Update Regarding EC Commission’s Position on Draft French Gaming Law

Following the notification procedure, the European Commission rendered its comments on the last Draft French Gaming Law as amended by the French National Assembly Commission works and after the French Government’s reply, on July 9th, 2009.
As a result, at this stage of the proceedings, the Draft Law has not yet been given green light by the EC Commission.

Following the notification (in accordance with Directive 98/34/CE) of the Draft French Gaming Law (hereinafter referred to as the “Draft Law”), the EC Commission rendered its detailed opinion on the above-mentioned Draft Law on June 8th, 2009. On September 1st, 2009, the EC Commission commented on the French Government’s reply, on July 9th, 2009, to the aforementioned detailed opinion and took into account the latest amendments of the Draft Law at the French National Assembly. As a result, at this stage of the proceedings, the Draft Law has not yet been given green light by the EC Commission.

Considering the European Commission’s comments, the latter and France are on the right way to reach a compromise regarding the Draft Law’s provisions which are alleged to be incompatible with EU law.

EC Commission’s comments on the French Government’s reply to its detailed opinion will be briefly summarized below.

• As regards Article 16 of the Draft Law providing for a licensing system with respect to online gaming operators, the EC Commission welcomed the proposal by the French Authorities to amend the wording of the Draft Law so as to take into account the requirements to which the requesting online gaming operator is already subjected in its country of establishment.

• As regards Article 52 of the Draft Law which provides for an obligation for all licensed online gaming operators to obtain consent from the operating right owner of the sport event, the EC Commission noted that the aforementioned provision applies equally to the use of French sporting events both by foreign and domestic online gaming operators. In these circumstances, the EC Commission would welcome a commitment by the French Authorities to carry out a business impact assessment two years after the entry into force of the provision in question, with a special emphasis on its impact on the free movement of services as well as the contribution of such a provision to sports development and the guarantee of integrity of the sport.

• As regards Article 8 of the Draft Law which provides for a maximum return per player ratio, the EC Commission noted that the aforementioned provision applies equally to both domestic operators and operators licensed in another Member State of the EU and the EEA. In addition, the EC Commission noted the concerns of the French Authorities relating to public and social order, but it would welcome further evidence of the appropriateness and proportionality of such a provision. In these circumstances, the EC Commission welcomed the proposal by the French Authorities to conduct a study to assess the benefits of this provision from the perspective of public and social order, within two years after the entry into force of the Draft Law.

• As regards Article 39 of the Draft Law which provides for an obligation to have a fiscal representative established in France, the EC Commission noted the response of the French Authorities about the lack of any form of assistance or cooperation in administrative levies on gambling (recovery of taxation affecting the operators of online games), and the intention to include such provisions during renegotiation of bilateral tax agreements so as to eliminate the requirement for the establishment in France of a fiscal representative.

In any event, the EC Commission will carry out an overall assessment of the Draft Law’s final version adopted by the French Parliament. The plenary session of the National Assemblee should take place the 7,8,9 October for scrutiny. Once the text is adopted by the deputees it will be transmitted to the Higher Chamber. The Government plans to see the final version of the law adopted by the end of 2009.

Furthermore, France will still have to notify the Draft Law’s implementing acts so as to enable the EC Commission to assess their compatibility with EU law. This should intervene in the beginning of 2010.

According to the Government’s expectations, the entire licensing system is likely to be operational before the Football World Cup starting in June.