Gambling: recent developments & likely evolutions in Europe

1. Gambling: recent developments & likely evolutions in Europe Evelyn Heffermehl ULYS law firm Member of the Brussels Bar

2. Content • Services directive: exclusion of gambling and consequences • Infringement proceedings against 7 Member States: what next? • Advocate General’s opinion in Placanica • Swiss Institute report • Quick overview: Italy, Germany, France, Belgium, EFTA (Norway) • Likely evolutions

3. Gambling: recent developments & likely evolutions in Europe (I) 16 February 2006: exclusion of gambling from Services directive by EP • Council maintained the exclusion last week: why? • Political reasons: gambling • Timing: Swiss Institute report (likely basis for a sector specific act?) • Ongoing infringements • Other priorities (!)

4. Gambling: recent developments & likely evolutions in Europe • Consequences (1) • Legal framework unchanged: • Gambling services = services (Schindler)► article 49 EC Treaty • Possible restrictions for imperative reasons of general interest (consumer protection, fight against fraud) + proof of a consistent gaming policy (Gambelli).

5. Gambling: recent developments & likely evolutions in Europe • Consequences (2) • No legal certainty: online gambling services still subject to differing national interpretations & to Commission case-by-case assessment: discretionary power to investigate complaints (art. 226 EC Treaty) ► ECJ last resort • Time consuming: internal market affairs ► 25 commissioners unanimity (rise of competition complaints?) • More ECJ cases expected ►preliminary ruling references (Italy ISP case?)

6. Gambling: recent developments & likely evolutions in Europe (II) 4th April: infringement procedures against 7 MS • Letter of formal notice sent to Denmark, Finland, Germany, Hungary, Italy, the Netherlands, Sweden • Sports betting markets only • What next? Reasoned Opinion, ECJ last resort • Likely market opening for sports betting (+ German constitutional court decision, Placanica)

7. Gambling: recent developments & likely evolutions in Europe (III) ECJ Placanica case • Case referred to the ECJ by national courts due to conflict between ECJ case-law (Gambelli) & Italian Supreme Court decision. • Italian legislation confers exclusivity on bets to those who hold a licence from the State under criminal sanctions (law 401/89) • Local intermediaries collecting bets for Stanley Intern. Betting sued • AG referred to Gambelli principles (adequacy, proportionality, non-discrimination) but went further: • AG insisted on prohibition of double controls under community law when company is already subject to tight control in its country of establishment. • Clarified the non-discrimination aspect and stated that the requirement of establishment before being granted a licence is discriminatory against companies established outside. • ECJ not bound but likely to follow AG conclusions

8. Gambling: recent developments & likely evolutions in Europe (IV) 24th April: release of draft Study on gambling services in the internal market • “Evaluate how differing laws in the field of gambling services impact upon smooth functioning of the internal market” • Stakeholders’ meeting held in Geneva & comments sent to the Swiss Institute • June 2006: Final version► • Unlikely basis for a gambling Act: only 20% of stakeholders have answered. • Change will also come from other factors

9. Gambling: recent developments & likely evolutions in Europe (V) National overview • Italy: AAMS decree black lists 684 gaming operators (national and private): far reaching • Inconsistent with: • Notification directive: nullity under ECJ case-law • Article 43 + 49 EC Treaty, Gambelli • E-commerce directive: no obligations on ISP to monitor information • ECHR : freedom of expression • Actions at European and national level under way • LFN sent to Italy concerning restrictive gaming legislation

10. Gambling: recent developments& likely evolutions in Europe (V) National overview: Germany • Constitutional court decision, 28 March 2006 • restrictions inconsistent with the Constitution: Court referred to Gambelli criteria • leaves up to the legislator the task of drafting new law: 2 alternative scenarios • Opening of gaming market (de-regulation through regulation: licences) • State monopoly: unlikely scenario • Until then, criminal courts to evaluate the scope of the provisions punishing illegal gaming: supremacy of Community law.

11. Gambling: recent developments& likely evolutions in Europe (V) National overview: France (1) • Main casino operator complaint lodged against the French state & the FDJ on basis of abuse of dominant position • FDJ is sole authorized to offer online gambling services • FDJ is offering more and more casino style games • Casino operators can’t compete and are discriminated against • Abuse consists in: • the extension of FDJ’s dominant position to the online gambling market, • the elimination of competition on a neighbouring market • the discrimination between casino operators and the FDJ • To be followed… • Actions also under way at the national level

12. Gambling: recent developments& likely evolutions in Europe (V) National overview: France (2) • Decree on the organisation and exploitation of lottery games imposing obligations on the FDJ such as: • ensuring the security and reliability of the games and the transparency of their operation • controlling the offer of games in view of combating fraud, crime and money laundering • preventing gambling addiction • not inciting people aged under 16 to play. • Advisory committee for responsible gaming policy created • Aim: compliance with Gambelli after exclusion of gambling services from SD • But decree will not prevent European actions against France

13. Gambling: recent developments& likely evolutions in Europe • (V) National overview • Belgium : draft legislative proposal on games of chance would allow (limited) number of online licences for betting shops and land based casino operators

14. Gambling: recent developments& likely evolutions in Europe • (V) National overview • Important development: EFTA • Norway brought to the EFTA court by ESA (// Commission) for violation of the EEA agreement: gaming machine monopoly contrary to free movement of services provisions: sole country brought to Court by European Institution. • Question: why hasn’t the Commission been proceeding as severely against MS?

15. Gambling: recent developments& likely evolutions in Europe (VI) Likely evolutions, possible scenarios • Slow but steady opening of sports betting market (German decision, Placanica, 7 infringement proceedings): acceleration of EU scrutiny lately • European regulatory act still uncertain: Swiss report final version awaited + tax harmonisation ? • Likelihood of increase in number of competition complaint: FDJ example • Exclusion of gambling services ►only apparent victory for monopolies

16. Thank you for your attentionevelyn.heffermehl@ulys.net