in any Court. Issues addressed in this presentation do only
concern the EU and EU law