Comments on the Proposed Changes of the Finnish Lotteries Act

March 4, 2009 2009

This article consists of a non-exhaustive review of the proposed changes to the Finnish Lotteries Act and official information and news gathered from media and the internet as regard to the changes in the Finnish gambling system.

Comments on the proposed changes to the finnish lotteries act (2001/1047)

This article consists of a non-exhaustive review of the proposed changes to the Finnish Lotteries Act and official information and news gathered from media and the internet as regard to the changes in the Finnish gambling system.

Executive summary


By expanding the definition of marketing in section 4 of proposed Lotteries Act to include “indirect adverting” and other marketing measures, the Government also expand the prohibition in section 62 of the Lotteries Act against marketing and organizing gaming services without a license. Therefore, the proposed amendments apply to the supply of online services (i.e. information society services) and fall within the scope of the notification directive.

The proposed changes to the Finnish Lotteries Act are aimed at preventing social issues and health problems in a more efficient way and to increase the possibilities for the authorities to intervene in illegal gambling activities. According to the Government the proposed changes, which have been communicated to the Commission, will come into force as soon as possible after the stand still period ends on 12 February 2009.

Despite the proposed prohibition against marketing of games connected with special risks for gambling problems, such as casino games, the Government gambling associations may continue to expose their brands and addresses to their internet gambling sites, for instance by offering sponsorship, even after the changes come into force. This demonstrates the inconsistency of the Finnish gambling regulation.

After the changes to the Lotteries Act come in to force, a lottery still may only be arranged by an association whose registered office is in Finland. Therefore, the Finnish gambling regulation may constitute discrimination on grounds of nationality and would hence be prohibited by EC law.

In spite of the fact that the main purpose with the proposed amendments of the Lotteries Act is to prevent social issues and health problems connected to gaming, the Finnish Government has plans to permit one of the Government gambling associations to arrange internet poker which – according to the proposition – is one of the games connected with special risks for gambling problems.

After the changes to the Lotteries Act come into force, it will still be a fact that (i) the Finnish Government gambling associations conducts extensive and aggressive marketing measures of their gambling services yearly, (ii) as a result of the new regulations, it will not only be easier for the Government to control the gambling business in Finland, but it will also increase the profit of the Government, since private competitors will be kept from the Finnish market in a more effective way and (iii) the Government’s view that gambling should not lead to profits for private businesses is contradictious, since the sales nets of the Government gambling associations in Finland are run by private entrepreneurs.

The main reasons behind the current – as well as the proposed Lotteries Act – seem to be to strengthen the finances of the Finnish Government, rather then protecting the public from the negative consequences gambling may cause, therefore the Finnish Government looses its right to call on social interests of protection as support for the restrictions of the free movements of services in the Lotteries Act.

It is a fact that the reasons of public good, referred to by the Finnish Government, can be fulfilled through other and less intrusive measures, hence the proposed changes to the Lotteries Act, as well as the current Lotteries Act must be considered as violations against Article 49 of the Treaty and the free movement of services.

With regard to recent media occurrences in Finland concerning the proposed changes of the Lotteries Act and the attached submission from the Federation of the Finnish Media Industry, it can be concluded that companies in the Finnish media sector believe that – after the proposed amendments come into force – all advertisement of gaming services has to stop and all foreign newspapers and magazines which include advertisement of gaming services can no longer be sold in Finland.

In conclusion, the proposed changes of the Lotteries Act strengthen the Finnish state controlled gaming monopoly and results in further restrictions of the free movement of services within the Community. Considering the motives given in the proposition and the fact that the definition of marketing has been expanded, one can make the assumption that the amendment of the prohibition in section 62 of the Lotteries Act will result in that the Finnish authorities – after the proposed changes come into force – will take further actions against media and gaming providers that advertise and/or organize gaming services without a license on the Finnish market.

•1.              Proposed changes to the Finnish Lotteries Act

On 26 June 2008 the Finnish Government proposed amendments to the Lotteries Act to parliament.[1] Below, we give a brief summary of the proposed changes and the effects the changes will have on the Finnish gaming system. The Government proposes that the changes will take effect as soon as possible.[2]

•1.1.         The new age limit

To protect minors from gaming addiction it is proposed in section 14 a of the Lotteries Act that the lower age limit for participating in gaming activities should be 18 years of age.

•1.2.        The new marketing provisions and penalty clauses

•1.2.1. The purpose of the new marketing provisions

The purpose of the proposed amendments to the Lotteries Act regarding marketing provisions are aimed at preventing social issues and health problems in a more efficient way and to increase the possibilities for the authorities to intervene in illegal gambling activities.

Both the new provisions in sections 14 b, 62-62 c, as well as the amended and extended definition of marketing in section 4 of the Lotteries Act, grant the Ministry of the Interior (hereinafter the “Ministry”) increased competence to decide on questions regarding prohibitions and injunctions as to gambling arranged without a gambling license according to section 11 of the Lotteries Act. According to the proposed provision in section 62 a of the Lotteries Act, the Ministry may direct a prohibition towards the person or the company arranging the gambling event as well as towards companies acting as intermediates with regards to notices and fees of participation in gambling events, making available spaces for slot machines or marketing gambling in any way.

•1.2.2. Defining marketing

Marketing is, according to section 4, paragraph 1; subsection 1 of the proposed Lotteries Act defined as:

“3) marketing shall mean advertising, indirect advertising, and other sales promotion activities; indirect advertising in particular is the promotion of a product in combination with the advertising for another product, where the distinctive mark of another product or its seller is used as such or recognizably adapted to the product, or where the advertising of another product conveys an image of a certain product or its seller” [3]

The definition of marketing measures is, according to the proposition, applicable on both marketing measures relating to allowed games (the proposed section 14 a) and marketing measures relating to illegal games or other lotteries (the proposed section 62). It can be read from the same definition that it corresponds well to the definition used in the Finnish Alcohol Act (FFS 1143/1994). From this follows that the same customs regarding supervision and court decisions as used in interpreting the definition in the Alcohol Act may be used while interpreting the definition in the Lotteries Act.

Marketing measures include actual direct advertisement for a gambling association or its games as well as indirect advertisement or other sales promoting activities. The term sales promoting activities is defined as a commercial procedure by which it is intended to directly influence the commercial decision of a consumer in relation to products or services.

The term “indirect advertisement” shall, according to the definition of marketing, in particular include the promotion of sale of lots in conjunction with advertisement measures for another product, in a way in which the hallmark of the product, unchanged or changed so that it is still recognizable, is an established hallmark for a lottery or someone arranging a lottery, or in a way that the advertisement for the other product in any other way is associated to a certain lottery or to someone arranging a lottery. Other sales promoting activities include, for example, sponsorship or free internet gaming sites, where the name or another sign for the person or the organization arranging the lottery is mentioned.

A commercial procedure which mainly has another purpose than influencing consumers into making commercial decisions in relation to products – such as commercial communication in the form of, for example, financial reports or business brochure aimed to investors – is not a matter of a sales promoting activity. Discussions about, for instance, the contents of the Finnish Lotteries Act or other social phenomena that are directly connected to the core of freedom of speech are, in the very same way, not a form of marketing according to the proposed definition in section 4, paragraph 1, subsection 3 of the Lotteries Act, even though the name of the organizer of the lottery is mentioned in the context.[4]

•1.2.3. Prohibition against marketing lotteries in section 62 of the Lotteries Act

The proposed prohibition against marketing of lotteries without a permit according to section 62, paragraph 2, and subsection 1 of the Lotteries Act is defined as follows:

“Prohibitions apply to:

1) selling or supplying tickets for a lottery run without a license required under this Act or marketing such a lottery” [5]

Considering statements in the proposition and the wording of section 62, paragraph 2, subsection 1 of the proposed Lotteries Act, one can make the assumption that the prohibition of marketing is still connected with the requirement of some sort of organization. From this conclusion follows that the guidelines put up by The Supreme Court in its decision 2005:27 (hereinafter the “PAF-case”), regarding when a lottery is to be supposed to have been organized in Finland, are still valid when assessing whether a marketing measure is allowed or not. Marketing is thus still assumed to be a part of organizing gambling (however, at the same time the meaning of the term “marketing” may be seen as expanded according to the proposed definition).

The reason why the expression “promoting lotteries by publishing or spreading advertisement or in any other corresponding way” in section 62 of the current Lotteries Act is suggested to be replaced with the single word marketing is, according to the proposition, that the current regulation has turned out to be ambiguous to interpret by the police in their preliminary investigations, by prosecutors and by courts. This, it is said, has led to a narrow interpretation of the expression.[6]

Taking into consideration the motive given in the proposition and the fact that so called indirect advertisement is included in the definition of marketing in section 4, subsection 3 of the proposed Lotteries Act, one can make the conclusion that the amendment of the prohibition in section 62 of the Lotteries Act aims at giving the authorities in Finland increased competence and further possibilities to take actions against media and providers of gaming services who advertise or organize lotteries without a license on the Finnish market.

•1.2.4. The Government gambling associations

The proposed changes to the Lotteries Act are an attempt to adjust the situation in accordance with the critique brought against the Finnish system by the Commission, in its reasoned opinion.

By introducing limiting provisions regarding the possibilities for the Government gambling associations – Oy Veikkaus Ab (the monopoly holder in Finland as to betting and lotto; hereinafter “Veikkaus”), Raha-Automaattiyhdistys (hereinafter “RAY“) and FinToto Oy (hereinafter “FinToto“) – to market their gambling services into section 14 b of the Lotteries Act, the Government wants to point out that the main reason for limiting the free movement of services within the Community in the Lotteries Act, is not to strengthen its finances, but to channel gambling to forms that are controllable and to protect the public against the negative aspects gambling may bring along into a society. This is discussed in more detail below.

From the proposition and the wording of section 14 b of the Lotteries Act, it can be read that marketing gambling products may not be done in form of aggressive sales promoting activities, but that the aim for the marketing measures is to concentrate on already existing demand of allowed gambling services or to distribute facts about gambling products.[7]

The marketing measures taken by the Government gambling associations will also in the future be supervised by the Ministry, which, according to the proposed section 62 b of the Lotteries Act, may ban marketing measures violating the Lotteries Act taken by the Government gambling associations. The Finnish Market Court may also, following an application from the Ministry and according to section 62 c of the Lotteries Act, unite a prohibition from the Ministry with a fine.

•1.2.5. The Government gambling associations are excluded from the prohibition against indirect marketing

It is clarified in the proposition that marketing of money games and gambling associations as a principle is allowed, if the marketing measures are taken in a responsible way and the purpose is to attract attention to already allowed games. The measures are, however, not allowed to be aimed at under aged or to create a positive image of excessive gambling. Measures aimed at games connected with special risks for gambling problems, such as casino games, are prohibited in other places than certain gambling halls, casinos and trotting tracks.

According to the proposition, however, the prohibition in section 14 b of the Lotteries Act does not limit the possibilities for the Government gambling associations, which arrange games associated with special risks for gambling problems, to market the association itself. Despite the prohibition in section 14 b of the Lotteries Act, the Government gambling associations are also allowed to give information about the gambling object, the gambling fees, the likelihood of winning and winnings regarding such games that are connected with special risks for gambling problems.

It may be concluded from the wording of both section 14 b of the current Lotteries Act and the proposition, that the Government gambling associations are excluded from the prohibition against indirect advertisement. Despite the prohibition against marketing of games connected with special risks for gambling problems, such as casino games, the Government gambling associations may continue to expose their brands and the addresses to their internet gaming sites, for instance by offering sponsorship. The gambling associations may thus continue to indirectly market their games, even though they are connected with special risks.[8] This demonstrates the inconsistency of the Finnish gambling regulation.

•1.3.        Discrimination on grounds of nationality

According to the Treaty itself and settled case law from the European Court of Justice (hereinafter the “ECJ“), article 49 of the Treaty prohibits any discrimination, on grounds of nationality, against a provider of services established in another Member State.[9] After the changes of the Finnish Lotteries Act will come in to force, the fact still remains that a lottery, according to article 5 of the Lotteries Act, may only be arranged by an association whose registered office is in Finland. As the Commission stated in their reasoned opinion sent to Finland on 23 March 2007, article 5 of the Lotteries Act may constitute a discrimination on grounds of nationality and therefore be prohibited.

•1.4.        Restrictions on the free movement of services

Considering a number of court cases from the ECJ, also the proposed changes of the Lotteries Act will imply restrictions to Article 49 of the Treaty. This conclusion is based on the fact that, according to section 4, 62, 62 a, 62 b and 62 c of the proposed Lotteries Act, providers of gaming services who are established in other Member States will still be obstructed from advertising and making their service available in Finland. The ECJ also stated in the Gourmet-case that a prohibition on advertising – such as the prohibition in section 62 of the proposed Lotteries Act – has a particular effect on the cross-border supply of advertising space and thereby constitutes a restriction on the free movement of services within the meaning of Article 49 of the Treaty.[10]

According to settled case law from the ECJ, restrictions of the free movement of services may only be justified by imperative requirements in the general interest (such as consumer protection and the prevention of both fraud and incitement to squander on gaming). In order to be justified, the restrictions must also (i) be suitable for achieving the objective which they pursue and not go beyond what is necessary in order to attain it, (ii) serve to limit betting activities in a consistent and systematic manner and (iii) be applied without discrimination on grounds of nationality.[11]

•1.4.1. Imperative requirements in the general interest

The new conditions in the proposed Lotteries Act have to some extent been adjusted in accordance with critique the Commission gave Finland in its reasoned opinion. In particular, the new conditions regarding marketing measures in section 14 of the proposed Lotteries Act, as mentioned above, is one example of such an adjustment. Even though some efforts hence seem to have been made by the Finnish Government, the following facts will, very likely, remain:

•a)      The Government gaming associations in Finland conduct extensive and aggressive marketing measures of their gambling services yearly. Even though Veikkaus has been criticized by the Commission, the company keeps strengthening its brand by sponsoring and advertising at sales points and sports venues etc.;

•b)      In spite of the fact that the main purpose with the proposed amendments of the Lotteries Act is to prevent social issues and health problems connected to gaming, the Finnish Government has plans to permit RAY to arrange internet poker which – according to the proposition – is one of the games connected with  special risks for gambling problems,

•c)      The restriction against trading of gambling services across the border is further strengthened when sections 4, 62, 62 a, 62 b and 62 c of the proposed Lotteries Act come into force. As a result of the new conditions, it will not only be easier for the Government to control the gambling business in Finland, but it will also increase the profit of the Government, since private competitors will be kept from the Finnish market in a more effective way;

•d)      The Government’s view that gambling should not lead to profits for private businesses is contradictious, since the sales nets of the gambling associations in Finland are run by private entrepreneurs. The entrepreneurs are also gained through the marketing measures, the investments and the high stakes profit demands taken by the Government gaming organizations.

Since the obvious main reasons behind the current as well as the proposed Lotteries Act seem to be strengthening the finances of the Finnish Government – rather then protecting the public from the negative consequences gambling may cause and limit betting activities in a consistent and systematic manner – the Government looses its right to call on social interests of protection as support for the restrictions of free movement of services in the Finnish Lotteries Act.

•1.4.2. Proportionality

It is a fact that the reasons of public good, referred to by the Government, can be fulfilled through other and less intrusive measures, therefore the proposed changes to the Lotteries Act, as well as the current sections of the Finnish Lotteries Act, must be considered as violations against Article 49 of the Treaty and the free movement of services. This conclusion is also supported by the ECJ’s reasoning in the Gambelli-case, in which the Court considered that the Italian system, which resembles the Finnish system in many ways, was above and beyond what can be considered as necessary to gain the protective interests referred to by the Government.[12]

•2.             Questions of EC law which indicate that marketing cannot be considered to form part of the organization of a lottery

The principle of the country of origin of the broadcast in the TV Directive[13] – as EC law – takes precedence over Finnish national law.[14] This means that gaming providers have the right to market their services on foreign TV and radio channels that can be seen and heard in Finland, for example channels owned by Viasat, as long as the broadcast originates from the United Kingdom or another Member State in which marketing of gaming services is permitted.

The provisions contained in the TV Directive concerning the principle of the country of origin of the broadcast also mean that Finnish authorities, when assessing what is to constitute unlawful organization of lotteries in accordance with the proposed changes to section 62 of the Finnish Lotteries Act – as well as the current section 62 of the Lotteries Act – should not be permitted to take into account the circumstance that gaming providers market their services on foreign TV and radio channels that can be seen and heard in Finland. However, on the basis of the Supreme Court judgment in the PAF-case, it may be stated that the Supreme Court nevertheless took into account marketing activities as a basis for its assessment concerning the “organization” requirement. The case in question did not in itself involve judging TV advertisements on the basis of the TV Directive.

•3.             Effects of the proposed changes

Both the new provisions in sections 14 b, 62-62 c, as well as the amended and extended definition of marketing in section 4 of the Lotteries Act, grant the Ministry increased competence to decide on questions regarding prohibitions and injunctions as to gambling organized without a gambling license according to section 11 of the Lotteries Act. The proposed changes of the Lotteries Act therefore only strengthen the Finnish state controlled gaming monopoly.

Considering the motive given in the proposition that “the current regulation has turned out to be ambiguous to interpret by the police in their preliminary investigations, by prosecutors and by courts which has led to a narrow interpretation of the expression[15] and the fact that the definition of marketing has been expanded, one can make the assumption that the amendment of the prohibition in section 62 of the Lotteries Act will result in that the Finnish authorities – after the proposed changes come into force – will take further actions against media and gaming providers that advertise and/or organize gaming services without a license on the Finnish market. The Finnish Government has also clearly stated in the proposition that one of the main reasons with the proposed changes of the Lotteries Act is to increase the possibilities for the authorities to intervene in illegal gambling activities.

As the ECJ stated in the Gourmet-case, a prohibition on advertising has a particular effect on the cross-border supply of advertising space and other marketing services. [16] Therefore, it is important that a restriction – such as the prohibition in section 62 of the proposed Lotteries Act – is suitable for achieving the objective which it pursue and not go beyond what is necessary in order to attain it. A prohibition regarding advertisement of gaming services should also – according to settled case law from the ECJ – limit betting activities in a consistent and systematic manner.

The proposition does not contain an explanation how/why the expanded prohibition against marketing and organizing lotteries will limit betting activities in a consistent and systematic manner or prevent health problem connected with gaming. In view of the fact, that the Government gambling associations may – despite the proposed prohibition against marketing of games connected with special risks for gambling problems in section 14 b of the Lotteries Act – continue to expose their brands and addresses to their internet gaming sites and (ii) that there is plans to permit RAY to arrange internet poker which – according to the proposition – is one of the games connected with a special risk for gambling problems it is hard to understand how the proposed changes of the Lotteries Act will limit betting activities in a consistent and systematic manner or prevent health problem connected with gaming.

With regard to recent media occurrences in Finland and the attached submission from the Federation of the Finnish Media Industry, it can also be concluded that companies in the Finnish media sector believe that – after the proposed amendments come into force – all advertisement of gaming services has to stop and all foreign newspapers and magazines which include advertisement of gaming services can no longer be sold in Finland. MTV Oy – one of the biggest multi-media/TV groups in Finland – has already canceled advertising and other cooperation agreements with gaming providers.

•4.             Technical standards and regulations

According to article 8 directive of directive 98/34/EC[17] of the European Parliament and of the Council, changed by directive 98/48/EC[18] of the European Parliament and of the Council (the “Directives“) technical standards and regulations imposed by Member States shall be immediately communicated to the Commission:

“1. Subject to Article 10, Member States shall

immediately communicate to the Commission any draft

technical regulation, except where it merely transposes

the full text of an international or European standard, in

which case information regarding the relevant standard

shall suffice; they shall also let the Commission have a

statement of the grounds which make the enactment of

such a technical regulation necessary, where these have

not already been made clear in the draft.

——–

3. Member States shall communicate the definitive text

of a technical regulation to the Commission without

delay.”

If a Member State fails to communicate a technical standard to the Commission, the Member Sate in question according to article 9 of the Directives has to postpone the adoption of a draft technical regulation:

“1. Member States shall postpone the adoption of a draft

technical regulation for three months from the date of

receipt by the Commission of the communication referred

to in Article 8(1).”

The ECJ held in Lindberg v Kingdom of Sweden that a Member State has to postpone a proposed regulation that constitutes a technical standard with several months, until the Commission has been able to try if the proposed technical standard complies with EC-law.[19]

•4.1.        Definition of technical standards and regulations

In the Directives the term “technical regulation” is define in article 1 (9):

“9. ‘technical regulation’, technical specifications and

other requirements, including the relevant

administrative provisions, the observance of which is

compulsory, de jure or de facto, in the case of

marketing or use in a Member State or a major part

thereof, as well as laws, regulations or administrative

provisions of Member States, except those provided

for in Article 10, prohibiting the manufacture,

importation, marketing or use of a product.

De facto technical regulations include:

– laws, regulations or administrative provisions of

a Member State which refer either to technical

specifications or other requirements or to

professional codes or codes of practice which in

turn refer to technical specifications or other

requirements and compliance with which confers

a presumption of conformity with the obligations

imposed by the aforementioned laws, regulations

or administrative provisions…

From the definition of a technical regulation in article 1 (9) of the Directives together with the definition of a service in article 1 (2) of the Directives follows that a Member State must communicate any proposed technical standards regarding services to the Commission:

“2. “service”, any Information Society service, that is

to say, any service normally provided for remuneration,

at a distance, by electronic means and

at the individual request of a recipient of

services.

For the purposes of this definition:

– “at a distance” means that the service is

provided without the parties being simultaneously

present,

– “by electronic” means that the service

is sent initially and received at its destination

by means of electronic equipment for

the processing (including digital compression)

and storage of data, and entirely transmitted,

conveyed and received by wire, by

radio, by optical means or by other electromagnetic

means,

– “at the individual request of a recipient of

services” means that the service is provided

through the transmission of data on individual

request…”

With reference to the definition of a service in article 1 (2) of the Directives, the definition of a technical regulation in article 1 (9) of the Directives and ECJ case law, it can be concluded that any proposed national regulation that restrict the freedom to provide services within the Community shall according to article 8 of the Directives be communicated to the Commission.[20]

In spite of the fact that it is clearly stated in the proposition that the proposed changes of the Finnish Lotteries Act do not – according to the Directives – include any technical standards and regulations, the Government on 11 November 2008 decided to communicate the proposed changes to the Commission.[21]

In light of the above, it must bee understood that the proposed changes of the Finnish Lotteries Act – according to the Directives – include technical regulations which restrict the free movement of services within the Community. This conclusion is based on the fact that, according to Articles 4, 62, 62 a, 62 b and 62 c of the proposed Lotteries Act, entities established in other Member States will be obstructed from advertising and making their service available in Finland.

By expanding the definition of marketing in section 4 of proposed Lotteries Act to include “indirect adverting” and other marketing measures, the Government also expand the prohibition in section 62 of the Lotteries Act against marketing and organizing gaming services without a license. Therefore, the proposed amendments does not only restrict the supply of online services (i.e. information society services) but also other services – such as the distribution/sale of newspapers and magazines, the broadcasting of TV shows and sports events etc. –  which include advertisement of gaming services without a license.

•5.             media occurrences in Finland

On 11 November 2008 MTV Oy, the owner of the TV channels MTV 3 and SUB, announced in the newspaper Markkinointi & Mainonta that the company, with regard to the proposed changes of the Finnish Lotteries Act, will cancel the TV show “Pokerithäti” [Poker star].

Pokeritähti is an entertainment-educational TV show consisting of a poker tournament and interviews of well-known Finnish people. The free poker tournament is a free-roll tournament with monetary prizes for the winners (play for fun).

The TV show has been successfully broadcasted for two seasons in the Finnish TV channels Nelonen and MTV 3, the second season more than doubling the viewer amounts. Unibet has, via the play for free site Unibet.fi, sponsored the TV show. Pokeritähti TV-show’s other partners were Tallink Group – which is one of the biggest ferries and hotels group in Finland – and Pokerielämys Oy, which is one of the biggest event companies.

Unibet concluded successfully discussions with MTV Oy of having a third season (2009) produced and broadcasted. However, under the threat of the proposed changes of the Finnish Lotteries Act and the expanded prohibition against organizing and advertisement of gaming services, MTV Oy was forced to end its cooperation with Unibet and cancel the TV show Pokerithäti.

In the article, MTV Oy also stressed out the fact that – after the proposed amendments come into force – all advertisement of gaming services probably has to stop and all foreign newspapers and magazines, which include advertisement of gaming services, can no longer be sold in Finland.

***************************

As a final conclusion, we note the following statement from the proposition: “according to the government program of prime minister Matti Vanhanen’s second government, the Government takes necessary measures to limit social problems connected with gambling, to fight criminality and to keep and protect the system of gambling and betting monopoly in the changeable, international world that surround us and to make sure that the authorities have enough resources to intervene in the offering of illegal gambling  and betting services“.[22] With reference to “necessary measures”, the Government seems content with the fact that the proposed changes would satisfy the Commission.


[1] Government proposition no. 96/2008 (HE 96/2008).

[2] Government proposition 96/2008, p. 1.

[3] Government proposition 96/2008, pp. 19-20.

[4] Government proposition 96/2008, p. 7.

[5] Government proposition 96/2008, p. 15.

[6] Government proposition 96/2008, p. 11.

[7] Government proposition 96/2008, pp. 9-10.

[8] Government proposition 96/2008, pp. 9-12.

[9] Case C-131/01, Commission v Italy [2003], ECR I-1659, paragraph 26.

[10] Case C-405/98 Gourmet [2001], ECR I-01795, paragraph 39.

[11] Case C-243/01, Gambelli and Others [2003], paragraphs 65 and 67.

[12]  Case C-243/01, Gambelli and Others [2003].

[13] Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by Law, Regulation or Administrative Action in Member States concerning the pursuit of television broadcasting activities.

[14] Case 6/64, Costa v ENEL, REG 1964 page 585; Swedish special edition, volume 1.

[15] Government proposition 96/2008, p. 11.

[16] Case C-405/98 Gourmet [2001], ECR I-01795, paragraph 39.

[17] Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations.

[18] Directive 98/48/EC[18] of the European Parliament and of the Council of 20 July 1998 amending Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations.

[19] See ECJ’s judgement in Case C-267/03, Lindberg [2005].

[20] See ECJ’s judgement in Case C-275/92, Schindler [1994], ECR I-01039; Case C-243/01, Gambelli and Others [2003].

[21] Government proposition 96/2008, p. 6.

[22] Government proposition 96/2008, page 5.

Legitimacy of the OPAP monopoly challenged

February 16, 2009 2009

The legitimacy of the OPAP monopoly has been challenged. The two Reporting Judges of the Greek Council of State recommended that the Greek betting monopoly, OPAP S.A. should be referred to the European Court of Justice.

In cases presented by two British sports betting operators, Stanleybet International and William Hill, the Reporting Judges questioned the legitimacy of the OPAP monopoly. For the first time in Greece, the Reporting Judges of its Highest Administrative Court, the Greek Council of State, have declared the monopoly in Greek sports-betting granted to a private entity, OPAP, as noncompliant with EU law.

The Reporting Judges stated that the legitimate right under EU law for licence applications to be made by Stanleybet International and William Hill had not been upheld by the Greek authorities who had refused to consider the operators’ requests for licences. The Reporting Judges went on to state that the monopolistic position granted to OPAP S.A. is not proportionate, justified, nor consistent with EU law.

Clive Hawkswood, chief executive of the RGA, said the references to the ECJ from various national courts are becoming endemic across the EU and they all raise one common issue: Are restrictive national gambling legislations of EU Member States consistent with the EU Treaty?

“We believe that the vast majority of them are not and it is disappointing that the European Commission, as the designated guardian of the EU Treaty, has remained so silent on these fundamental points for the last 12 months,” said Hawkswood.

Proposed changes to Finnish lotteries act raise EC’s concerns

February 16, 2009 2009

The European Gaming and Betting Association (EGBA) has welcomed the the European Commission’s decision to issue formal Comments against the proposed changes to the Finnish lotteries act.

Comments issued by the European Commission in the context of the notification procedure mean that it considers that the text submitted raises issues or requires further details for clarified interpretation.

According to the Association, these changes, if implemented, would increase the extent of the breach of EU law that is already the subject of an EC infringement procedure.

The EGBA highlighted that the new draft provisions introduce even further restrictions on indirect marketing of gambling services for operators without a Finnish licence, as well as fines and prison sentences of up to two years for both media and online gaming companies operating or marketing such activities. These additional restrictions are, however, not aimed at enhancing consumer protection in a consistent and systematic manner as they will not apply to the Finnish government’s own gambling activities which will still be allowed to conduct extensive and aggressive marketing campaigns.

Sigrid Ligné, EGBA Secretary General, said, “This shows all too clearly that the Finnish authorities have for the past two years – during which the Commission has been delaying Finland’s referral to the ECJ – enhanced their protectionist legislation rather than removed it.”

“The Commission’s patience has clearly not paid off. We now call on the Guardian of the Treaty to defend our rights and to bring Finland to the ECJ.”

Live Real money Texas Hold’em Poker tournaments legalized out of casinos in France

January 9, 2009 2009

After a crisis meeting with casino representatives in the middle of November, the French Home Affairs Minister, Michèle Alliot-Marie promised to reflate the casino industry by authorizing the organization of live real money Texas Hold’em tournaments out of the confines of casinos but under their control and responsibility. The 24 December 2008 decree concerning casino games concretizes this proposal.

Live real money poker tournaments have become more and more popular, and casino managers needed more flexibility to organize such tournaments. According to casinos representatives, even if this point was not one of the major priorities to relaunch the sector (1), it will have a positive impact.

The 24 December 2008 decree modifies an important decree of 14 May 2007 which introduced Texas Hold’em Poker into casinos for the first time and specified detailed rules concerning the different sequences of the game. The scope of these decrees is limited to casino games’ regulation.

Article 19 of the 2008 decree specifies that “casinos can organize texas hold’em poker tournaments, with prizes at stake, in their gaming room or in premises guaranteeing the same level of sincerity and security in games operations”.

From this article we can infer that the responsibility to ensure sincerity and security in games operations rests on casinos shoulders as though the tournament took place in their own premises.

In order to ensure transparency, tournament rules and conditions shall be transmitted to public authorities and notably to the Home Affair Ministry at least twenty one days before the event.

The decree does not specify any territorial limit to the organization of live real money Texas Hold’em Poker tournaments. In theory, a casino is thus authorized to organize such tournament every where in France as long as honesty and security are ensured.

The decree also relaxes the regime applicable to preliminary tournaments (2) originally limited to 100 per casino and per year. The amount of such tournaments is no more restricted and following article 20, casinos are no longer required to award cash money to winners but can offer stakes for another tournament.

If the new decree makes casino games’ regulation look more flexible, there is no doubt that public authorities will keep on imposing a strict control. Nevertheless these measures are favorable to casinos who are now free to organize larger and plentiful events.

(1) Casinos’ representatives firstly requested a tax suspension and the right to operate casino games online

(2) Small tournaments in which the winner gets the right to take part in a major tournament at least cost. Such tournaments are organized before the main event to attract more people to major tournaments.

Source: Arrêté du 24 décembre 2008 relatif à la réglementation des jeux dans les casinos, JORF n°0303 du 30 décembre 2008 page 20411, texte n° 40, NOR: IOCD0829527A

Rien ne va plus in the French Casinos

December 4, 2008 2008

The French Casinos have decided to have their voice heard. They have reached a situation of extreme difficulties whereby they require the French public authorities, at both the federal level as well as local level, to know of their concerns regarding the current state of the French gaming market. The French Casinos have requested the government to enact remedies which will allow French Casinos to become more competitive.

The French Casinos have decided to have their voice heard. They have reached a situation of extreme difficulties whereby they require the French public authorities, at both the federal level as well as local level, to know of their concerns regarding the current state of the French gaming market. The French Casinos have requested the government to enact remedies which will allow French Casinos to become more competitive.

Despite many warnings over the last number of years, the French Government now finally appears ready to undertake a series of initial action to assist French Casinos. But to what extent will these actions allow the Casinos to regain a competitive edge?

The Casino industry in France consists of 197 casinos, which employ 18,200 employees, and operate 22,000 slot machines in addition to roulette and poker. At the end of 2006-2007, the gross revenue reached
€ 2.8 million, which represented an increase of 3.07% over prior years. In comparison, the gross revenue fell by 13.5%, with a decrease of 20% recorded in September alone, during 2008.

French Casinos have expressed their dissatisfaction with the current legal system and tax regime. French Casinos have warned the public authorities for years. In the words of a director of one of the leading French Casinos: “[w]hen the casino coughs, the municipality gets a cold.”

As an example, Barbazan (a municipality in southern France) received € 529 000 in 2007 from casino tax payments, which represents 74% of its budget. Barbazan was a town of 350 inhabitants before the opening of its casino. One hundred new inhabitants relocated to Barbazan as a result of the construction of the casino, which has generated hundreds of jobs and commercial opportunities.

In total, € 245 million in taxes have been paid by French Casinos to municipalities. This tax figure excludes additional revenue received from employee wage payments and revenue derived from connected activities (such as resorts and entertainment, etc…).

Considering that some of the French Casinos are now in the process of laying-off employees, or even face the prospect of ceasing operations, the economic crisis will not only affect the French Casinos, but also the municipalities where the casinos are located.

Reasons for such a crisis

There are multiple factors which have directly and indirectly caused the French Casinos to face losses in revenue during 2008.

First, the smoking ban which became effective on January 1, 2008, has radically changed the habits of players. Players were used to being able to smoke and drink while playing. Instead of quitting smoking, players have preferred to neglect the casino properties and now play at home via the internet in order to keep smoking while gambling.

Second, as a consequence of the financial crisis and a general declining economic atmosphere, casinos have experienced an even greater decrease in players frequenting their properties.

Third, the strict identification and registration process for anyone to enter casinos premises in France has had a negative effect on the number of players entering casinos and, thus, likely contributed to a decline in gaming revenue. Such traceability of players and money may have contributed to regular casino patrons electing to play at foreign casinos in countries bordering France.

Finally, the French Casinos suffer from unfair competition from online gaming operators. According to French law, internet gaming is generally prohibited except in limited circumstances. Specifically, online gaming is only authorized by virtue of an exemption for the historic gaming actors in France: the two State monopolies, the Française des Jeux (FDJ) and the Pari Mutuel Urbain (PMU). Hence, these two majors gaming businesses are free to offer gaming opportunities which French Casinos are otherwise strictly prohibited from offering. Newly authorized casinos have even been sued in French courts when they attempt to enter the online market, whereas operators licensed by other Member States of the European Union are “free” to proceed to offer online gaming in France.

Opening of the market… any prospect for French Casinos?

On June 11, 2008, the French Government announced it would open its gaming markets as a result of pressure from the European Commission.

The imminence of a new legal framework has been confirmed; the main features of the new liberalized gaming law has been announced. However, because the legal process to open the French gaming market is still at a political stage, the new law is still an evolving work in progress. The French Parliament must still enact legislation and final amendments to the law may be made by the President. Therefore, the details which have been announced may be subject to subsequent changes. Moreover, implementing the new legal framework may not begin until the second half of 2009.

Opening up the French gaming market will primarily be directed at on-line gaming (which excludes off-line gaming such as lotteries, which will remain within the scope of the State monopoly “la Française des Jeux”, as Casinos being subject to special authorizations of the Ministry of Home Affairs and as Gaming Clubs (Cercles de Jeux) or Phone Gaming).

On-line gaming which may be authorized under the new gaming law regime include:

– betting on sport events;
– mutual betting on horse races and fixed odds betting for all other sports betting;
– poker and maybe a limited number of other games currently offered in Casinos and Gaming Clubs (“Cercles de jeux”), such as backgammon.

As a result, betting on virtual events, the financial market, spread betting or on results not linked to a true sports event are excluded from the liberalization of the French gaming laws. These games will remain prohibited under the new gaming law, as is the case under current French law. In addition, lotteries and slot machines will be excluded from the new law, even for online versions.

As far as French Casinos are concerned, the restrictions represent for online lotteries and slot machines their main point of contention because it prevents the French Casinos from developing a very lucrative business activity within the “information society.” It is well known that la Française des Jeux competes in these sectors of the gaming market. La Française des Jeux holds a State monopoly, which is officially justified by reasons of social health and public order. In reality the activities of la Française des Jeux represent a huge source of income for France.

On the positive side, as a result of the opening of the French gaming market, French Casinos will finally be officially allowed to operate online poker. Hence, the new regulation aims at creating a real opportunity for larger operators, which are able to fulfill all licensing criteria, to target the French online gaming market. This system tends to promote already operating and licensed large operators willing to adopt some responsible gaming measures and be subject to France’s control, as opposed to illegal or smaller entities. That is, the terrestrial casinos may have some preference in obtaining an online gaming license.

However, the new system is far from being adopted and implemented and does not even meet the main expectations of the French Casinos.

Latest measures announced in order to help the Casinos

Following up to a meeting held by the French Minister of Home Affairs, Michèle Alliot-Marie, with French Casinos representatives on November 14, 2008, the Minister officially proposed some measures to support terrestrial casinos facing the dramatic impact of the economic crisis.

Taking into consideration the popular success of poker tournaments, Michèle Alliot-Marie announced a relaxation of restrictions with regard to the organization of such tournaments. By the end of 2009, the number of tournaments will no longer be limited. In addition, French Casinos will be authorized to organise competitions off their premises, which is not authorized under the current gaming law.

Moreover, the Ministry assured casinos that the procedure authorizing new games will be considerably reduced.

Finally, conditions to request additional slot machines or further casinos games will be also relaxed with the aim of bringing players back to casinos.

Even if casinos representatives have expressed some satisfaction from the already announced changes, they are still waiting for answers regarding their main requests.

Main requests still unsatisfied

The Casinos have repeatedly pointed to the loss of revenue due to competition from online gaming. The new gaming law, which would potentially allow casinos to partially develop online activities, is still at a drafting stage. Considering the unfair competition domestic French casinos face and overall economic difficulties, French Casinos have requested a global review of the tax system. They have officially called for:

– an immediate decrease of or exemption from taxes until the new gaming law is in place;
– an update of the rates for the progressive tax, which has been obsolete for 22 years because of inflation;
– a distinction in the tax applicable to, on the one hand slot machines and, on the other hand table games, whereby the tax rate on table games should take into account the value generated from the greater employment table games generate in casinos;
– a strict limitation of 15% of the global tax payments should be shared with the municipalities.

These requests have been unfulfilled thus far and the draft legislation authorizing online gaming has been too restrictive for French Casinos. As a result, some French Casinos are seeking alternative solutions to contain their losses.

When the Casinos start to bet on the law…

Losing patience and excited by the success of online poker free rolls offer (up to 4000 players online simultaneously), The Partouche Group, one of the European leaders in terrestrial casinos, decided to promote a new online poker game with real money – which is absolutely illegal under current French law. This new offer is now available for French players on https://poker.partouche-game.com.

Partouche is the first French casino to cross the red line and challenge the French government. Nonetheless, as long as the current French gaming law system is the subject of criticism by the European Commission and the liberalization reforms for online gambling are still in progress, it is very unlikely that any prosecution will be made. On the other hand, who knows what will be decided under the future licensing system: could one bet that the new French gaming law will have some future consequences for Partouche to obtain a License?

Legal Gaming in Europe Summit 2013 – Summary Day 1

Legal Gaming in Europe Summit 2013 Day 1 Summary Video







Video: International Gaming Law Summit 2011 Highlights

International Gaming Law Summit 2011 Highlights Video



Copyright: http://www.calvinayre.com

To get the latest news follow us on

twitterlinkedintwitterlinkedin

Archives