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An effort to lift ban on online gambling in the US

March 18, 2009 2009

A senior Democratic lawmaker is to push for passing of legislation to repeal a three-year-old U.S. ban on Internet gambling that has hurt trade ties with European Union.

“I’m going to be pushing it,” House of Representatives Financial Services Committee Chairman Barney Frank recently said at a press conference to lay out his agenda for reforming U.S. financial regulation.

With the Democrats in the U.S. Congress drafting legislation to repeal a controversial three-year ban on online gambling, Rep. Barney Frank, D-Mass., said he will work to see the legislation passed.

In 2006, Congress attempted to curtail online gambling in the U.S. by barring businesses from knowingly accepting payments in connection with unlawful Internet gambling. This includes payments made through credit cards, electronic fund transfers and checks.

The US could receive as much as $51.9 billion in federal revenue over the next decade if Internet gambling is regulated as proposed in legislation introduced by Representatives Barney Frank (D-Mass.) and Jim McDermott (D-Wash.), according to an updated analysis.

The new revenue estimates are approximately 22 percent larger than those of an earlier analysis prepared by PricewaterhouseCoopers in 2007, reflecting the increased online gambling activities of Americans despite attempts to prohibit activity through passage of the Unlawful Internet Gambling Enforcement Act of 2006.

Related Links:

Key Congressional Committee votes to clarify Internet Gambling ban

RGA disappointed with recently released report

March 18, 2009 2009

The Remote Gambling Association (RGA) has expressed displeasure over the EU Parliament’s decision to ignore the findings of an independent report commissioned through Europe Economics.

Referring to the recently released report, which effectively upholds the existing right of member states to control gambling and sports betting, Clive Hawkswood, chief executive, RGA, said many of the conclusions were unsupported and that the report was advanced by vested interests seeking to keep certain markets closed to competition.

“We have a good story to tell if people are willing to hear it, but unfortunately many people have deeply ingrained anti-gambling prejudices and, of course, there are powerful vested interests that are opposed to the opening up of markets in the EU.”

“The serious claims in this Resolution are highly detrimental to European-licensed operators, which already comply with stringent legislation and high standards of consumer protection and social responsibility. Moreover, it blindly ignores the findings of the [EU] Parliament’s own study, prepared by Europe Economics which demonstrates the lack of evidence to support many of these arguments.”

In December last year, the RGA had stated, “The freedom of establishment and the freedom to provide gambling services across internal EU borders are set down in the EC Treaty. Several Member States, however, have yet to amend their gambling laws to take account of this and Commission infringement proceedings against those States are still outstanding.”

The RGA had urged the authorities to address these unfair restrictions as a matter of priority because not only do they constitute a clear breach of EC law, “but they are also unfairly restricting the growth of many well established and responsible online European companies and reducing consumer choice.”

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.

Interview of Thibault Verbiest for Game Spectrum

February 20, 2009 2009

“Game Spectrum” is a magazine that is focused on the Balkan Region & Eastern Europe.

1. In your opinion how online gaming should be regulated.

It should be regulated in a proper way. It should be regulated in a way which is actually not just extreme positions between either the pure nationalism of some member states like France, the Netherlands or Germany nor it should be very naïve pro European approach of some bookmakers because their license in UK, Malta or Gibraltar they receive by the same talk and European passports to do whatever they want in the rest of the Europe. Those are two extreme positions but having in mind the opinions of other legal gaming advisors I would say that we need a compromise – the compromise is obtaining a local license or that means that if an operator is licensed in an European country and he wants to operate in another European country, he needs further to apply for a license in that other country through more simplified procedure that will not require entire establishment in that other country. So the operator may stay where he is and he is not obliged to move all his servers and the company to the other country. And to make it workable the only way is conclusion of corporation agreements between all European countries as long as we do not have the European directive of the online gaming Prohibition is not regulation. The prohibition leads to the absence of control and sometimes to criminal organization. Regulation with a compromise between national regulations and consideration for the other European countries is the best way. I think that the most important issue is a local gaming tax. The most of the European countries will demand to levy tax on online gambling and the best thing is to have so called “online gaming tax”, which is not based on the turnover or even benefit of incomes of the company. It should be based on the gross profit revenue of the portion of the games conducted with the players of the given country. It’s what the gaming operator actually perceives from the game -bet minus win.

2. Do you find any regulatory model for online gaming as a good one and may you point out its main characters?

Alderney is the best one with a very good regulatory environment with a long time experience. With the paradoxical situation that we got, that in one hand Alderney is British Satellite and is outside the European Union, plus it is not a European Member State, it has a very demanding proper regulatory environment, which is the source of exploration of other regulations like UK, France and Malta, as well found, in Alderney a very good source of exploration for its own regulations.

3. How the player and the legitimate interests of the operators and the state should be protected in online gaming?

One of the main things in my opinion is the question of the location of the servers. Many regulators like Italy or even Malta with the exception of Alderney, strongly believe that the only way to control online gaming industry is to make sure that the all peaces of the technology are based on the national sole. This is at the same time not feasible for many operators and is not a necessity for a good regulation. Gaming sites offering Cash Poker, for example, may have players from all across the globe and they will play against each other on pair to pair platform. In this case there will be players from Bulgaria, Italy, USA, China etc. and all of them will be playing against each other. The gaming server that actually makes it possible for each of players to play and to bet, should be located just in one place where it is being controlled by the regulator without possibility of having server in several jurisdictions or possibility to duplicate it. But duplication of the registration server, which is dedicated to the registration of the customers, is possible. Gaming server could be located just in one place and for instance France, Bulgaria, Spain etc. could have agreements with Alderney and Malta that the server may remain where it is because like this can be controlled what exact actions of the citizens of that particular country are, not of any other.

4. Do you think that the regulation of online gaming should be settled on in an international level?

Before saying international, let’s try to make it European first. In my opinion the international may appear in five, ten years maybe via WTO (World Trade Organization) as a good organization to set common standards, guidelines for international online gambling. But first step is European, because once the EU has agreed on the common standards, afterwards it will be able afterwards to negotiate a treaty with the countries as USA, China etc.

5. How do you see the future of online gaming?

We are now on the process of a big revolution in the way we provide gaming services, the franchise between the online and offline is very artificial, because most of the offline operators will offer online services either via internet or via offline premises. The games will become virtualized and computerized. Everything will be online even if it is offline. That is why it is so painful now for the traditional casino industry. They have to transform themselves and to understand that is not the other world outside it is just continuation of their activity. And they have to set up alliances with online operators. It’s a new industry merging will be the future.

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

February 16, 2009 2009

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.”

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