E.C. RENEWS WARNINGS TO SWEDEN AND GERMANY

1 February 2008

January 1st German ban and Sweden's poker at the centre of latest warnings


Despite reports in the German press earlier today (Thursday) that the EC was considering a deal on its German problems, the enforcement arm of the European Union has issued renewed warnings to the German and Swedish authorities over their monopolistic gambling restrictions.

In doing so, the Commission is tacitly giving its support to the litigation being pressed by several major gambling companies in other EU countries who are being denied access to Swedish and German markets, reports the Bloomberg business news service.

At the centre of the latest EC warning is Germany's ban on online gambling imposed on January 1st, and the protectionist nature of the Swedish government's Svenske Spel monopoly on Internet poker. The new initiative was confirmed by EC officials.

Germany and Sweden are just two of the 10 members of the 27-nation EU that have been the subject of litigation or threats from the Commission over gaming laws in the past two years. The Commission has opened a series of legal challenges in response to complaints by betting companies and industry groups such as the European Gaming and Betting Association, representing Bwin, Party Gaming and other major Internet gambling operators.

The Commission's power to enforce EU business rules is exercised through the European Court of Justice in Luxembourg, which can order governments to change their laws and fine countries that ignore its judgments, Bloomberg points out.

The EU court made two landmark rulings against Italian state monopolistic gaming restrictions last year. Judges in March struck down the use of criminal laws to hinder foreign companies including Stanley Leisure Plc of the U.K., and in September declared the country's licensing system illegal.

Shortly thereafter the Italians followed the licensing and regulation route rather than monopolising the pastime.

The Reuters news service reported on the new EC move in more detail, revealing that EU Internal Market Commissioner Charlie McCreevy has asked Germany for information to assess whether the January 1st ban was in line with EU rules on the free movement of services.

"Germany has two months in which to respond. The Commission hopes that the answers it receives will lead to an early and satisfactory resolution of the matter," the Commission said in a statement.

In particular, the EU executive is looking at the treaty's total prohibition of games of chance on the Internet, particularly sports betting, advertising restrictions on television, on the Internet or on jerseys or billboards, and the ban on financial institutions processing bet payments.

"However, it should be noted that in Germany horse race betting on the Internet is not prohibited and slot machines have been widely expanded. Moreover, advertising of games of chance by mail, in the press and on radio is still permitted," the Commission said.

Reuters reports that in its Swedish action, the Commission is verifying whether all national measures relating to poker games and tournaments are compatible with EU laws on the free movement of services. The Stockholm government also has two months to respond.

The Commission refers to European Court of Justice rulings which say EU states can introduce restrictions only if they are necessary, proportionate and non-discriminatory.

McCreevy has criticised states as hypocritical for protecting money-spinning national monopolies that actively promote betting while banning rivals on the grounds that consumers needed protecting.

The new German treaty replaces existing legislation that was already the subject of legal action from Brussels.

"The new [German] treaty introduces an even more restrictive regime by banning private online and 'bricks and mortar' sports betting operators and by imposing further discriminatory, disproportionate and inconsistent restrictions which leave the sports betting markets in the control of the German state lotteries," a spokesman for private gaming firm Stanleybet International said.

"The Swedish case concerns the introduction of online poker by the Swedish state-controlled gambling operator, Svenska Spel. This is certainly a discriminatory measure because Sweden maintains a very strict regime banning all other online operators," Stanleybet said.

The legal actions are part of a three-stage process that can end in the European Court of Justice, which has powers to fine EU states and force them to change their laws.

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