freedom to provide services online gaming and betting

IDEST
Master - Law of Space Activities and Telecommunications
FREEDOM TO PROVIDE SERVICES
ONLINE GAMING AND BETTING
December 14th, 2007
Fabien Gaucher
Attorney at the Paris Bar
Ulys Law Firm (Brussels and Paris)
[email protected]
www.ulys.net
www.gaminglaw.eu
EC Treaty
Article 49 EC
Principle:
Restrictions on freedom to provide
services within the Community are
prohibited
Exception: Restrictions may be imposed only for
reasons of public policy, public security
or public health
EC case law
Article 49 EC
A Member State may impose restrictions on freedom to
provide services only if such restrictions comply with
the general interest and are both necessary and
proportional to the realization of the expected
objective, while complying with the criterion of nondicrimination.
EC case law
Gaming and betting
Reasons of overriding general interest set out
by the ECJ:
➡ Consumer protection
➡ Prevention of fraud
➡ Reduction of gaming and betting opportunities
EC case law
Gaming and betting
A few decisions were issued by the ECJ which
relate to gaming and betting:
- Schindler (1994)
- Läärä (1999)
- Zenatti (1999)
- Anomar (2003)
- Gambelli (2003)
- Placanica (2007)
EC case law
Gaming and betting
Gambelli (2003)
Threat of reduction of tax revenues and/or the financing of
social activities cannot justified restrictions.
Restrictions must be consistent and systematic: a Member
State which encourages gaming and betting to the financial
benefit of the public purse cannot invoke public order
concerns.
Existence of harsh criminal sanctions and rigorous controls in
the EC Member State where the operator is based make
regulations generally not proportional.
EC case law
Gaming and betting
Placanica (2007)
Same principles:
Restrictions must be justified by overriding general interest
and be proportionate and necessary.
Member States must have a systematic and coherent gaming
policy.
French regulations
Gaming and betting
What about France: do French gaming and
betting regulations and policy comply with EC
law?
French regulations
Gaming and betting
Let’s take a look...
French regulations
Gaming and betting
Principle:
General prohibition of lotteries and betting (law
of 21 May 1836)
Exception:
Lotteries and betting organized by Française des
Jeux (“FDJ”) (law of 31 May 1933 and decrees of
9 November 1978 and 1 April 1985)
Betting on horses races organized by Pari
Mutuel Urbain (“PMU”) (law of 2 June 1891)
FDJ and PMU are granted exclusivity over the Internet
French regulations
Gaming and betting
Harsh criminal penalties
➡ Lotteries and sports betting operators: €60,000 + 2 years
➡ Horse races betting operators: €90,000 + 3 years
➡ Advertisers: €30,000 / x4 the amount invested
➡ ISPs: €75,000 + 1 year if they do not warn customers of blacklisted sites
➡ Banks required to stop transferring funds relating to online gambling (?)
Situation of France
Gaming and betting
Legal proceedings and threats
➡ Criminal complaints filed by the monopolies
➡ Judicial proceedings against Zeturf and Partouche
➡ Arrestation of Bwin’s CEOs and of Unibet’s CEO
➡ Hearing of personalities (e.g. Patrick Bruel)
➡ Pressures against public authorities (e.g. CSA and LFP)
➡ Pressures against partners of online gaming and betting operators
Situation of France
Gaming and betting
Objections put forward by France:
- Public and social order
- Fight against money laundering
These concerns may be reasons of overriding general interest... but
ONLY if:
➡ they are suitable for achieving theses objectives
➡ they limit gaming and betting in a consistent and systematic manner
Situation of France
Gaming and betting
Is this the case in France?
Key figures
Monopolies
- Semi-public corporation
- Controlled by the ministry of budget
- Offers lotteries and sports betting
- Distribution: offline and online
- Economic Interest Group
- Controlled by the ministry of agriculture
- Offers betting on horse races
- Distribution: offline and online
Key figures
Monopolies
Key figures
Française des Jeux
Key figures
Française des Jeux
Key figures
Française des Jeux
Key figures
Pari Mutuel Urbain
Key figures
Pari Mutuel Urbain
Key figures
Pari Mutuel Urbain
Network
Française des Jeux
Network
Pari Mutuel Urbain
Marketing
Monopolies
Is FDJ and PMU’s advertising
communication aggressive...?
Marketing
Monopolies
FDJ was the 16th largest French media
advertiser in 2006
➡ €132
million allocated to advertising
➡ Advertising
expenses has increased by 100% in 4 years
Marketing
Française des Jeux
Marketing
Pari Mutuel Urbain
Protection of players
Monopolies
Do FDJ and PMU protect players?
Protection of players
Française des jeux
FDJ released 2 leaflets in 2006:
Protection of players
Française des Jeux
Does FDJ protect minors...?
Protection of players
Française des Jeux
Does FDJ protect minors...?
Protection of players
Pari Mutuel Urbain
PMU’s CEO statement in the 2006 annual report...
“PMU offers to punter a moderate number of occasions to bet: an average of 17
races per day”
PMU released 1 leaflets in 2006:
Distribution
Française des Jeux
FDJ and “Bouquets d’Objets”:
Distribution
Pari Mutuel Urbain
PMU launched “PMU Mobile” in 2006:
Distribution
Pari Mutuel Urbain
Equidia Info
Paris Ovales
Pariez Spot
International
Française des Jeux
EuroMillions
International
Pari Mutuel Urbain
Situation in France
Online gaming and betting
What conclusion?
Situation in France
Online gaming and betting
France obviously fails:
➡ to
meet the suitability standard
- Money-driven policy
➡ to
meet the proportionality standard
- Monopoly system
- Severe criminal sanctions
Situation in France
Online gaming and betting
Consequently, a few European operators filed
complaints against France before the
European Commission...
➡ Mr
Bookmaker
➡ Bwin
➡ The
French casinos union
Situation in France
Online gaming and betting
...and these initiatives were successful!
European Commission
Online gaming and betting
What reaction from the European
Commission?
➡ Infringement procedure on 12/10/2006
Sports and horse races betting only
France was given 2 months to justify its
regulations
➡ Reasoned opinion on 27/06/2007
France was given 3 months to comply with EC law
Situation in France
Online gaming and betting
What next?
Situation in France
Online gaming and betting
France has no choice than to open the French
gaming and betting market...
➡ Ongoing talks with the European Commission
➡ A dra= gambling act to be ready in March 2008
➡ Licence system (exclusion of the mutual recognition principle)
➡ Tax issues
Thank you for your attention
Fabien Gaucher
[email protected]