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Offline Poker Tournaments vs. Online Poker Tournaments

January 26, 2009 2009

The future of offline poker torunaments in the wake of the legalisation of remote skillgaming in Italy and subsequent launch of the first online poker tournaments

A few nights ago, while taking an after-dinner stroll with a few friends in a little seaport town not too far from Rome, a car full of young students pulled by us asking if we could by any chance direct them to an apparently unnamed and unmarked “private club” where a big texas hold’em tournament was due to take place that very night. Regrettably none of us was able to assist the poker-lovers bunch yet two or three thoughts immediately crossed my mind: (i) poker is ever more popular even amongst the youngest generations of Italians, (ii) if the whereabouts of the venue where a big poker tournament was to be held were not easily nor openly available and instead seemed surrounded by a good deal of clandestineness, probably the tournament itself was not authorised or perhaps the type of poker game being offered in the private club was not fully legal, in any event (iii) the law enforcement authorities are unable to effectively cope with the poker-mania phenomenon which is causing an increasing number of poker clubs to spring up all over the Peninsula.

The fact of the matter is, that offline poker tournaments indirectly benefited from the big push the legalisation (July 2006) and subsequent two-phase regulation (September 2007-May 2008) of remote skill gaming gave to real money card tournaments leading many to wrongly believe that the rules explicitly applying to online poker tournaments implicitly covered land-based poker tournaments too, better known in Italy as “poker sportivo” or sporting poker with a good dose of terminological hypocrisy. Such a regulatory misunderstanding was spurred by a provision carried by article 1, paragraph 93 of Law 27 December 2006 (also known as the Finance Act 2007 or simply “FA07”) which stated that any card games organised in the form of a tournament and where the pool prize is based solely on the buy-in fee, are to be considered skill games.

The FA07 provision in comment was aimed at ensuring that once the Italian gaming regulator (AAMS) would eventually implement the remote skill gaming rules, online poker tournaments would be automatically classified as a skill-based game and as such they could be legally and legitimately offered to Italian players subject always to specific regulatory restrictions established by AAMS for game purposes being fully complied with. This is what in fact happened thereby paving the way to the launch of the first AAMS-licensed real money online poker tournament in September 2008 by an Italian operator (Gioco Digitale), followed shortly thereafter by a few others including BWin, Lottomatica, Snai, Sisal, Eurobet, etc.

However, the mere inclusion in the remote skill gaming category of any kind of card-based tournament complying with the FA07 requirements was not meant to legalise poker outright nor to apply to offline poker tournaments which therefore continue to be covered by a different legal and regulatory regime. Indeed the legalisation and regulation of remote skill gaming in Italy did not abolish nor otherwise affect the general gambling ban contemplated by articles 718 and following of the Criminal Code which still apply to all games of chance (including poker and other cash games) carried out in terrestrial premises other than the four fully-licensed Italian casinos, namely Venice, Campione, St. Vincent and Sanremo. This explains why at the moment a texas hold’em tournament legally hosted on any AAMS-licensed online gaming platform could instead well possibly take place in terrestrial premises if the local police authorities competent to authorise such an event had in fact included poker in the official list of games covered by the general gambling ban.

Notably the lack of any thorough and uniform guidelines from the central police department at the Ministry of Interiors as to which games should actually be listed nationwide as illegal gambling has over the years led to a disharmonised and at times also conflicting interpretation, application and enforcement at local police level of the Criminal Code gambling restrictions particularly with regard to live poker tournaments.

The quite unclear status for regulatory purposes of live poker tournaments triggered a number of court cases involving their actual legality under the current rules and resulted in November 2008 in a landmark ruling by the Council of State (the Italian supreme administrative court) which appropriately and timely cast some light over the grey area of offline poker tournaments.

The ruling issued by the Council of State is largely based on a well-articulated opinion submitted by the legislative office of the Ministry of Interiors (“MoI”) whose main points can be summarised as follows:

1. The MoI authorities confirm that the law provisions and subsequent regulations whereby remote skill games were introduced in Italy are not aimed at repealing the criminal code provisions in matters of gambling but only at legalising and strictly regulating real money remote skill games carried out pursuant to a state-granted licence. Hence offline poker does not fall under the scope of the remote skill gaming rules
2. Pursuant to the FA07 law provisions, card-based tournaments qualify for skill game classification provided (i) they are offered remotely (not live) and the pool prize is solely based on the buy-in fee. By contrast no mention whatsoever is made therein to offline poker tournaments which accordingly should be considered in principle as a game of chance thereby falling under the general gambling ban laid down in the Criminal Code
3. Section 721 of the Criminal Code is still fully in place and requires that illegal gambling has two features: (i) the service is offered for a profit and (ii) it entails a game of chance
4. Whenever a live poker tournament is conducted for a profit of its organisers or however the pool prize is not just token, the game cannot be considered a play-for-fun event and becomes a play-for-money instead
5. There is no standard criterion to establish whether the amount of the pool prize is such as to give rise to a profit for the organisers hence the actual nature and purpose of a live tournament has to be assessed from case to case having regard to: (i) whether it is to be carried out at local, regional or nationwide level, (ii) a buy-in fee is charged only in the final stage of the tournament as opposed to it being required also in the qualification and/or pre-final rounds (in which case it ought not to exceed €30 anyway). Even in those cases where the entry fee was very modest a live tournament could equally devise a play-for-money event if the aggregate amount of all buy-ins resulted in a not economically irrelevant amount
6. When multiple games are simultaneously played within the same live tournament, a player who entirely used up his fiches plafond must be ruled out of the context hence no re-buys are allowed
7. The promoter of a live tournament cannot be authorised by the police authorities to run more than one event on the same day and in the same venue

The MoI report is an important term of reference and going forward it should hopefully enable the police authorities to adopt also at local level a more consistent, uniform and well-coordinated policy when it comes to granting or denying an authorisation to the promoters of an offline poker tournament. In this regard there is very little doubt that clearer and more straightforward rules on poker will not just help the law enforcement authorities but also benefit the Italian market in terms of tournament promoters on the one hand, and players on the other by steering at long last poker sportivo out of the regulatory limbo it has featured so far.

Given the big success marked by the first online poker tournaments launched in Italy that at the end of 2008 and in only four months have already fetched nearly €240mln in total turnover, a bit more clarity regulation-wise in matters of online poker tournaments versus offline poker ones was not just appropriate but much needed too so as to enable the Italian authorities exploit and drive the poker-mania boom in a fair and balanced way.

Quirino Mancini, partner
Sinisi Ceschini Mancini
Qmancini@scm-partners.it

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

January 22, 2009 2009

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

January 22, 2009 2009

‘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

Interview with Quirino Mancini, Partner, SCM Partners

January 22, 2009 2009

Call for operators to go for ‘realistic and swift action’ in Italy

Bulletbusiness.com’s Legal Gaming Special

Considering the situation in the US right now, it is being pointed out there is more gambling online than there used to be before a ban was introduced.

As a result, governments in such instances completely lose control of their tax revenues, while consumers bet into markets where there are no regulations. Meanwhile, the regulated operators or companies, which want to pay tax and work with government, do no business.

As an expert in this arena, Quirino Mancini, Partner, SCM Partners, feels this analysis is indeed quite accurate for most international jurisdictions.

“But (it) does not appear to fit well with the Italian market, in which authorities have consistently implemented over the last three years a legal & regulatory policy aimed at discouraging (via the infamous blacklist restrictions) local residents from gambling on foreign-based unlicensed sites while simultaneously enticing foreign operators to seek a local licence by opening up the domestic market through the awarding of a large batch of new licences and a controlled yet progressive gaming liberalisation,” said Mancini, who is scheduled to speak during Bulletbusiness’ 3rd Legal Gaming in Europe Summit 2009, to be held in London on 26-27 January.

On recent developments in Italy, Mancini said the new online gaming regulations have not yet been published although they have been in the Italian regulator’s pipeline for several months now.

“(As per the grapevine) they (new regulations) should be actually out by later this month and if that should happen undoubtedly this will be the first and foremost striking news of the New Year.”

“Meanwhile the recent (September 2008) launch of the first real-money online poker tournaments received a prompt and enthusiastic response from the domestic market so it can be easily predicted that the Italian poker-mania will receive a further boost when a very top operator like PokerStars goes live in Italy later this year.  More generally, the 2008 turnover figures and the 2009 forecasts seem to confirm, at least in Italy, the very anti-cyclic nature of the gaming business economics-wise.  So the deeper the recession, all the better for those anyhow engaged in the provision of offline/online gaming services in the Peninsula,” shared Mancini.

From operators’ perspective, who have been asking for a level playing field but in vain, Mancini said for those gaming operators who may want to exploit “the still quite good business opportunities” offered by the Italian market (and/or any other key European market not yet saturated) “this is not the time for hope but rather for realistic and swift action”.

“This means that they should not expect the Brussels authorities to come up any time soon with a hat trick solution harmonising both licensing rules and tax rates EU-wide, but instead identify those markets across Europe where they should enhance or strengthen their operations and then act in accordance with to the local licencing regimes,” said Mancini.

Overall, Mancini still feels that there are too many regulatory hurdles and tax gaps do exist across Europe so as to be effectively addressed and rapidly bridged at EC commission level.

“In this regard I note that despite various rulings that the ECJ consistently handed down in recent years under the theory of articles 43 and 49 of the Rome Treaty, the local gaming monopolies – not just the Italian one I might add – continue to enjoy prosperity and good shape and still rule their respective markets.  This hard fact suggests that “the Italian job” – a blend of driven and progressive market liberalisation yet always coupled with the requirement of a local licence – stands good chances of becoming a fairly flexible, and certainly improvable, regulatory model that other regulators could replicate elsewhere in Europe in the years to come,” added Mancini.

Recently, a draft EU document indicated that there are “grounds for a common approach to regulating the European Union’s multi-billion-euro gambling sector”.

It found there were “already grounds for seeking a common approach” and cooperation among national gaming regulators appears to be a necessary first step to combating money laundering, fraud and corruption.

But for his part, Mancini said, “At the risk of sounding redundant, I find the above statement to be little more than wishful thinking at this time yet would be very glad to be proven wrong by the Brussels authorities.”

Role of Bullet Business and Gaminglaw.eu partnership going forward

Assessing the partnership between Bullet Business and portal Gaminglaw.eu from gaming law specialists, Mancini said, “Me and the other founders and partners of Gaminglaw.eu strongly find that the main and most important job mission of our 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.”

“Such an ambitious and far-reaching goal can only be achieved by teaming up with a few suitable media partners at international level and definitely Bullet Business has all right credentials in this regard,” said Mancini.

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

eCOGRA extends its services

January 22, 2009 2009
eCommerce and Online Gaming Regulation and Assurance (eCOGRA) has extended its independent testing, standards and monitoring services to cover Internet bingo, sportsbetting and live gambling operations.
With this move, eCOGRA has positioned its “influential Safe and Fair certification seal within reach of most online gambling operators”.

CEO Andrew Beveridge said, “We have now introduced our new eGAP Minimum Requirements covering all operational aspects for online bingo and sportsbetting operations. This enables operators in these sectors to come forward for assessment and testing with a view to achieving the Safe and Fair eCOGRA seal, already held by some 126 tier one online casinos and poker rooms.”

The player protection and standards organisation now covers all major sectors in the online gambling industry, from online casinos and poker sites, through affiliate activities to mobile gambling, sportsbooks, live gambling studios and the burgeoning bingo business.

According to Beveridge, eCOGRA currently has a significant number of sportsbetting and bingo operations under review.

“This extension of our inspection, advisory and monitoring services means eCOGRA now covers all the main products currently being offered by online gambling operators. We complement this work through oversight of areas such as live gambling studios and mobile platforms, and by providing monthly payout percentage and randomness reports based on the live gambling data from every transaction,” said Beveridge.

Once a company has been accredited it is subject to continuous monitoring and annual reviews, and must comply with eCOGRA requirements regarding the quick and efficient handling of player complaints through the organisation’s Fair Gaming Advocate.

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