ECJ delivers a critical judgment

The European Union’s highest court recently ruled that a Portuguese state-run charity’s gambling monopoly is legal if it aims to combat criminal activity.

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.”

The Direccao do Departamento de Jogos da Santa Casa de Misericórdia de Lisboa, a Portuguese state charity that has a broad national monopoly covering electronic betting and lotteries on television, radio and the Internet, fined the Liga €75,000 ($107,565) and Bwin €74,500 for infringing on its monopoly, according to Dow Jones. Liga and Bwin appealed these fines before a Portuguese court, arguing that EU rules ensure companies can provide goods and services freely across the bloc’s borders. The court hearing the case decided to ask the ECJ to give its interpretation on the application of EU law. The Luxembourg court ruled that free movement of goods and services can be restricted if the public interest is at stake.

A major setback for online gaming

The online betting industry has suffered a setback as the European Union said that member states could be allowed to ban gambling websites if its intention was to stop crime.

In a recent ruling, The European Court of Justice (ECJ) decided that a Portuguese state-run charity’s gambling monopoly is legal if it aims to combat criminal activity.

Referring to the recent case, which involved bwin and the Portuguese football league versus the Portuguese monopolist Santa Casa da Misericórdia de Lisboa, Sigrid Ligné, secretary general of the European Gambling and Betting Association (EGBA), said 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,” said Ligné.

According to the Association, the 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.

Overall, the sentiments have been fairly negative.

“It’s a bit disappointing because the hope was that the European Commission and the European Court of Justice were actually in favour of markets opening up,” said James Hollins, analyst of gambling stocks at Daniel Stewart & Company, according to Reuters. “It looks like (the ruling) would strengthen the hand of countries who want to continue to protect state monopolies, which include Portugal or Germany.”

Internet-based gambling operators are currently involved in a number of court cases and regulatory disputes over access to markets in Europe. The industry feels the recent verdict may adversely impact the pending cases.

Camelot asked to discontinue its email campaign

The Advertising Standards Authority (ASA) recently directed Camelot Group to drop its email advertising campaign for the National Lottery.

The Authority upheld a complaint that Camelot encouraged excessive gambling although it rejected the suggesting it implied gambling was indispensable.

According to Camelot, the ad was one of a series of e-mails which were sent to National Lottery players who had opted to receive marketing communications.

The advertiser explained that the ad did not imply that gambling was indispensable and reasoned that it merely suggested that, because of the advantages of playing the Lottery interactively, a good excuse was needed by recipients if they were to miss out. Also, it added that the ad was designed to stress some of the advantages of playing the Lottery interactively and mentioned features like automated ticket checking, advance play and win notifications. The ad did not encourage excessive play but provided information that helped recipients decide if they wanted to play Lottery games interactively.

But the ASA considered that the ad focused on the benefits of playing the Lottery interactively and invited recipients to use their interactive account repeatedly by stating “The more you play the more likely you are to win”.

It noted the ad suggested that recipients had a higher chance of winning if they bought multiple lines, across the numerous Lottery games on both the Wednesday and Saturday weekly draws, and concluded that, by referring to the greater chance of winning resulting from multiple entries, the ad encouraged repeated and potentially excessive gambling.

Violating laws by earning a living from gambling

The Danish Supreme Court has reportedly decided that an unemployed man, who allegedly had been earning a living as an online poker player, would have to be taxed as a professional gambler.

According to a report filed by the Copenhagen Post, the concerned player, whose identity wasn’t disclosed, earned nearly $28,000 playing online poker in one year. The court said in its ruling that the man violated the laws by using his poker winnings as his sole source of income and ordered him to surrender the money. The Court ruled that even though computer servers used to run the poker games are placed outside of Denmark, the individual computer used to play is located in the country and subject to Danish law.

The Supreme Court chose not to enforce a DKK5000 fine issued by a lower court.

Press Release PARR: ECJ fails to recognize the opportunities afforded by the internet and winds back the clock

published by Sports spokesman of the FDP Parliamentary Group, Detlef Parr on 8 September 2009

BERLIN. Sports spokesman of the FDP Parliamentary Group, Detlef Parr, comments on the ECJ ruling that the ban under Portuguese law on companies such as bwin offering games of chance on the internet is compatible with the freedom of services:

The ruling shows: urgent action is also needed in Germany – we have to rethink the existing regulations within the German Interstate Treaty on Gambling. Private gambling operators are just as able to meet the requirements for protection of gamblers as the state operators and indeed are already doing so.

The internet has long been able to offer effective protection for players. The Interstate Treaty on Gambling would, according to the latest ECJ ruling, only be deemed suitable for achieving the aim of combating addiction, if it did so in a coherent system. However, as comparable categories of gambling such as sports betting (state monopoly) and horse betting (private sector) are treated completely differently, this constitutes a clear violation of European law according to this latest ECJ ruling. The ECJ will thus withdraw recognition under European law of the Interstate Treaty on Gambling at the latest in the scope of the German preliminary ruling on Carmen Media.

The ECJ ruling is a step in the wrong direction. The ECJ has provided support for the national monopolies. The reasoning of the ECJ, that “the limitation of the freedom of services can be justified on compelling grounds in the public interest” is pure window dressing. Nobody has yet been able to absolutely define the specific conditions which must be met in order to justify government imposed limitations on betting operators.

The state has to provide such a definition. All those involved on a federal and Land level need to overcome their conventional, party mentality and find a solution which corrects the negative effects of the Interstate Treaty on Gambling.