Knock for French monopolies

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FRENCH MONOPOLIES RECEIVE A KNOCK

Top French Court favours EU approach to gambling


France’s highest appeals court, the Cour de Cessation, has ruled that the only justification the country can have for a monopoly on sports betting is through crime prevention.

The court made the ruling as part of a sanction review against Malta-based betting company, Zeturf (see previous InfoPowa report) in regards to horse racing. Paris Mutuel Urbain, which holds a monopoly in remote horse race betting took the matter before the court.

Reuters news service reported that France's top court overturned the decision to ban the Maltese company from offering online betting on horse races in France, adding to pressure from the European Commission for an end to the French state monopoly.

Under European Union rules, limits to competition, even those 'stemming from limits on gaming as a special or exclusive right, cannot be justified,' the Cour de Cassation, said Wednesday as it announced its decision.

Such restrictions can be used only to block gambling companies from 'criminal or fraudulent' activities by 'channeling them through controllable avenues,' the court, based in Paris, said in its ruling this week.

The decision sends the case against Zeturf, a Maltese Internet gambling company, back to a Paris appeals court for a rehearing. It could take up to a year for the case to come back to court..."

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EUROPEAN COMMISSION GETS TOUGH WITH THE FRENCH

Legal action could be the next step after 24 August deadline

The European Commission is taking a tougher stance on the French refusal to open its online gambling to companies from other EU states, it appears.

Ton Van Lierop, a spokesman for the European Union revealed that the European Commission last week instructed the French Government to modify its draft law on online gambling to allow foreign gambling companies to operate in France or face legal action.

“Last week, we sent a detailed opinion to France concerning the draft law, which is aimed at prohibiting foreign operators from coming to sell their services on the French market,” said Van Lierop.

The Commission claims that the French draft law violates article 49 of the European Union treaty concerning the free provision of services. Van Lierop said that the French have until August 24 to change their draft law or face the possibility of being taken to court.

Observers were taken by surprise by the announcement, as there were reports last week that France’s state betting and gaming monopoly was among the subjects discussed when Jean-Pierre Jouyet, France’s secretary of state for European affairs, had talks in Brussels with Charlie McCreevy, European commissioner for internal market and services.

At the time, a spokesperson for McCreevy said the meeting had been very positive and that an extension had been granted to France to reply to the letter of formal notice sent by the Commission, although no date had been set. The spokesperson added that both men were hopeful of finding a solution to the issues related to European cross-border betting and gaming in France that will be in accordance with the European Treaty.

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MORE TIME FOR FRANCE AND GREECE IN EC HASSLES

On the threshold of legal action, a breathing space

France and Greece have been given a further sixty days to respond to the European Commission over their claimed monopolistic barriers to participation in their gambling industries by other European Union members.

In an announcement this week, European Commission spokesman Oliver Drewes said the extension was granted on applications from the two countries, who are among several in the Commission's cross-hairs for their exclusive legislation regarding Internet gambling.

The Commission took France and Sweden to within one step of European Court of Justice action in June when it also gave Greece an initial warning that it too was at risk over its gaming laws.

It gave all three countries two months to respond, reports the Reuters news agency.

"The deadline for Greece and for France is now 29 October," Drewes, a spokesman for the executive's Internal Market Commissioner, Charlie McCreevy, today (Tuesday).

"We have not seen anything from Sweden so far but as they did not ask for an extension we assume it's on its way," Drewes said.

The situation in France had changed since a court ruling last month was favourable to EU law, Drewes said.

France's top court overturned a ruling that banned a Maltese firm, Zeturf (see previous InfoPowa reports), from offering online horse race betting in France, adding to pressure from Brussels for France to end the state's lucrative monopoly.

The French case will trigger a retrial which could take up to a year to come to court.

Drewes said there were good contacts with the Greek authorities. Greek betting monopoly OPAP is a listed company and one of Europe's biggest betting firms but competition is restricted - even though OPAP competes in neighbouring Cyprus.

Sports betting and gambling is a state-owned monopoly in many EU countries, generating large amounts of revenue for governments but thwarting attempts by private-sector rivals to get a piece of the multi-billion-euro action.

McCreevy has said there was no agreement among EU states to adopt pan-EU rules on gaming due to a wide range of views but he was ready to use his legal powers to stop unjustified restrictions on the free movement of services in the bloc.

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SWEDISH MONOPOLY COULD BE HEADED FOR COURT

Svenske Spel monopoly defended against EC Article 49 opinion

It is beginning to look as if the Swedish government gambling monopoly Svenske Spel could find itself in court after rejecting the European Commission's claim that it was acting contrary to European Union law in excluding gambling services from other EU countries.

In justifying its exclusionary gambling practices, the Swedish government has claimed that its laws are proportionate, prevent crime and provide social protection to Swedish gamblers. Earlier this week Sverige Radio International revealed that gambling, and state profits from Svenske Spel is booming in the Scandinavian country.

Earlier this year the EC required that Sweden and other EU countries with similar bars to the free movement of trade and services between European Union members justify their exclusionary approach toward online gambling operators from other EU nations. The Internal Markets Commissioner, Charlie McCreevy quoted Article 49 of the European Treaty regarding the issue.

Assuming the EC finds the Swedish justification unacceptable, its next step could be an appearance in the European Court of Justice - an event that could take several years to judicially finalise.

Petter Nylander, chief executive of online gambling group Unibet, expressed his disappointment, saying: “It looks like the market will be opened up by the European Commission rather than the government and it doesn’t make any political logic. However, from a financial point of view, the [Swedish] gambling monopoly is one of the biggest cash cows for the government and it doesn’t want to change the current set up.”

The Swedish move was described in an article carried by eGaming Review as a ploy to buy the Swedish government more time. Quoting an unidentified Swedish source, the publication reported: “There is friction within the government because it got to power by promising tax cuts on real estate and wealth.

"By holding onto Svenska Spel’s monopoly for at least another two years, it keeps in place huge tax revenues which make up the shortfall from any cut in other taxes. The government knows the European Commission is a slow moving animal so really this is a cynical move to play for time.”

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FRENCH SCENE BRIGHTER

Talks commence in Brussels on a more liberal approach to online gambling

Providing a list of demands can be met, there may be some light at the end of the French online gambling tunnel as French representatives meet with European Union officials this week in Brussels for talks on the exclusive nature of French policies.

But any rapprochement is likely to involve only online sports betting, according to eGaming Review.

In previous InfoPowa bulletins we have extensively reviewed the clash between French national monopolistic policies when it comes to gambling, and the position of the European Commission which seeks to persuade members of the 27 nation EU to adhere to treaty obligations for free passage of goods and services. This year in particular has seen an apparently looming confrontation with several nations - including France - reluctant to eschew their national holds on gambling, and the prospect of European Court of Justice actions has moved closer.

Now, according to the eGaming Review report, the French have given a little ground in the debate and enter talks to find a way forward - but with a list of demands.

The list includes a stipulation that only online sports betting will be involved; that deregulation must be accomplished in a controlled manner; that online gambling companies wishing to access the French market set up offices in the country and that some protection for the French state monopolies be afforded.

It's likely that negotiations will be tough. eGaming Review quotes Unibet chief Petter Nylander as welcoming the developments but asserting that a realistic approach to regulation would come through a robust system that was in line with current regimes, such as those in the UK or Malta.

Nylander added that by only allowing operators to offer pool betting, the French government was placing a decoy to protect state monopolies, and that players would always be able to use a broader range of products from other (non-regulated) online operators.

Apparently French land gambling operations are champing at the bit to launch online gambling sites targeting French players, and have been lobbying government figures to this end. The eGaming Review article claims that the country’s two largest operators, Barrière and Partouche, are getting increasingly nervous of the competition from non-French online gaming operators targeting the country.

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FRIENDLY FRANCE

Government minister tells media "we're not hostile to online gambling."

In an interview with Agence France Presse this week a French minister, Eric Woerth, asserted that the French government was “not hostile to opening up to online gaming” as long as it was done in a “controlled” way.

Woerth will play an important part in discussions next (October) month in Brussels when the possibility of allowing private online gaming operators to take bets from French citizens will be on the table. But he insisted that France would not allow in “just any operator” to enter the market, for reasons of “social and public order and problem gambling”.

France has long been at the centre of controversy over bans on Internet betting not carried out under the aegis of the state gambling monopolies, and confrontations have resulted in the arrest of Austrian gambling executives and restrictions on advertising that have impacted sporting events. The country has also been the subject of warnings on the free passage of trade and services for other European Union nations.

Following the Brussels discussions, a further meeting is scheduled for 17 October in Paris to discuss adapting “the French model of betting and gaming” so that it meets its European trade obligations of allowing cross-border competition.

The Paris meeting will be attended by French gambling monopolies PMU and Francaise des Jeux, French casino groups Barrière, Partouche and Tranchants, the European Gaming and Betting Association (EGBA) and Betfair.

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FRENCH MAY STAND FIRM ON ONLINE BETTING

EU mutual recognition "difficult for us to accept"

French Budget Minister Eric Woerth recently spoke to the French newspaper Le Parisien, explaining that his country is not ready to drop key legislation limiting online gambling but may consider loosening the state monopoly on horse racing.

The European Commission has been applying increasing pressure to persuade the French to comply with European Union principles regarding free passage of trade and services on gambling, and Woerth is due to meet with Commissioner McCreevy in the near future to seek a way past the traditionally protectionist policies that France has been applying against fellow EU nations..

"We are not opposed to a certain opening [of gambling to other EU nations] but we will remain firm on certain points," Woerth told Le Parisien. "On the point of mutual recognition, which is difficult for us to accept," he said when asked on what points France would not compromise.

"Just because an operator is recognised in a foreign country is no reason for us to have to open our gates to them in France," the Minister continued. "We intend to keep control of authorisations."

"The question of tax should also be looked at because we want to keep control of that," he added.

The Budget Minister revealed that the French government may be prepared to consider loosening the monopoly on gambling on horse racing currently held by betting firm PMU.

"Operators apart from the PMU could be accepted, but we want to keep the principle of pari-mutuel," he said. He identified fixed-odds betting as a serious stumbling block from a French perspective.

[Casinomeister]

.."Just because an operator is recognised in a foreign country is no reason for us to have to open our gates to them in France," the Minister continued...

Umm...it's called the European UNION. Sheesh!

If this was about selling shoes or DVDs, there wouldn't be an issue. It's all about the € € € € !!

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MORE TALKS ON FRENCH ONLINE GAMBLING POLICIES

European Commission and French government seek to avoid legal confrontation

Early this week French government delegates and European Commission officials faced off across a negotiating table in Brussels to find a way past the former's protectionist policies on gambling, which conflict with EU principles of free pasage of trade and services.

The preliminary meeting agreed that further talks were necessary to avoid France being taken to the European Union's top court for restricting competition in sports betting, according to reports from the Reuters news agency.

France's Budget Minister Eric Woerth and European Affairs Minister Jean-Pierre Jouyet met the Commission's internal market chief, Charlie McCreevy, who had previously sent a final warning to France for banning private betting firms, with the next step the European Court of Justice.

The parties to the dispute have agreed that there will also be political and technical talks to open up the market in France, which is dominated by state-controlled lottery Francaise des Jeux and horse betting firm PMU.

Further meetings will be held in February and March to find a solution to end the legal action before France takes over the EU presidency in June.

McCreevy's spokesman, Oliver Drewes, said the legal issues had not been resolved and that the legal action would continue. "A process of intense dialogue will be started on technical and political issues, with the aim of meeting again in early February," Drewes said.

The French put a more positive spin on the initial meeting, with Woerth telling reporters: "We indicated to Mr McCreevy France was ready to gradually open up its gaming market".

The European Commission has launched preliminary legal action against France and nine other EU states over what it sees as restrictions on competition in gambling.

Woerth said any opening of the market would have to meet a list of French demands, including tax conditions and powers to combat money laundering and unlicensed online betting sites (see previous InfoPowa reports).

The French also gave an undertaking that there will be no repetition of the arrest of online gambling executives such as Petter Nylander, the Unibet CEO arrested last week at Schipol airport on a French warrant who was subsequently released on bail. The arrest warrant was rooted in a complaint by French monopolies Francaise des Jeux and PMU that Unibet breached 19th-century laws protecting state-owned monopolies.

The European Commission criticised France last month over the arrest, and spokesman Oliver Drewes said after the Brussels meeting: "The French ministers also confirmed there will be no new kinds of complaints issued similar to the one that led to the arrest of Mr Nylander."

Sigrid Ligne, secretary general of the European Gaming and Betting Association, appeared to be losing patience with the process when she commented: "Negotiations have been taking place since June. Promises have been made, but no concrete solutions nor concessions have been made. All of this in the context of criminal procedures such as the Unibet one.

"We hope that talks of a controlled opening are real and that the Commission received serious guarantees from France and that today's discussion is not there to buy time once again."

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BWIN EXEC POSITIVE ON EUROPEAN ONLINE GAMBLING

More legal certainty could be achieved as early as next spring

A Bwin executive with more than a passing knowledge of the draconian approach of France to online gambling said in an interview this week that he is optimistic about growing liberalisation in European Union nations.

Norbet Teufelberger was on the unpleasant end of French officialdom earlier this year when he and a fellow executive of the company were detained by French police for involvement in a football and advertising sponsorship with a Monaco team, so he has a personal as well as business understanding of the French approach.

Nevertheless, Teufelberger believes that European countries including France could step out on a path towards liberalising online gambling by next spring, creating more legal certainty in the business. And if a major nation like France took the lead in opening up its Internet betting market to other EU nations, it could start a landside in liberalising the Euro 3 billion ($4.4 billion) online gambling market in Europe.

"There are many signals," says the chief of the Vienna listed Bwin. "Who would have thought six months ago that France would move politically? There is movement now."

"We hope that we will have more clarity in a few months. There won't be a solution yet, but I think one can have a feeling for the direction this is going to take," he said.

Bwin and other online betting groups are lobbying for a deal with European countries under which state monopolies for lotteries would stay, but betting and gambling would be opened for commercial operators.

"There won't be a European Union-wide solution (in spring), but in individual countries," he said. "The UK already has a solution. Our goal is to find one in one or several major countries. If that's going to happen, there will be a landslide."