Interview with Dr. Wulf Hambach, Partner of law firm Hambach & Hambach

Bulletbusiness.com’s Legal Gaming Special

“States are wounding themselves if they stick on to the old fashioned monopoly approach”

Even as some of the key markets across Europe are contemplating the idea of opening their respective online gambling sectors, and some level of co-operation between Member States is inevitable, the region is still a long way from any system of pan-European regulation.

Achieving agreement between governments and regulators on detailed regulations will be an extremely difficult task. At the same time, there are a number of key issues that they should be able to agree on without too much trouble and these relate to consumer protection, crime prevention, and combating problem and underage gambling. Of course, there are existing laws and mechanisms that also already apply in areas related to money laundering, fraud and corruption.

Assessing the situation, Dr. Wulf Hambach, Partner of law firm Hambach & Hambach told Bulletbusiness.com it is indeed in the interest of the European governments to regulate this interesting market.

“Without regulation or even worse with regulations like the German one including an Internet ban, the black market is growing, the players are unprotected and the states go away empty-handed. A common approach aiming at a liberalised online gambling market in consequence of their own interests and the pressure of the European Commission as well as the ECJ decisions is probable but unfortunately it will still take some time, ” said Hambach, who is scheduled to speak during Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009, to be held in London on 26-27 January.

Elaborating on the issue of players being unprotected and governments completely losing control of their tax revenues in today’s environment, he said, “I am definitely convinced that the states are wounding themselves if they stick on to the old fashioned monopoly approach in times of the digital age. The consequence of an Internet gambling ban and a monopoly that is not allowed to advertise in a normal manner for the products leads to the fact that players stop playing with state operators but go to the Internet where they have the possibility to choose between thousands of internet gambling operators.”

“The negative consequence is of course that, if the player and customer is not able to find out immediately after using an online gaming product whether this product or gaming operator is credible or not and if the gaming operators do have an effective responsible gaming programme or not, the player is left alone in the cyberspace. Therefore, not only tax money is staying out of the monopoly jurisdiction but also the gamblers and players are endangered by the uncontrolled offer in the Internet.”

Hambach also spoke about current status and issues related to Germany. Excerpts:

On major developments in Germany: The major issue of 2008 in Germany was definitely the enactment of the Interstate Gambling Treaty on the 1st of January 2008 and the reaction of courts, the new gambling authorities and operators in the light of this UIGEA style. As before the enactment of the Interstate Gambling Treaty we still have the situation of legal chaos in the way that courts decide in some cases that the Interstate Gambling Treaty is in accordance with German Constitutional Law and with European Law and others, who declare the Interstate Gambling Treaty not being valid in accordance with EU Law and national laws.

This lack of clarity definitely leads to the fact that most of the EU gaming operators decided to stay on the promising German gambling market and fight the cases through in case they are attacked by the German gambling authorities. The question of the opening up of German gambling market definitely depends on the development of European law level and the future decisions of the European Court of Justice.

On how can operators benefit in the time to come: First of all we received a very strong, supporting statement of the European Commission. This brief by the Commission to the ECJ relates to proceedings conducted by the Gibraltarian online gambling provider Carmen Media (represented by the law firm Hambach & Hambach) before the Administrative Court of the German Federal State of Schleswig-Holstein. At the beginning of 2008, the Administrative Court decided to suspend the proceedings and to refer the decisive questions regarding European law to the ECJ for a preliminary ruling. So, we hope that the ECJ will follow our and the Commission’s legal statement when replying to the Administrative Court. In this case the ECJ will come to the conclusion that the German State Treaty on Gambling violates higher-ranking Community law due to the incoherence of the German gambling regulations. Should the ECJ follow this opinion, German courts would have to cease application of the regulations which violate European law.

Secondly, the political discussions do not cease on European and national level. The French Government announced it would open its gaming markets as a result of pressure from the European Commission. The Italian Government realised that a legalised Internet gambling offer is necessary for the protection of the Italian citizens and to control and tax this market. Additionally all European institutions are discussing how to regulate online gambling. An independent expert opinion was published by the European Parliament’s Internal Market and Consumer Protection Committee – IMCO and comes to the conclusion that “some form of Code of Conduct is the best way forward, since it would allow Member States to leave their differences on one side and concentrate on issues seen as important across the whole EU.”

On whether operators should be individually licenced in each jurisdiction: In my point of view, a regulation on European level is preferable as the requirements for online gambling offers regarding consumer or minor protection should be the same.

Furthermore the e-Commerce Directive installed the principle of origin for online offers not without cause. Also for the European gambling market operators who are licensed in one state should be allowed to provide their services in all Member States. If a license per member state – or even worse – 16 licences e.g. in Germany for all German Federal States – are required, smaller operators simply cannot bear the costs of this marathon and fair competition is prevented. Nevertheless, their online offer will be available in all Member States and so they will be obliged to ensure that players from states where the operators do not hold a license are blocked. Again the smaller operators will have to pay for geo-localisation tools without being certain that they can guarantee that all foreign players are blocked. Legal conflicts are inevitable.

Role of Bullet Business and Gaminglaw.eu partnership going forward: The partnership between Bullet Business and a portal with special information of the gaming laws around Europe is a big profit for the gaming industry as on the one hand legal information is provided and on the other hand industry information from a gaming industry service Bullet Business. I see that the partnership will develop into a long term relationship with more and more improvements where industry news and legal news will shape the future of gambling regulations as they define the needs and the weaknesses of gambling law systems.

Ritesh Gupta

Bulletbusiness.com

3rd Legal Gaming in Europe Summit 2009

Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009 is scheduled to take place in London on 26-27 January.

For more information visit: http://www.bulletbusiness.com/legaleurope09/agenda.shtml

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Contact:

Ben Satchwell at +442073757163 or email ben@bulletbusiness.com