The French Tennis Federation looses a set in the Roland Garros online betting issue

Following a legal action brought in Belgium under summary proceedings by the French Tennis Federation (FFT) against Ladbrokes, Bwin and Betfair and aimed at preventing Belgians from betting on the Roland Garros and French Master Series results, the first court Tribunal of Liège dismissed the action.

The FFT accused the defendants of not behaving as “prudent and diligent operators”, and of acts of parasitism (unlawful competition) .

Hence the FFT asked namely for:

• A total ban on online betting taken by the Belgian public on the upcoming 2008 Roland Garros tournament and the Paris Masters 2008

• The annulment and the reimbursement of bets already taken by Belgian residents

The defendants’ lawyers argued that gambling is a legal and ancestral practice in sport that has never been challenged until now. In addition, they exposed that their clients had enacted a code of conduct and respect corporate governance rules. They also explained that the defendants had set up individual measures to fight against bribery.

On April 28th, the Liege first instance court ruled in favour of the defendants.

It is to be emphasized that the litigation brought before the Belgian judge was international. Thus, the plaintiff was a sport federation which was granted powers from the French Government to organize tournaments in Paris while the defendants were companies that are not based in Belgium. That’s why the first question that arose in this case was the competence of the Liège first instance court. The judge grounded its decision on article 5.3 of the European regulation 44/2001, which provides that “A person domiciled in a Member State may, in another Member State, be sued in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur”. It is not contested that regarding Internet matters, the place where the harmful event occurs is wherever a website is accessible. In order to establish the accessibility of the involved websites, the judge assessed several criteria including the available language (English is deemed to allow perfectly an access from the Belgian market), the targeted market (it appears that bets on the Belgian football league are possible) and the fame of the FFT tournaments in Belgium. Consequently, the Liège first instance court declared itself competent to rule in this case.

It is interesting to confront this reasoning with several decisions of the Paris Court of appeal (Cour d’appel de Paris, 4ème ch.A, 6 juin 2007, n°06/14.890). Indeed, the French court appears to adopt strict criteria to avoid a systematic territorial competence to the French jurisdiction. Thus, the judges expect a “sufficient, substantial and significant link between the activity and the harmful event.

First, the court, taking into consideration the corporate responsibility of the EU operators concerned and the procedures in place “preventing all anonymous bets, ensuring perfect traceability” concluded that these operators had behaved in a prudent and diligent manner. Interestingly, the judge also took into account “the various measures, namely for the protection of minors” implemented by Bwin, as well as its membership of “ESSA (“European Sport Security Association”) which aims to guarantee the integrity of sports betting offers and to keep sports honest and free from fraud”.

Secondly, the judges took into account the fact that the defendants did not use the names of the FFT tournaments in a promotional way. Indeed, it was considered that the “simple mention of the name of a sports event is a necessary indication for the online betting activity” which therefore “cannot be considered as an act of parasitism since its sole purpose is to let the player identify which sport event to place a bet on”.

The Belgian judge ordered the French Tennis Federation to pay €5000 per case for the recovery of legal costs.

It should be noted that the FFT is also facing an action from Bwin in the Paris high court. The latter will undoubtedly use this first victory to support its claim in these other proceedings.

Danish Minister announces liberalization of online gaming and sports-betting

The Minister for Taxation, Kristian Jensen, told Danish radio station that the governments prepares to formally liberalise online gaming and skill-games.

The Danish government is preparing a formal liberalization of online gaming and skill-games. Fixed-odds betting is considered a skill game in Denmark. Danish Tax Minister Kristian Jensen said that the Danish gaming market is already competitive because of the nature of the internet. He also acknowledged that Danish authorities have ample possibilities to prevent its citizens from participating in online gaming. Therefore, a licensing system for online gaming and skill-games will be prepared.

Mr. Jensen emphasized that licensing conditions will be strict, and operators should expect a Danish tax burden. Further specifics on the liberalization, such as a time schedule, are still unclear.

The monopoly for lottery games will not be affected by the liberalization and will remain in the hands of the state-owned Danske Spill.

EC Observations to Italian New Online Gaming Rules

First remarks on the proposed online gaming rules by Italy in the wake of the observations submitted by the European Commission

At the end of the scrutiny of the proposed draft featuring the new and quite more European-friendly online gaming rules Italy intends to adopt (“the New Rules”), the European Commission wrote on 14 April 2008 a letter to the Italian Minister of Foreign Affairs (“the EC Remarks”) to make certain recommendations and comments in relation thereto. What follows is a brief summary and comment of the most relevant aspects of the EC Remarks.

First and foremost it is interesting to note that there is no explicit statement in the EC remarks ruling out the concession regime currently implemented by the Italian gaming authority (“AAMS”). As a matter of fact, at point 2 of its note the Commission stresses the importance that said concession regime should remain open-ended, ie. no numerus clausus restrictions should be imposed by AAMS to thereby limit the number of foreign operators who may wish to access the local gaming market. So if on the one hand the EC reiterates its firm opposition to any attempt possibly made by AAMS (or any other national regulatory bodies throughout the EU) to cap the licences that can be awarded at local level, on the other hand it implicitly confirms the full validity of the state-granted concession regime altogether with respect to online gaming.

Turning its attention to the new AAMS requirement whereby a licence may be sought even by a non-gaming operator (whereas currently the applicant has to prove that it already holds an online gaming licence), the EC recommends AAMS to ensure that for purposes of assessing the actual eligibility of a non-gaming operator as well as licence applicant it apply fair, transparent, non-discriminatory and proportionate standards as also recently ruled by the European Court of Justice in re Europa 7 (C-380/05 of 31 January 2008).

Another request contained in the EC Remarks is aimed at amending any reference in the New Rules to operators based/licensed in the EU to cover instead operators based/licensed in the EEA – European Economic Area (which includes Liechtenstein, Norway and Iceland plus the whole European Union).

It is reasonable to believe that AAMS will have no problems in accepting the above suggestion. Actually to further encourage licence applications from throughout Europe it cannot even be ruled out that AAMS might possibly consider taking a “whitelist” approach similar to the one followed in January 2007 by the UK Department of Culture, Media and Sports with respect to non-EEA jurisdictions like the Isle of Man and Alderney, as a result of which all operators licensed there now can legally advertise their gaming services in the UK too.

Always with respect to the licensing requirements laid down in the New Rules, the Commission criticises the one-off AAMS licence fee (currently set at €300.000 yet scheduled to progressively go down year by year) which is generically justified as a “contribution towards expenses incurred by AAMS for the management and functioning of the licence-related infrastructure”. While conceding that in the New Rules the licence fee will be substantially slashed on an annual basis until the natural expiry date of the current licences (30 June 2016), the Commission requests AAMS to prove the alleged proportionality between the fee charged and the expenses the Italian regulator claims to incur

With respect to the requirement of the New Rules whereby an AAMS licensee may no longer have to (re)locate its gaming servers provided (i) they are still based in the EU/EEA and (ii) a safe 24/7 connection between the servers and the AAMS centralised system is guaranteed, the Commission urges AAMS to provide alternative operational solutions that should prove less burdensome and costly for the operators while equally and adequately allowing all checks and monitoring required by AAMS.

This remark reflects a largely popular concern across the online gaming industry, namely that AAMS is unduly forcing its licensees to fully link up their gaming platforms to its centralised system and database via the setting up of quite a complicated and expensive connection procedure which according to the claim of many concerned foreign operators results in unnecessary costs and much longer kickoff times.

Last but not least, the EC Remarks carry a very crucial query for the Italian authorities asking to know whether once the New Rules fall in place all EU operators that will then become licensees and which are currently included in the AAMS namelist of ”illegal” gaming sites, will be eventually struck off said list. This is undoubtedly not an easy answer to be provided by AAMS specially if one bears in mind that all its current licenses who do continue to operate a ‘.com’ site in parallel to the AAMS-licensed ‘.it’ one have not seen their names wiped off the AAMS blacklist, which seems to suggest that the Italian gaming regulator may not be so prepared to relax its grip over the unlicensed sites.

The Italian authorities and AAMS in particular are now expected to carefully review and digest the EC Remarks prior to deciding how to bring about the implementation of the New Rules, something which will hardly be a matter of just a few more weeks.

Yet all in all regulations-wise there do not appear to be any insurmountable problems nor irreconcilable positions between Brussels and Rome hence it is fair to say that if and when AAMS properly deals with and addresses all the issues raised by the EC, once the New Rules become effective all state-granted concession regimes still prospering across the EU will be strengthened and corroborated even further.

Quirino Mancini, partner

Sinisi Ceschini Mancini (qmancini@scm-partners.it)

Duplicate poker officially recognized by the French government

The legal affairs section of the French interior ministry confirms that duplicate poker does not come under the scope of the 1983 act on games of chance

Traditionally under French law, games of chance where a stake is involved are prohibited.

Traditional poker is considered in France as a game of chance and its offer is restricted in France to casinos and private gaming clubs.

Duplicate poker is a poker variation based on Texas Hold’em: the basic rules are the same. However, in duplicate poker the element of chance is strongly reduced.

The concept of duplicate comes from Bridge which recognized in France as a mind sport: each player seated at different tables is dealt the same hand.

In duplicate poker, each player are seated at different tables and is dealt the same hand as the player holding the corresponding seat on another table: for each deal, players holding the same position at another table will receive the same cards (flop, turn and river).

Contrary to Texas Hold’em poker, the deals at the beginning are identical: player X in table 1 receives the same cards as his counterparts in table 2 etc.

Thus, players directly competing with each other for the winning prize all have the same set of cards to start with, and are further playing against opponents who also have the same set of cards amongst themselves.

Players do not know the game distributed to other players.

Moreover, the objective of the game is to do one’s best with the game at hand, knowing that one only plays against those who have the same game as oneself.

It should be stated that this authorization only covers duplicate poker.

Traditional poker games are still prohibited where stakes are involved and their offer limited to casinos and gaming clubs.

Sweden halts prosecutions of media carrying gaming advertisements

The Swedish Prosecutor-General has issued a circular letter, in which Swedish prosecutors are ordered to await prosecution on illegal gaming advertising until further notice.

The landmark decision to halt the prosecution on illegal gaming advertisements is the result of a landmark decision by the Swedish Supreme Court of 6 February 2008, which stated that the editors of two Swedish newspapers are entitled to appeal criminal convictions for publishing advertisements for private betting companies. The European Commission is of the opinion that Swedish gaming law is inconsistent with EU law and two infringement procedures are ongoing. In its decision of 6 February, the Swedish Supreme Court has stated that it is unclear if the Swedish laws are valid. The Prosecutor-General subsequently stated that the outcome of the infringement proceedings by the European Commission should be awaited, and prosecutors should not initiate new proceedings against media carrying betting advertisements.

The Supreme Courts decision stated that the Court of Appeal should hear the editors’ cases and referred to recent decisions by the European Court of Justice and the Reasoned Opinion that was sent by the European Commission to Sweden regarding the monopoly on sports betting. The Court of Appeal had previously stated that there was no reason to hear the editors’ case because Swedish case-law established that the Swedish gambling policy is justifiable under EU law.

The recent developments in Sweden are good news for private remote operators, currently excluded from the racing and gaming markets. Although a definite decision is not expected soon, and the legal situation is therefore still unclear, the decision of the prosecution department to cease prosecution of betting advertisers is significant. Private operators now have the ability to extend there marketing efforts in Sweden.

However, a liberalization of the gambling market can not be expected in the near future. According to reports on www.gamblingcompliance.com(1), Ola Wiklund, partner in the Stockholm offices of Swedish law firm Wistrand, said that none of the ruling government coalition parties wants gambling to become a political issue ahead of the next general election in 2010. However, if the ruling government retains power in the election, Wiklund expects that “they will likely try to dismantle the gaming monopoly in some way, maybe with some kind of licensing system.”

Also, Wiklund suggested that the interim period will be extremely important in terms of how private betting companies position themselves in the Swedish market. He urged private operators to strike sponsorship deals with grass roots sports, as well as with more established football clubs. According to www.gamblingcompliance.com, Wiklund explicitly mentioned the trotting industry, because this is quite open for new sponsorship opportunities.

(1) James Kilsby, Private Operators Gather Momentum In Sweden, available on http://www.gamblingcompliance.com/node/13476