EU Gaming News - July 2011

EU AFFAIRS

European Commission issues detailed opinion on the First Amended German Interstate Treaty on Gambling
On 18 July 2011, the European Commission issued a detailed opinion on the First Amended German Interstate Treaty on Gambling, consequently extending the standstill period of the TRIS notification procedure for one additional month. During the process, the Commission received lengthy comments from the UK and a detailed opinion from Malta.

Amongst other things, the draft law proposes to bring gaming and amusement machines in arcades under the control of the regional governments, giving them power to limit the distance between arcades and introduce mandatory closing times. EUROMAT members, the Verband der Deutschen Automatenindustrie e.V. (VDAI), the Deutsche Automaten- Großhandels- Verband (DAGV) and the Bundesverband Automatenunternehmer e.V. (BA), have strongly criticized the proposal and warned that it is contrary to EU legislation.

The Commission's opinion has now confirmed that certain aspects of the draft law are in fact in breach of EU law and German authorities have been asked not to adopt the text. The Commission highlights eleven different areas that need to be reviewed, concerning namely restrictions on the provision of online gambling services, the organization of casino games and poker, the conditions and licensing process foreseen for sports betting, and the advertisement of online betting services, amongst others. Furthermore, the Commission has pointed out that the Treaty needs to be examined in view of all gambling related legislation, including that applicable to gaming and amusement machines (which are regulated at the Federal level), and ensure compliance with the requirement of establishing a coherent and systematic framework.

The German Bundesländer must now rectify the text or face the possibility of having an infringement procedure opened by the Commission. The standstill period will now run until 16 August 2011.

Please find here further information on the notified draft law.

European Parliament's IMCO Committee discusses report on Green Paper on online gambling
On 12 July 2011, the Internal Market and Consumer Protection (IMCO) discussed the own-initiative report on Online Gambling in the Internal Market drafted by Rapporteur, MEP Jürgen Creutzmann (ALDE, Germany).

In his introductory remarks, MEP Creutzmann reiterated the importance of respecting the principle of subsidiarity but emphasized on the need for harmonised actions and European minimum standards, especially in order to combat illegal gambling and protect minors and problem gamblers. The members of the IMCO Committee expressed a general satisfaction with the report presented by MEP Creutzmann.

As MEPs deliberate on possible amendments to the draft report, EUROMAT has called on them not to rely on the private sector alone to assess the prevalence of internet gambling and gambling addiction in the EU but to collect and publish informed, accurate and facts-based data also from independent sources statistics. Furthermore, EUROMAT has highlighted that regulation is only effective if it is enforceable.

As part of IMCO's own-initiative report, the Economic and Monetary Affairs (ECON) and the Legal Affairs (JURI) Committees will respectively also submit an own draft opinion. While JURI's opinion, drafted by Rapporteur MEP Sajjad Karim (ECR, UK), will call "on the Commission to bring forward meaningful legislative proposals to provide a legal framework that will create legal certainty for legitimate European businesses and protect consumers", MEP Sophie Auconie (EPP, France), Rapporteur of ECON's opinion, focuses on the need to establish a "European Agency for Integrity and Fair Play in Sport". Once adopted by the respective Committees, the opinions will be formally submitted to IMCO for consideration.

In the meantime, the Commission has announced that it will present a report on the outcome of the public consultation on the Green Paper on Online Gambling in the Internal Market in the autumn (2011). The report will also reflect the views presented by the Parliament.

Timeline:
19 September 2011: Vote in IMCO Committee
12 December 2011: Vote by the whole of the European Parliament

European Commission delivers detailed opinion on the Greek draft gambling law
On 7 July 2011, the European Commission issued a detailed opinion on the Greek draft law ‘Regulation of the gaming market - games of chance played on gaming machines or online', thereby extending the standstill period of the TRIS notification procedure for one additional month. The Commission warns the Greek authorities that the proposed legislation infringes competition law. During the process the bill has also received a detailed opinion from Malta and comments from the UK.

However, under pressure to sell its state lottery and get hold of valuable tax revenue, the Greek Government seems determined to pass the draft law despite the warning made by the Commission. The text has now been included as part of an omnibus finance bill that includes pensions and tax evasion reforms. Amongst others, the bill would license up to 30.000 new Video Lottery Terminal (VLT) machines and 50 online gambling companies.

The Greek Parliament could already cast its vote on 5 August, while the standstill period in the Commission will still run until 8 August 2011.

European Court of Justice delivers opinion on the Zeturf Ltd v Premier ministre" case
On 30 June 2011, the Court of Justice of the European Union (CJEU) delivered its decision on the "Zeturf Ltd v Premier Ministre" case concerning the French monopoly for the management of off-course betting on horseracing.

In France, legislation confers on the Groupement d'Intérêt Économique Pari Mutuel Urbain (PMU) a monopoly for the management of off-course betting on horseracing. Zeturf Ltd is a Maltese company (with a licence issued by the Maltese gambling regulation authority) that offers, inter alia, betting on French horse races on its website. In July 2005, Zeturf applied to the French authorities seeking the repeal of the French legislation.

The case was brought to the Conseil d'Etat (France) which then asked the CJEU whether the restriction on the freedom to provide services constituted by the French legislation regarding betting on horseracing is justified. Furthermore, it sought to determine whether the justification for the restriction on freedom to provide services must be assessed only from the point of view of the restrictions placed on offering on-line horserace betting or in relation to the entire horseracing betting sector.

In the judgment delivered, the CJEU recalls that Member States are free to set the objectives of their policy on betting and gaming, and where appropriate, to define the level of protection sought. In particular, the CJEU holds that a situation in which exclusive rights on horserace betting are granted to a state-controlled monopoly is justified as long as (i) a high level of consumer protection is sought by the authorities, and (ii) a control over the single operator is implemented in the consistent and systematic pursuit of the objectives stated.

With regards to the question whether the online and offline sectors should be considered separately when assessing restrictions to the free provision of services, the CJEU points out that "the internet constitutes a simple channel through which games of chance may be offered". The market in horseracing betting should, therefore, in principle, be considered in its entirety, independently of the question whether the bets concerned are offered by traditional channels, at physical locations, or through the internet.

Furthermore, the CJEU recalls that it has previously noted that because of the lack of direct contact between consumer and operator, games of chance offered via the internet involve "different and more substantial risks of fraud by operators against consumers compared with the traditional markets for such games". In particular, the CJEU points out at the characteristics of the games offered through the internet, as well as the conditions of those playing (e.g. isolation, anonymity and absence of social control) are likely to foster the development of gambling addiction.