Monday, September 25, 2006

It appears as though the right to free access to online gambling services in
Europe is destined to be decided by the courts, as increasing numbers of
European states ignore the recent European Court of Justice directive which
stated that a Member State cannot invoke the need to restrict its citizens'
access to betting services if at the same time it incites and encourages
them to participate in state lotteries, games of chance or betting which
benefits the state's Finances. The basic premise of a recent European Court
of Justice statement regarding the subject is that individual Member States
cannot protect state-sponsored monopolies at the expense of private or
foreign-based enterprise. In an ideal situation, the European Commission
would like to see open access to services or, failing that, no access at
all. Protectionist economic policies appear to be contradictory to the very
ideals upon which the European Union was established. In April of this year,
the European Commission sent official requests for information on national
legislation restricting the supply of sports betting services to seven
Member States (Denmark, Finland, Germany, Hungary, Italy, Sweden and the
Netherlands). The Commission was responding to complaints that the Member
States were in breach of Article 49 of the EC Treaty which guarantees the
free movement of services. The EC decision to investigate these Member
States was specifically related to sports betting, and a statement released
by the EC at the time made it clear their decision to investigate did not
have implications for the liberalization of the market for general gambling
services. However, the alleged breaches the EC are investigating in relation
to sports betting seem to have a lot in common with recent steps France has
undertaken to protect its own state-sponsored gambling monopoly. French
police arrested two BWin executives in Monaco last week for "violation of
French gambling laws" by "offering illegal games of chance, illegal lottery,
advertising prohibited lotteries and taking illegal horse racing bets".

The European Court of Justice has repeatedly stated that any restrictions
which seek to protect general interest objectives, such as the protection of
consumers, must be "consistent and systematic" in how they seek to limit
betting activities. The recent French arrests of the BWin executives can be
described as a lot of things, but 'consistent' and 'systematic' they are
not.

Dozens of online gambling entities advertise in France, including market
giants such as Casino-on-Net (888.com), who are the title sponsor of
Toulouse FC. 888.com Chief Executive John Anderson handed in his notice not
long after the BWin arrests, the timing of the announcement coincidental, to
say the least. Hundreds of online gambling companies offer their services in
France via the Internet, and it now seems likely executives of those
companies risk arrest if they set foot in France.

To casual observers, the entire case appears cut and dry. The French
actions, in attempting to protect their monopoly, are incompatible with
European Community law. A spokesman for the EC Internal Market Commissioner,
Charlie McCreevy, warned the commission was considering expanding their
investigation following news of the French arrests.

Individual European states are testing the authority and will of the
European Commission. The EC needs to stand up and exert its authority and,
more importantly, it needs to exert that authority expediently. It is
possible that the French actions are nothing more than an attempt to buy
time to allow its monopoly to gain a firmer grasp in the market. If the EC
takes too long to investigate before handing down a decision and enforcing
that decision, the French monopoly can still win, even if the EC decision is
not in their favor.

But with European government-sponsored monopolies generating as much as $30
billion in revenue annually, and rising every year, the stakes are high. Cut
and dry it may seem, but the situation is almost certain to drag on for some
time before reaching a conclusion.