EU Court Ruling Sparks Debate on Consistent Web Gambling Rules
European Internet gambling rules, currently a crazy-quilt of national laws and court decisions, may be moving toward some level of harmonization, several sources said. The impetus appears to have been a September European Court of Justice preliminary ruling allowing EU countries to bar foreign operators from offering online gambling if the ban serves public interests such as fraud and crime prevention, said Thibault Verbiest, an Internet lawyer with the Ulys law firm in Paris. That decision paved the way for a “conditional recognition principle” allowing governments to consider requirements gambling operators have met in their home countries when deciding whether to grant licenses, he said. The case’s implications for cross-border gambling are to be the subject of a Feb. 11 debate in the European Parliament.
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Since Europe’s online gambling sector isn’t subject to EU-wide rules, each country can decide for itself whether, just because an operator lawfully offers Internet services in other places where it’s subject to statutory controls, that country’s own consumers will be adequately protected against crime and fraud, the ECJ said in Santa Casa v. Bwin (WID Sept 9 p3). Prohibitions imposed on a gambling provider, if justified for combatting crime and fraud, are compatible with the freedom to provide services across the internal market, the court said.
The conditional recognition principle seems to be proportionate and gives governments a bit of discretion about online gambling activities, Verbiest said. If it prevails, each country will enact its own Internet gambling legislation but consider other EU governments’ laws when deciding whether to grant licenses, he said. “One cannot rule out some sort of harmonization at EU level.” To put regulations in place, countries will sign mutual cooperation agreements that could be the first step toward harmonization, he said.
Next week’s parliamentary debate will center on questions the Internal Market and Consumer Protection Committee asked the EC last November after the Santa Casa decision. Lawmakers want to know what the EC plans to do in light of that and other ECJ opinions on Internet gambling, what legislative developments have taken place in some countries based on the rulings and whether the EC expects a common regulatory regime for the growing number of cross-border online gambling activities to ensure responsible gambling.
The panel also wants an update on proceedings the EC filed against several countries on the grounds that measures infringing or restricting the cross-border supply of online gambling services violate European Community law. Former Internal Market Commissioner Charlie McCreevy wanted to pursue the infringement cases, but it’s unclear where Commissioner-Designate Michel Barnier stands, a parliamentary source said. There’s some concern Barnier will take a more nationalistic approach and try to stop the infringement cases, the source said.
The Santa Casa case could be interpreted to leave some scope for the EC to pursue its cases, or -- as monopoly gaming companies hope -- to rule out mutual recognition, the parliamentary source said. The latter position could raise questions about the legality of the EC’s proceedings, the person said. Some standardization in the next five years is possible, the source added.
Internet Gambling a Success Despite Problems
The online gambling model “has resilience” as consumers opt to stay home and broadband becomes more widely available, Global Betting and Gaming Consultants founder Warwick Bartlett said at last week’s International Gaming Expo in London. The industry’s biggest problem is government, he said.
"With the exception of the offshore jurisdictions, not one government is warming toward Internet gambling, they fear it and their response to it has been negative,” Bartlett said. Even the U.K. government recently announced new measures for offshore operators that take bets from Britons, despite no consumer complaints about bad deals from online operators, he said.
The Internet gambling market was moving slowly in the right direction toward liberalization but now seems to be headed back to political and legal protectionism, Bartlett said. Courts are confirming the political mood and competition authorities have “gone quiet,” he said. Protectionism seems to have gained ground when France took over the EU Presidency in July 2008, he said. The U.K., the “last bastion of the free market,” is now eyeing licenses for foreign websites, and governments want to raise taxes on remote operators, he said.
But Internet gambling continues to grow, Bartlett said. Broadband is becoming one of life’s necessities, and mobile gambling will take off once the latest handsets reach 25 percent market penetration, he said. This year and next will be bad for the gambling sector, but things should pick up in 2012, he said.