FINNS AGAIN REJECT LADBROKES

11 May 2007

Supreme Court rules that Finnish government has the right to deny gambling application

A Ladbrokes application for recognition of its rights to enter the Finnish gambling market again met with failure this week.

Helsingin Sanomat business news reports that the Supreme Administrative Court (KHO) ruled that the Finnish Government had the legal right to deny Ladbrokes' application to run a betting operation in the country based on the fact that a license already had been granted to state-run gaming company Oy Veikkaus Ab.

Ladbrokes first applied for a license back in 2003.

According to a ruling handed down on Tuesday by the KHO, the government has a legal right to reject the application by gaming company Ladbrokes for a licence to arrange betting and gaming operations in Finland. The government decision was taken on the basis that a corresponding licence had already been awarded to Oy Veikkaus Ab, the state-owned national lottery and gaming company, and according to the 2002 Act on gaming, only one such licence can be in effect at any one time.

This was the second time the Ladbrokes application has been rebuffed. The company first sought a licence in 2003, but the government, via the Ministry of the Interior, rejected the proposal in 2004. A year later, the Court overturned the government decision and ordered it to be reconsidered, as the initial rejection was based simply on an interpretation of the Gaming Act, and not on the Ladbrokes' contention that the maintenance of a gaming monopoly was in contravention of EU rules on the free movement of services.

A second application was rejected in November 2005, and now KHO has responded to the appeal against this decision. The Court believes that the monopoly on gaming activities based on the Act on Gaming is in line with European Union legislation, and bases its decision on European Court of Justice rulings. These have stated that a national monopoly arrangement is acceptable when it is based on grounds of the public interest and is non-discriminatory.

KHO nevertheless noted that there are problems with Veikkaus operations, in particular with the marketing and product development activities of the company, which tend to be at odds with the avowed aim of the legislation to tackle the adverse effects of gambling.

Veikkaus, whose revenues from operations passes in large measure to the government, has actively marketed its products and services, thereby increasing turnover and indirectly the state's income from gambling.

The Supreme Administrative Court believes some of these difficulties can be overcome by developing the legislation, for example by raising the age limit for gaming to 18 and ensuring that advertising does not target minors.

The entire question of a gambling monopoly has been in the air for several years, particularly as Internet gambling has brought betting to computers in all Finnish homes. Ladbrokes has been particularly active in attempting to bring down the Veikkaus monopoly.

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