Interview with Dr. Wulf Hambach, Partner of law firm Hambach & Hambach

Bulletbusiness.com’s Legal Gaming Special

“States are wounding themselves if they stick on to the old fashioned monopoly approach”

Even as some of the key markets across Europe are contemplating the idea of opening their respective online gambling sectors, and some level of co-operation between Member States is inevitable, the region is still a long way from any system of pan-European regulation.

Achieving agreement between governments and regulators on detailed regulations will be an extremely difficult task. At the same time, there are a number of key issues that they should be able to agree on without too much trouble and these relate to consumer protection, crime prevention, and combating problem and underage gambling. Of course, there are existing laws and mechanisms that also already apply in areas related to money laundering, fraud and corruption.

Assessing the situation, Dr. Wulf Hambach, Partner of law firm Hambach & Hambach told Bulletbusiness.com it is indeed in the interest of the European governments to regulate this interesting market.

“Without regulation or even worse with regulations like the German one including an Internet ban, the black market is growing, the players are unprotected and the states go away empty-handed. A common approach aiming at a liberalised online gambling market in consequence of their own interests and the pressure of the European Commission as well as the ECJ decisions is probable but unfortunately it will still take some time, ” said Hambach, who is scheduled to speak during Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009, to be held in London on 26-27 January.

Elaborating on the issue of players being unprotected and governments completely losing control of their tax revenues in today’s environment, he said, “I am definitely convinced that the states are wounding themselves if they stick on to the old fashioned monopoly approach in times of the digital age. The consequence of an Internet gambling ban and a monopoly that is not allowed to advertise in a normal manner for the products leads to the fact that players stop playing with state operators but go to the Internet where they have the possibility to choose between thousands of internet gambling operators.”

“The negative consequence is of course that, if the player and customer is not able to find out immediately after using an online gaming product whether this product or gaming operator is credible or not and if the gaming operators do have an effective responsible gaming programme or not, the player is left alone in the cyberspace. Therefore, not only tax money is staying out of the monopoly jurisdiction but also the gamblers and players are endangered by the uncontrolled offer in the Internet.”

Hambach also spoke about current status and issues related to Germany. Excerpts:

On major developments in Germany: The major issue of 2008 in Germany was definitely the enactment of the Interstate Gambling Treaty on the 1st of January 2008 and the reaction of courts, the new gambling authorities and operators in the light of this UIGEA style. As before the enactment of the Interstate Gambling Treaty we still have the situation of legal chaos in the way that courts decide in some cases that the Interstate Gambling Treaty is in accordance with German Constitutional Law and with European Law and others, who declare the Interstate Gambling Treaty not being valid in accordance with EU Law and national laws.

This lack of clarity definitely leads to the fact that most of the EU gaming operators decided to stay on the promising German gambling market and fight the cases through in case they are attacked by the German gambling authorities. The question of the opening up of German gambling market definitely depends on the development of European law level and the future decisions of the European Court of Justice.

On how can operators benefit in the time to come: First of all we received a very strong, supporting statement of the European Commission. This brief by the Commission to the ECJ relates to proceedings conducted by the Gibraltarian online gambling provider Carmen Media (represented by the law firm Hambach & Hambach) before the Administrative Court of the German Federal State of Schleswig-Holstein. At the beginning of 2008, the Administrative Court decided to suspend the proceedings and to refer the decisive questions regarding European law to the ECJ for a preliminary ruling. So, we hope that the ECJ will follow our and the Commission’s legal statement when replying to the Administrative Court. In this case the ECJ will come to the conclusion that the German State Treaty on Gambling violates higher-ranking Community law due to the incoherence of the German gambling regulations. Should the ECJ follow this opinion, German courts would have to cease application of the regulations which violate European law.

Secondly, the political discussions do not cease on European and national level. The French Government announced it would open its gaming markets as a result of pressure from the European Commission. The Italian Government realised that a legalised Internet gambling offer is necessary for the protection of the Italian citizens and to control and tax this market. Additionally all European institutions are discussing how to regulate online gambling. An independent expert opinion was published by the European Parliament’s Internal Market and Consumer Protection Committee – IMCO and comes to the conclusion that “some form of Code of Conduct is the best way forward, since it would allow Member States to leave their differences on one side and concentrate on issues seen as important across the whole EU.”

On whether operators should be individually licenced in each jurisdiction: In my point of view, a regulation on European level is preferable as the requirements for online gambling offers regarding consumer or minor protection should be the same.

Furthermore the e-Commerce Directive installed the principle of origin for online offers not without cause. Also for the European gambling market operators who are licensed in one state should be allowed to provide their services in all Member States. If a license per member state – or even worse – 16 licences e.g. in Germany for all German Federal States – are required, smaller operators simply cannot bear the costs of this marathon and fair competition is prevented. Nevertheless, their online offer will be available in all Member States and so they will be obliged to ensure that players from states where the operators do not hold a license are blocked. Again the smaller operators will have to pay for geo-localisation tools without being certain that they can guarantee that all foreign players are blocked. Legal conflicts are inevitable.

Role of Bullet Business and Gaminglaw.eu partnership going forward: The partnership between Bullet Business and a portal with special information of the gaming laws around Europe is a big profit for the gaming industry as on the one hand legal information is provided and on the other hand industry information from a gaming industry service Bullet Business. I see that the partnership will develop into a long term relationship with more and more improvements where industry news and legal news will shape the future of gambling regulations as they define the needs and the weaknesses of gambling law systems.

Ritesh Gupta

Bulletbusiness.com

3rd Legal Gaming in Europe Summit 2009

Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009 is scheduled to take place in London on 26-27 January.

For more information visit: http://www.bulletbusiness.com/legaleurope09/agenda.shtml

or

Contact:

Ben Satchwell at +442073757163 or email ben@bulletbusiness.com

Interview with ULYS’s partner Thibault Verbiest

‘There will be a day when the competition will be more fluid in France’

Bulletbusiness.com’s Legal Gaming Special

It is recommended that within the European Union every Member State should be enabled to decide about the liberalisation of the gambling market taking national characteristics into account.

This is in fact the current position in EU law, but with the crucial caveat that there is only a narrow band of legitimate reasons for restricting market access, according to the Remote Gambling Association.

According to the Association, unfortunately, the key to opening up markets is as much about taxation as regulation.  The main sticking point is that most EU Member States will not recognise the fundamental right of EU-based gambling operators to provide their services across borders. If this right is not enforced properly by the European Commission then Member States will gradually introduce systems that call for operators to be individually licensed in each jurisdiction.  This is completely unnecessary if the primary interest is consumer protection because comparable standards really should be in place across the EU, but compulsory local licencing will of course enable jurisdictions to levy taxes.

From France’s perspective, international law firm ULYS’s partner Thibault Verbiest says this will probably be the case in France, according to the ongoing discussion within the French government, the draft bill requires that all operators should obtain a licence in France, without respect to the fact they may already have one in another Member State.

“It would be surprising if the European Commission did not react against systems that are blatantly violating the freedom to provide cross-border services. However, operators will probably need to take legal action against legislations which one way or another limit cross-border services without having a coherent regime in parallel (e.g. which really protects consumers) or which discriminates operators without real justification,” said Verbiest, who is scheduled to speak during Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009, to be held in London on 26-27 January.

In France, the market opening talks are still ongoing.

Äccording to Verbiest, a draft bill creating a new regime should be examined within the next three months by the French MPs.

“The government announced at the end of 2008, that by the beginning of 2010 the new licencing project was going to be in place thanks to the new French gambling authority,” said Verbiest.

Verbiest also said that the government acknowledges that it is completely losing control of their tax revenues and consumers for their part continue to look for online gambling sites in other markets.

“This is not a new situation in France, since online gambling exist, French people have been trying it, sometimes at their own expenses since there was no system to help them distinguish trusted operators from fraudulent ones. For more than a year, the French government has acknowledged this situation and is trying to find remedies through a new piece of legislation. Since the topic has stopped being a taboo in France, it seems that consumers are more aware of which websites are safe (i.e. duly licensed in the E.U. or other safe jurisdictions), but it is obvious that only a real and realistic awareness campaign from the State will reach out to all players,” said Verbiest.

From operator’s perspective, Verbiest said since private operators did not have any legal access to French market until now and that the French government is willing to let some of them in, it can be said that there is a progress.

“However, there will be a long time before all operators can compete evenly, since the opening in France will only concern sports betting and casino games (poker, maybe backgammon) operators; all online games which are assimilated to lotteries and slots machines will remain prohibited. Thanks to European law and big legal battles, there will be a day when the competition will be more fluid in France, but this is not for tomorrow despite the tremendous progress which has been made.”

On grounds for a common approach to regulating the European Union, Verbiest said gambling regulations have been challenged in light of EU law in almost all EU Member States, and the same questions are raised every time. This alone is the sign that there is a need to discus common issues.

“There are already common regulations concerning money laundering but Member States seem to be ready for at least a common recommendation,”  Verbiest said.

Role of Bullet Business-Gaminglaw.eu partnership going forward

Gaming law specialists, who have joined hands with Bullet Business, feel the main and most important job mission of pan-European groupment is to provide the gaming industry not just with accurate and up-to-date legal advice but also to share key information, disseminate comments and suggestions, stimulate debates, quickly spread news and if at all possible, effectively reach out to the regulatory movers and shakers in the interest of the stakeholders.

For his part, Verbiest said this partnership (between Bullet Business and portal Gaminglaw.eu from gaming law specialists) is a unique opportunity to develop and enrich the only European portal dedicated to gaming and gambling laws.

3rd Legal Gaming in Europe Summit 2009

Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009 is scheduled to take place in London on 26-27 January.

For more information click here: http://www.bulletbusiness.com/legaleurope09/agenda.shtml

or

Contact:

Ben Satchwell at +442073757163 or email ben@bulletbusiness.com

Interview with Quirino Mancini, Partner, SCM Partners

Call for operators to go for ‘realistic and swift action’ in Italy

eCOGRA extends its services

Interview with Santiago Asensi, Partner, Asensi Abogados

Time to tackle ‘crime scenarios’ in online gambling

Bulletbusiness.com’s Legal Gaming Special

Few months ago, it was being pointed out that Spain was in midst of discussions about how to regulate the online gambling sector at a national level and in accordance with the EU law and principles.

Assessing the situation as of today, Santiago Asensi, Partner, Asensi Abogados, says in accordance with the Law 56/07 on measures to develop the Information Society, Spain is preparing a new gaming law, which would be totally focused on the online market.

“The Sectorial Gaming Commission, the body that groups all the Spanish authorities in charge of the gaming regulations, will meet in the first quarter of 2009 to review the first draft of the Bill. This draft is being prepared by LAE (The State Lotteries Monopoly) and shortly will be circulated between the different administrations,” said Asensi, who is scheduled to speak during Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009, to be held in London on 26-27 January.

Asensi also spoke about some of the key issues related to Spain. Excerpts:

On governments losing out on tax revenues and players being unprotected: The fact that the governments have not showed interest in regulating this market but rather putting barriers in order to protect their monopolies has damaged the three principal agents of this business:

i) Consumers that in many occasions have not found the due protection brought by consumers associations and courts where to find their rights covered;

ii) Licenced operators missing out on opportunities to launch their products in many markets; and

iii) Governments loosing the opportunity to obtain income from this industry.

I would say that the governments have damaged the whole gaming sector by restricting and putting barriers to online gaming. To restrict the market to their own monopolies under the argument of consumer protection is a poor and a vague excuse that nobody who is in this industry can believe in.

On how can operators benefit in the time to come: I like to be an optimist and I do believe that this is just a question of time. Most of the sectors of the gaming industry keep growing wealthy even in times of crisis. If we take a look at the legal situation in the past and we compare it with the current one, there should be no doubt that there have been many achievements.

Unfortunately, this is not applicable to all jurisdictions yet but the balance must be considered as positive.

On key to opening up markets being as much about taxation as regulation: My view is that sooner than later this scenario will change or, it would be better to say that it will keep changing. It’s changing in countries like France or Spain and this will also happen with the rest of the countries of the EU.

Furthermore, European jurisdictions should learn from the UK regulation, white-listing those jurisdictions that reach the proper levels of technical standards.

On cooperation among national gaming regulators: Let me be ironic: it’s great to know that our politicians are about to reach the conclusion that this would be the best way to combat all type of crimes that can be related to this industry. If you want to prevent thefts in a dark street, the best measure to take will be always to set up lights in that street instead of increasing the penalty for theft. And this simple example is absolutely applicable to prevent crime scenarios in the online industry.

Role of Bullet Business and Gaminglaw.eu partnership going forward: I believe this is a great opportunity for both parties in order to establish a strong collaboration, which will benefit clients of both entities and the end users of Gaminglaw.eu. This partnership has been built on the basis of many years of experience and the knowledge of the industry. The result must be always good.

We have put our best efforts looking forward that this idea works and I do not find a single reason why it shouldn’t.

Ritesh Gupta

Bulletbusiness.com

3rd Legal Gaming in Europe Summit 2009

Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009 is scheduled to take place in London on 26-27 January.

For more information visit: http://www.bulletbusiness.com/legaleurope09/agenda.shtml

or

Contact:

Ben Satchwell at +44207 375 7163 or email ben@bulletbusiness.com