MPs challenge Google’s decision to allow gambling advertising in the UK

Google’s decision to allow gambling advertising is being challenged in the UK. An early day motion calling for Google to stop advertising online gambling firms gained the signatures of 40 MPs.

The motion, brought today by Kahlid Mahmood, Labour MP for Birmingham Perry Barr, questioned Google’s decision to reintroduce gambling ads and calls on the search giant to review its policy.

The early day motion was as follows: “This house notes with concern the recent decision of Google to reintroduce online gambilng advertisements during a period of economic downturn; supports the Church of England’s position that the actions of Google risk normalising gambling in society; and calls on Google to review its policy in line with its own obligations on corporate social responsibility.”

Speculation of the amount of revenues Google can generate gambling companies paying for sponsored listings range from £100 million to £300m.

James Cashmore, industry leader at Google UK, said: “Following a thorough policy review last year, we believe that allowing search ads for gambling in Great Britain is consistent with local business practices. We have, however, taken steps to ensure only properly licenced gambling businesses can advertise on Google, and these ads will automatically be classified as ‘Non-Family Safe’, meaning they will not show on any search where a user has applied the Safe Search filter. Advertisers must also display links to a gambling charity – like GamCare, or Gamble aware – on their websites.”

UK gambling operators at risk from ‘unfair’ tax rate: report

Global Betting & Gaming Consultants has highlighted that UK online gambling operators risk being overtaken by European rivals because the Government fails to understand the importance of competitive gambling tax.

According to the consultancy, a Europe-wide gambling policy will be implemented and this will mean that players are taxed under the laws of the country they live in rather than the country the operator is based in.

Warwick Bartlett, partner, Global Betting and Gaming Consultancy, according to marketingweek.co.uk, said the UK Government’s tax policy for gambling companies has gone “horribly wrong”.

According to the report, while an agreed Europe-wide measure would create a substantial increase in market growth, it is likely to be matched by increasing overheads as governments take steps to gain control over the industry. The report claims that UK companies will continue to lose market share, and points to an existing deal between the Government and operators that allows the repatriation of UK sports betting websites from offshore so as to achieve gross profits tax as being “unsustainable”. It says foreign websites are able to reinvest the tax saving in their offering and “scoop” the market.

Holland plans action against illegal Internet gambling sites

Holland’s Minister for Justice Ernst Hirsch Ballin has reportedly told MPs that a ‘black list’ of illegal gambling websites will be circulated to Dutch banks by March, bringing into effect a ban on the processing of Internet gambling payments in the country ahead of a possible wider shakeup of Holland’s gambling regime later this year.

Ballin added that online gambling sites that continue to target Dutch residents will now face unspecified legal action. According to the Dutch justice ministry, it’s currently targeting both foreign-based gambling companies, as well as domestic, but refused to give divulge more details or any specifics.

A Justice Ministry spokesman declined to tell news agency ANP how many sites are being targeted.

The Dutch are spending €450m a year on illegal Internet gambling sites, according to a new survey by research agency Motivaction, quoted in the Telegraaf. This represents a doubling of the annual spend since 2005.

Motivaction says Dutch gamblers, most of them young people, spend an average of €82 a month on the Internet and that there are 485,000 regular players.

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

or

Contact:

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

Interview with ULYS’s partner Thibault Verbiest

‘There will be a day when the competition will be more fluid in France’

Bulletbusiness.com’s Legal Gaming Special

It is recommended that within the European Union every Member State should be enabled to decide about the liberalisation of the gambling market taking national characteristics into account.

This is in fact the current position in EU law, but with the crucial caveat that there is only a narrow band of legitimate reasons for restricting market access, according to the Remote Gambling Association.

According to the Association, unfortunately, the key to opening up markets is as much about taxation as regulation.  The main sticking point is that most EU Member States will not recognise the fundamental right of EU-based gambling operators to provide their services across borders. If this right is not enforced properly by the European Commission then Member States will gradually introduce systems that call for operators to be individually licensed in each jurisdiction.  This is completely unnecessary if the primary interest is consumer protection because comparable standards really should be in place across the EU, but compulsory local licencing will of course enable jurisdictions to levy taxes.

From France’s perspective, international law firm ULYS’s partner Thibault Verbiest says this will probably be the case in France, according to the ongoing discussion within the French government, the draft bill requires that all operators should obtain a licence in France, without respect to the fact they may already have one in another Member State.

“It would be surprising if the European Commission did not react against systems that are blatantly violating the freedom to provide cross-border services. However, operators will probably need to take legal action against legislations which one way or another limit cross-border services without having a coherent regime in parallel (e.g. which really protects consumers) or which discriminates operators without real justification,” said Verbiest, who is scheduled to speak during Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009, to be held in London on 26-27 January.

In France, the market opening talks are still ongoing.

Äccording to Verbiest, a draft bill creating a new regime should be examined within the next three months by the French MPs.

“The government announced at the end of 2008, that by the beginning of 2010 the new licencing project was going to be in place thanks to the new French gambling authority,” said Verbiest.

Verbiest also said that the government acknowledges that it is completely losing control of their tax revenues and consumers for their part continue to look for online gambling sites in other markets.

“This is not a new situation in France, since online gambling exist, French people have been trying it, sometimes at their own expenses since there was no system to help them distinguish trusted operators from fraudulent ones. For more than a year, the French government has acknowledged this situation and is trying to find remedies through a new piece of legislation. Since the topic has stopped being a taboo in France, it seems that consumers are more aware of which websites are safe (i.e. duly licensed in the E.U. or other safe jurisdictions), but it is obvious that only a real and realistic awareness campaign from the State will reach out to all players,” said Verbiest.

From operator’s perspective, Verbiest said since private operators did not have any legal access to French market until now and that the French government is willing to let some of them in, it can be said that there is a progress.

“However, there will be a long time before all operators can compete evenly, since the opening in France will only concern sports betting and casino games (poker, maybe backgammon) operators; all online games which are assimilated to lotteries and slots machines will remain prohibited. Thanks to European law and big legal battles, there will be a day when the competition will be more fluid in France, but this is not for tomorrow despite the tremendous progress which has been made.”

On grounds for a common approach to regulating the European Union, Verbiest said gambling regulations have been challenged in light of EU law in almost all EU Member States, and the same questions are raised every time. This alone is the sign that there is a need to discus common issues.

“There are already common regulations concerning money laundering but Member States seem to be ready for at least a common recommendation,”  Verbiest said.

Role of Bullet Business-Gaminglaw.eu partnership going forward

Gaming law specialists, who have joined hands with Bullet Business, feel the main and most important job mission of pan-European groupment is to provide the gaming industry not just with accurate and up-to-date legal advice but also to share key information, disseminate comments and suggestions, stimulate debates, quickly spread news and if at all possible, effectively reach out to the regulatory movers and shakers in the interest of the stakeholders.

For his part, Verbiest said this partnership (between Bullet Business and portal Gaminglaw.eu from gaming law specialists) is a unique opportunity to develop and enrich the only European portal dedicated to gaming and gambling laws.

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 click here: http://www.bulletbusiness.com/legaleurope09/agenda.shtml

or

Contact:

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