ONLINE GAMBLING BALANCING FREE TRADE & SOCIAL POLICY
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1 ONLINE GAMBLING BALANCING FREE TRADE & SOCIAL POLICY
2 What is Online Gambling & Who is at it? Gaming, Betting, Lotteries, Prize Competitions The concept of remote gambling Statistics
3 EXAMPLES Example Betting Example Horse-racing Example Online poker Example Virtual horse-racing Example Virtual race horse breeding
4 Risks associated with Online Gambling & Regulatory Objectives Problem gambling & addiction Harm for individual and society Minors Crime associated with (some) gambling operations (fraud, money laundering) Consumer Protection Ensuring gambling is conducted fairly and openly
5 Motivations for States to regulate Socio-economic factors: Players protection: country of residence bears negative social and economic consequences Risks associated with certain operators: gaming activities are attractive target for organised crime, money laundering Traditionally creation of funds for social and cultural purposes => public funds transfer to other countries
6 Different Regulatory Models Outright prohibition of online Gambling Workable? US Unlawful Internet Gambling Enforcement Act 2006 State operator monopoly EgSvenska Spel or Norsk Tipping (games); Norsk Rikstoto (horse race betting) Single private operator EgPari Mutuel Urbain in France Restricted licensing system Open licensing system Eg UK Gambling Act 2005
7 National Regulation as Trade Restriction Divergent laws, no harmonisation, no country of origin rule The internet & cross-border access EU Treaty, freedom to provide services & establishment Excluded from scope of Services Directive, E- commerce Directive etc Direct effect => lever for harmonisation?? Role of the courts in the absence of harmonisation?
8 The Caselaw of the ECJ Case C-275/92 Schindler Case C-124/97 Lärää Case C-67/98 Zenatti Case C-234/01 Gambelli Case C-338/04 Placanica (6. March 2007) Case E-1/06 Re Amendment to Game & Lottery Law (14. March 2007) Case E-3/06 Ladbrokes v Norway (30. May 2007)
9 The caselaw of the ECJ (2) Mutual recognition & non-discrimination Fiscal reasons not allowable Coherent and systematic approach Expansion? State operators (monopolies) and licensing restrictions ok Advertising restrictions discriminatory? Restrictions on numbers of licenses arbitrary
10 The Caselaw of the ECJ (2) Jurisprudence under Art 267 (ex 234)(Prelim Ref) Commission infringement procedure Art 258 (ex 226) Notification against Denmark, Germany, Finland, Italy, the Netherlands, Sweden and Hungary (April 2006) Austria and Luxembourg (December 2006) Commission expressing concerns on the German Inter-State Treaty in March 2007 Internet prohibition for sports bets and lotteries Court of Appeal in Hessen
11 Commission Infringement Procedures Jan 2008 Germany; official request for information; total prohibition of games of chance on the internet, including sports betting; advertising restrictions on TV, on the internet, on jerseys or billboards; prohibition on financial institutions to process payments related to unauthorised games Jan 2008 Sweden; official request for information; poker games and tournaments; since 2006 offered by state-owned company on a large scale- cannot be offered by operators in other Member States
12 What do the national courts do with this Guidance from the ECJ? The PMU v Zeturf case as an example Situation following Gambelli & Placanica: PMU v Zeturf : Court of Appeal, Paris: (1) ordering cessation of operations; (2) quantifying the penalty amount due by Zeturf Maltese courts refuse enforcement French Cour de Cassation: Reversed to CA (13. July 2007)
13 Commission Infringement Procedures Jan 2008 Sweden; official request for information; poker games and tournaments; since 2006 offered by state-owned company on a large scale- cannot be offered by operators in other Member States Jan 2008 Germany; official request for information; total prohibition of games of chance on the internet, including sports betting; advertising restrictions on TV, on the internet, on jerseys or billboards; prohibition on financial institutions to process payments related to unauthorised games
14 GATS-WTO (1) General obligation MFN; transparency Specific commitments, Art 16 But Article 14 Exception public morals, prevention of deceptive or fraudulent practices
15 GATS-WTO (2) DS 285 Antigua & Barbuda v United States Cross-border online gambling services Panel Report November 2004 Appellate Body Report April 2005 US not complied: March 2007 Arbitration (lost trade) EU Complaint to WTO?
16 Conclusion Online gambling growth sector => pressure to liberalise cross-border provision Potential for social & individual harm => risk assessment specific to online gambling Enforcement issues pertaining to national regulation (arrests; payment providers) Harmonisation unlikely Role of the ECJ/WTO in determining the limits of social policy Proportionality test But application by the national courts? Result: Litigation battle
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