IDEST Master - Law of Space Activities and Telecommunications FREEDOM TO PROVIDE SERVICES ONLINE GAMING AND BETTING December 14th, 2007 Fabien Gaucher Attorney at the Paris Bar Ulys Law Firm (Brussels and Paris) fabien.gaucher@ulys.net www.ulys.net www.gaminglaw.eu
EC Treaty Article 49 EC Principle: Restrictions on freedom to provide services within the Community are prohibited Exception: Restrictions may be imposed only for reasons of public policy, public security or public health
EC case law Article 49 EC A Member State may impose restrictions on freedom to provide services only if such restrictions comply with the general interest and are both necessary and proportional to the realization of the expected objective, while complying with the criterion of nondicrimination.
EC case law Gaming and betting Reasons of overriding general interest set out by the ECJ: Consumer protection Prevention of fraud Reduction of gaming and betting opportunities
EC case law Gaming and betting A few decisions were issued by the ECJ which relate to gaming and betting: - Schindler (1994) - Läärä (1999) - Zenatti (1999) - Anomar (2003) - Gambelli (2003) - Placanica (2007)
EC case law Gaming and betting Gambelli (2003) Threat of reduction of tax revenues and/or the financing of social activities cannot justified restrictions. Restrictions must be consistent and systematic: a Member State which encourages gaming and betting to the financial benefit of the public purse cannot invoke public order concerns. Existence of harsh criminal sanctions and rigorous controls in the EC Member State where the operator is based make regulations generally not proportional.
EC case law Gaming and betting Placanica (2007) Same principles: Restrictions must be justified by overriding general interest and be proportionate and necessary. Member States must have a systematic and coherent gaming policy.
French regulations Gaming and betting What about France: do French gaming and betting regulations and policy comply with EC law?
French regulations Gaming and betting Let s take a look...
French regulations Gaming and betting Principle: General prohibition of lotteries and betting (law of 21 May 1836) Exception: Lotteries and betting organized by Française des Jeux ( FDJ ) (law of 31 May 1933 and decrees of 9 November 1978 and 1 April 1985) Betting on horses races organized by Pari Mutuel Urbain ( PMU ) (law of 2 June 1891) FDJ and PMU are granted exclusivity over the Internet
French regulations Gaming and betting Harsh criminal penalties Lotteries and sports betting operators: 60,000 + 2 years Horse races betting operators: 90,000 + 3 years Advertisers: 30,000 / x4 the amount invested ISPs: 75,000 + 1 year if they do not warn customers of blacklisted sites Banks required to stop transferring funds relating to online gambling (?)
Situation of France Gaming and betting Legal proceedings and threats Criminal complaints filed by the monopolies Judicial proceedings against Zeturf and Partouche Arrestation of Bwin s CEOs and of Unibet s CEO Hearing of personalities (e.g. Patrick Bruel) Pressures against public authorities (e.g. CSA and LFP) Pressures against partners of online gaming and betting operators
Situation of France Gaming and betting Objections put forward by France: - Public and social order - Fight against money laundering These concerns may be reasons of overriding general interest... but ONLY if: they are suitable for achieving theses objectives they limit gaming and betting in a consistent and systematic manner
Situation of France Gaming and betting Is this the case in France?
Key figures Monopolies - Semi-public corporation - Controlled by the ministry of budget - Offers lotteries and sports betting - Distribution: offline and online - Economic Interest Group - Controlled by the ministry of agriculture - Offers betting on horse races - Distribution: offline and online
Key figures Monopolies
Key figures Française des Jeux
Key figures Française des Jeux
Key figures Française des Jeux
Key figures Pari Mutuel Urbain
Key figures Pari Mutuel Urbain
Key figures Pari Mutuel Urbain
Network Française des Jeux
Network Pari Mutuel Urbain
Marketing Monopolies Is FDJ and PMU s advertising communication aggressive...?
Marketing Monopolies FDJ was the 16th largest French media advertiser in 2006 132 million allocated to advertising Advertising expenses has increased by 100% in 4 years
Marketing Française des Jeux
Marketing Pari Mutuel Urbain
Protection of players Monopolies Do FDJ and PMU protect players?
Protection of players Française des jeux FDJ released 2 leaflets in 2006:
Protection of players Française des Jeux Does FDJ protect minors...?
Protection of players Française des Jeux Does FDJ protect minors...?
Protection of players Pari Mutuel Urbain PMU s CEO statement in the 2006 annual report... PMU offers to punter a moderate number of occasions to bet: an average of 17 races per day PMU released 1 leaflets in 2006:
Distribution Française des Jeux FDJ and Bouquets d Objets :
Distribution Pari Mutuel Urbain PMU launched PMU Mobile in 2006:
Distribution Pari Mutuel Urbain Equidia Info Paris Ovales Pariez Spot
International Française des Jeux EuroMillions
International Pari Mutuel Urbain
Situation in France Online gaming and betting What conclusion?
Situation in France Online gaming and betting France obviously fails: to meet the suitability standard - Money-driven policy to meet the proportionality standard - Monopoly system - Severe criminal sanctions
Situation in France Online gaming and betting Consequently, a few European operators filed complaints against France before the European Commission... Mr Bookmaker Bwin The French casinos union
Situation in France Online gaming and betting...and these initiatives were successful!
European Commission Online gaming and betting What reaction from the European Commission? Infringement procedure on 12/10/2006 Sports and horse races betting only France was given 2 months to justify its regulations Reasoned opinion on 27/06/2007 France was given 3 months to comply with EC law
Situation in France Online gaming and betting What next?
Situation in France Online gaming and betting France has no choice than to open the French gaming and betting market... Ongoing talks with the European Commission A dra= gambling act to be ready in March 2008 Licence system (exclusion of the mutual recognition principle) Tax issues
Thank you for your attention Fabien Gaucher fabien.gaucher@ulys.net