Saturday, December 23, 2006

Seen as yet another indicator towards liberalization of gambling
restrictions in Europe, the Italian government has announced that it will
auction off 17,000 licenses for betting shops, kiosks, casinos as well as
for online casinos, poker rooms and sportsbooks. This is in preparation for
January 1st, when all Italians will be able to legally play online poker. In
spite of not being sure what the potential for the new Italian market is,
initial reports say that Betfair, William Hill and Ladbrokes are poised to
grab their share of the auctioned licenses. In fact, the European Union
Commission just Dec. 20 cleared William Hill's proposed joint venture with
Codere to enter the Italian gambling market. This enables them to exploit
betting licences being issued by the Italian regulatory authorities in the
new year.
Europe's 50 billion euro (approximately $65 billion US dollar or 130 billion
pound) market has become even more critical to the gambling sector since the
Unlawful Internet Gambling Enforcement Act (UIGEA) was signed into law by
the USA in October, making it illegal for financial institutions to handle
online gambling transactions from US residents. The loss of US players
caused many legally-licensed companies to lose upwards of 50-60% of their
value overnight. It also caused many publicly-held companies to either sell
off US-facing parts of their companies or go private to avoid shareholder
lawsuits. Many companies are now regrouping around Europe with new games
offered in a variety of languages. Several large U.K operators appear
well-placed to take advantage of the new European laws. Gala Coral already
operate an Italian-language site and a betting shop in Genoa, William Hill
has a venture with Spanish firm Codere for Spain, and Ladbrokes completed a
deal with Italian firm Pianeta Scommesse back in August as well as buying
three betting shops in Turin last month. Meantime, many other countries such
as Spain and Belgium, who had formerly viewed gambling as marginally
acceptable, are now moving toward regulating the sector. This is due in
large part to increased access to gaming brought about by advances in
technology, because more people have access to the Internet, and because of
now-possible controls for regulation, enforcement and protection of minors
and at-risk users. Greece, Ireland, Hungary, Poland and the Czech Republic
are watching closely to see how early adopters fair.

Simultaneously, the European Commission is trying to ensure that any changes
to gambling laws across Europe comply with rulings by the EU that countries
not interfere with healthy competition. According to a judgment by the EU's
highest court, member states may place curbs on private gambling operators,
but these must be "non-discriminatory, proportionate and consistent".

This especially presents a challenge to countries, including Germany France
and Poland, to justify that present laws are not simply there to protect
state-owned gambling and lottery monopolies.

Charlie McCreevy, EU internal market commissioner, has already brought
infringement proceedings against at least half a dozen countries for
restrictions on betting markets.

Last month McCreevy told the European parliament that there is "Not a
chance," for consistent Europe-wide legislation on internet gambling at this
time.