Dutch Court Verdict Gives Hope To Private Operators

Drawing heavily on the ECJ’s recent Placanica decision, Holland’s highest court has raised severe doubts over the compatibility with European law of the country’s system for licensing domestic lottery operators. According to one observer, the precedent also bodes well for operators hoping to secure access to the Dutch betting market.

On July 18, the Dutch Council of State delivered its judgment on a case brought against the Ministry of Justice by an operator whose application for a Dutch lottery licence had been denied by the Ministry. The operator in question, Schindler, applied for a licence to act as an intermediary for foreign lottery companies within Holland, as well as a licence to offer its own lottery games within the country. The Council of State’s decision last week means that the Ministry of Justice will now have to review Schindler’s application in accordance with the Council’s recommendations.

There are currently three licensed lotteries in Holland and licences are renewable on a five-year basis. As Justin Franssen, partner at Amsterdam-based law firm Van Mens and Wisselink, explains, in reality these licences are “semi-permanent” as they are continually renewed and are not opened to a tendering process once they expire. The Ministry of Justice, in rejecting Schindler’s application, stated that there was no particular need for a fourth licensee as lottery demand in Holland was already being satisfied by the three operators and issuing a licence to Schindler would cause the Dutch government to “loosen its grip” on the market.

The Court found that the absence of any tendering procedure to renew licences “…cannot, in light of principles of necessity and proportionality established by the ECJ […], be justified by merely referring to the objective of keeping a grip on the market.” According to the Court, granting Schindler access to a licensing process would not cause the government to ‘lose its grip’ as all operators would still be obliged to comply with any regulations set by the government under the terms of that process.

Although Dutch courts have traditionally upheld the Dutch system to be in line with European law, the latest Council of State decision suggests that the ECJ’s Placanica verdict in March has led to something of a re-evaluation.

“The Dutch government says that it has large discretion within European law to determine national policy on gaming. The Council of State has now said that on the basis of Placanica this is not true,” says Franssen.

“In its decision, the Council of State is critical of the Dutch policy on the basis of Placanica and Gambelli and argues that if there is to be a limited amount of licences available there has to be a more transparent mechanism to determine how those licences are issued or renewed.”

According to Franssen, such a transparent process should grant foreign, or at least EU-based, operators access to any lottery licence bidding process. The precedent set by the Council of State’s decision could however have an impact upon the sports betting and horse racing markets where long-standing licences are renewed on a similar basis to the lottery market. “This decision could mean that all [lottery, horse racing and betting] licences will become subject to tender. If we stretch the Council of State’s decision to these other licences it means that no operator in Holland, aside from Holland Casinos and the state lottery, is safe,” says Franssen.

For Franssen, the verdict is especially significant given the fact that betting operators, Ladbrokes and Betfair in particular, have challenged the government’s decisions to exclude them from the Dutch market on similar grounds to Schindler. “After all the judgments against foreign operators [3] recently, I would say that this new decision is in a way groundbreaking,” he says. “The Dutch government has taken the view that it has the right to exclude operators from a licensing process – in accordance with this decision it cannot do that anymore.”

Gamblingcompliance.com understands that the Council of State will rule on the Betfair case on August 30.

—

The author of this article is James Kilsby. This article was published on 25/07/2007 on GamblingCompliance.com (http://www.gamblingcompliance.com)

© Gambling Compliance Ltd 2006

Source URL: http://www.gamblingcompliance.com/node/7239

Links:

[1] http://www.gamblingcompliance.com/

[2] http://www.gamblingcompliance.com/author/30

[3] http://www.gamblingcompliance.com/node/6787

New Regulator But Familiar Policies Expected In Holland

According to new legislation promulgated last week, the task of issuing gaming and betting permits and enforcing compliance will soon fall outside of the Ministry of Justice. However, while the Act is not without significance, observers suggest that Dutch policy on gambling will remain substantively the same.

The Betting and Gaming Act, sent out for consultation by Justice Minister Ernst Hirsch Ballin last Thursday, proposes the establishment of an independent regulatory body, the Betting and Gaming Authority, which will be charged with issuing licences and acting in the event of any licence breaches. Once the new legislation comes into force, the Netherlands Gaming Control Board, which currently advises the Minister who then issues licences accordingly, will cease to exist. The Ministry of Finance will continue to oversee the National Lottery (Staatsloterij) and the activities of Holland Casinos.

According to Justin Franssen, partner at Amsterdam-based law firm Van Mens and Wisselink, the administrative change is an interesting development. “The new Act signifies a change from the current system in that there will be a new entity which establishes a clear distinction between the Minister and the licences [that are issued],” he told Gamblingcompliance.com.

However, Franssen agrees with those who argue that the new Act heralds more of a perpetuation of the Dutch Government’s restrictive policy on gambling than a signal of impending change. Although the current licensing system has been subject to criticism from both the European Commission and, most recently, the Dutch Council of State, some observers believe the new law will do little more than update the 1964 Act.

For example, Gamblingcompliance.com understands that there is nothing in the Act to suggest that existing lottery and sports betting permits will be opened to tender once they expire. On the contrary,accompanying explanatory notes suggest that the current licensing system will be maintained as far as is possible. “The new system will be largely the same as the old one. The Act contains no radical changes,” Franssen says.

Whilst it may be a different regulator that oversees the Dutch market and issues or renews licences, the Ministry of Justice will maintain ultimate responsibility for instigating overall gambling policy. A press release from the Ministry read: “The new Betting and Gaming Act will make it possible to annul decisions by the Authority when they pose considerable risks to the restrictive games-of-chance policy in the Netherlands.”

—

This article is written by James Kilsby and was published on 07/08/2007 on www.gamblingcompliance.com.

Placanica Fallout – Will Dutch Gambling Monopolies Hold?

Placanica decision has placed Europe’s state gambling monopolies under added scrutiny. Despite increased confidence amongst private operators, however, observers remain unsure as to whether Holland will now open up its restricted market.

It seems as though Placanica decision has been met with roars of approval from all sides. On the one hand, state operators such as Deutscher Lotto- und Toto-block have stated that the ECJ’s decision reinforces the validity of state gambling monopolies. On the other, leading online bookmakers proclaim that the ruling proves that state gambling monopolies are an anachronism that contravenes European law. Evidently the Placanica judgement is open to interpretation.

“Since the judgement there has been a lot of empty rhetoric from both monopolies and the private sector,” notes leading Amsterdam-based gambling lawyer Justin Franssen of the firm Van Mens & Wisselink. “In this respect Placanica is very much comparable to Gambelli.” Franssen does not share the optimism of those operators such as bwin, Ladbrokes and Unibet who were quick to proclaim the death of state monopolies in Placanica’s wake: “It is very clear that the ECJ grants member states considerable discretion to limit gambling operators within their countries,” he says.

Does this mean, then, that the Dutch monopoly is likely to go unchallenged? “What was interesting about the Placanica judgement was the references it made to the tendering and licensing processes,” Franssen states. “The Dutch situation regarding the licensing of sports betting clearly has to be re-thought.”

At present the licence to develop sports betting in Holland is awarded on a renewable five year basis but, in reality, as Franssen attests, it is “semi-permanent” and international operators such as Ladbrokes (forced to cease all its Dutch operations by a court decision in 2003) and Betfair have been prohibited from even bidding for that licence.

Operators should not necessarily expect a wide-scale liberalisation, however, or even a partial opening such as that set to take place in neighbouring Belgium later this year. “Placanica may not have that great an effect,” says Franssen. “The sports betting system [limited to one exclusive licensee] is backed up strongly by the civil courts in Holland which have consistently ruled the system to be compliant with Articles 67 and 69 of the 2003 Gambelli judgement.”

Even if Holland does not open up its sports betting market to allow multiple licensees, the Placanica ruling means that the tendering process must be made more open and transparent as excluding EU-licensed companies from entering the bidding process contravenes European law.

However, Holland Casinos’ monopoly of the Dutch casino market is coming under increasing pressure. A decision is due later this week in the Dutch Council of State in a case brought against Holland Casinos’ monopoly on behalf of the French casino group Tranchant. And a ruling against Holland Casinos could be just the start of several challenges brought to the group.

Private operators will no doubt be emboldened by the Placanica decision to scrutinise the legitimacy of last year’s awarding of an exclusive licence to Holland Casinos to develop online casino gaming for the Dutch market.

Another European gaming expert, Jan Gerard Rodrigo – who worked for Holland Casinos for 17 years prior to 2002, is more confident than Franssen that the Dutch monopolies are unsustainable. “Eventually there will be a liberalisation,” he says. “The Dutch monopoly is like a house of cards that is going to fall – it’s just a question of when.”

Interestingly, according to Rodigo, a liberalised Dutch gambling market may not be such an unpalatable reality for Holland Casinos. If restrictions were lifted then Holland Casinos would also be freed from the shackles of its own monopoly and would be free to expand throughout Europe – in the manner of Casinos Austria, for example.

“Holland Casinos does not see the point in monopolies,” notes Rodigo. “Its knowledge of the casino gambling market is like a bottle of squash – it’s so concentrated. You could take that knowledge and operate fifty casinos.”

© Gambling Compliance Ltd 2006

The author of this article is James Kilsby. This article was published on 14/03/2007 on GamblingCompliance.com (http://www.gamblingcompliance.com)

Source URL: http://www.gamblingcompliance.com/node/7345

Links:

[1] http://www.gamblingcompliance.com/

[2] http://www.gamblingcompliance.com/author/30

Exploring The Status Of Poker In Europe – Holland

Although Dutch players are revered on the world poker scene, restrictive legislation in Holland limits opportunities for Dutch nationals to play the game outside of state-owned casinos.

Anyone who knows poker knows that the Dutch make for some of the most formidable players on the planet. Among their number are young tyro Noah Boeken, whose career earnings exceed US$630,000, former athlete Rob Hollink, a father of three with earnings in excess of US$2.2m, as well as one of the Godfathers of European poker, Marcel Luske. Luske, the ever-stylish ‘Flying Dutchman’, has well over US$3m in the bank thanks to poker, and if his trademark habit of wearing his sunglasses upside down seems a little odd at first, it soon becomes familiar and, one might think, evidences a buoyant, confident and well-established Dutch poker market.

Sometimes though, style triumphs over substance. If Luske has an undoubted pedigree in international poker, there are serious questions to be asked of his homeland’s regulatory stance towards the game. The Dutch may have produced world-class poker players but their laws arguably leave a lot to be desired.

“The game in Holland has exploded in popularity,” confirms Justin Franssen, an expert in gaming law with Amsterdam-based law firm Van Mens and Wisselink. “It’s going through the roof, with plenty of exposure on television and the ongoing success of players like Luske, Boeken and Hollink. Home games among friends, whatever the stakes, are fine but otherwise the legal status of poker is arguably contrary to European law.”

Franssen explains that “…according to the Gaming Act of 1964, poker is only legal in casinos.” Moreover, those casinos are established thanks to a state monopoly. “Holland Casino is a 100-percent state-owned foundation which operates 14 casinos in locations in the Netherlands. It was established in 1975 when the government decided to grant just one exclusive gaming license in order that gaming remained honest, reliable and well-controlled.”

Since 1975, Holland Casino has grown and its bricks and mortar incarnation is set to expand yet further, with applications for five additional casinos, so as to provide “nationwide coverage”, currently pending. Further development is expected as Holland Casino has been authorised by recent legislation, in Holland’s Second Chamber, to develop an online gaming presence. This draft law has received serious criticism, according to Franssen, from the First Chamber (which can, on certain rare occasions, veto laws passed in the lower house), with additional criticism, and the implied threat of potential infringement proceedings, also coming from the European Commission.

The present case law means, in effect, that it is illegal for overseas operators to accept bets from Dutch residents and the regulatory emphasis on national exclusivity is not going down well in all quarters. “It is an interesting and delicately poised situation,” says Franssen, himself a former casino dealer, “not least because the 1964 Act came from the pre-internet age and did not anticipate these modern developments. Another difficulty exists when the EU law perspective is considered. Arguably the position occupied by Holland Casino contravenes Articles 43 and 49 of the EC Treaty.”

Article 43 provides for the freedom of establishment within the European community, while Article 49 establishes the freedom to provide cross-border services. Both are designated as “fundamental freedoms” whose existence is crucial to the functioning of the EU Internal Market. Moreover, they are of “direct effect”. This means that Member States are obliged to modify national laws that restrict freedom of establishment, or the freedom to provide services (and which are therefore incompatible with these principles). There is, though, a carve-out. Member States can implement or maintain restrictions on Articles 43 and 49 in specific circumstances, for example when justified by overriding reasons of public policy, public security or public health. Even so, the restrictions have to be “proportionate”.

There is ample case law on Articles 43 and 49, and, insofar as gaming is concerned, the trend has generally been that national courts do not believe that restrictive gaming laws infringe the EC Treaty. However, as the betting and gaming markets continue their worldwide exponential rise, there are signs of increasing disquiet in various territories – Holland among them. Franssen cites a case brought by Compagnie Financière Régionale B.V (CFR BV) against the Ministry of Justice and Ministry of Economic Affairs as an example.

“Judgment by the Administrative Court of Breda, in December 2005, was greeted as a significant victory for those who contend that state gaming monopolies contravene the EC Treaty. The background is that CFR BV applied for a license to operate a casino in the Dutch municipality of Bergen op Zoom. It was rejected, because of the exclusive rights of Holland Casino but CFR BV launched legal proceedings which ultimately give ammunition to those seeking liberalisation of this sector.”

The reason, explains Franssen, is that the court adopted liberalisation-friendly aspects of the well-known Gambelli case on Italian sports betting. While other ECJ jurisprudence had suggested that exclusive rights for gaming were not incompatible with EU law, the Gambelli case stated that “…the restrictions must serve to limit betting activities in a consistent and systematic manner.” The ECJ, in the same case, also held that “…insofar as the authorities of a Member State incite and encourage consumers to participate in lotteries, games of chance and betting to the financial benefit of the public purse, the authorities of that State cannot invoke public order concerns relating to the need to reduce opportunities for betting in order to justify.”

The court in Breda looked at these and other aspects of the Gambelli judgment and found that Dutch policy was at best counterproductive and at worst that its insistence on a restrictive casino monopoly was potentially contrary to Article 49. “The court found that the policy did not comply with the principles of consistency and coherency as set forth in Gambelli,” says Franssen.

Regrettably, for those who would see Holland change its restrictive stance, the Breda decision has since been overturned, though the points it raised seem set for renewed argument, if not in Dutch jurisprudence then elsewhere in EU Member States. Meanwhile UK operators Ladbrokes and Betfair have also drawn a blank in Holland, with their challenge to the monopoly of De Lotto, the state-authorised entity that runs lotteries, sports books and scratch cards, having failed thus far (although the challenge was only made in relation to sports books).

The restrictive zeitgeist is the antithesis of a report published in 2000, entitled ‘New Round, New Chances,’ which proposed that the Dutch market be liberalised with a phased introduction of a totally free market which would be open to any commercial operator able to meet the licensing requirements. As well as the recent overturning of the CFR case, in 2004 the Dutch government officially reaffirmed its commitment to a single gaming entity. The upshot is that Holland Casino continues to hold all the chips.

Despite this, Franssen says that the tide could be turning. “Poker is so popular here and the Dutch people have a tolerant attitude to the game. This may be not be shared by Parliament but the ongoing disputes in other Member States might help to bring about a harmonisation of European law. It’s a difficult one to call but I’m not sure that Holland Casino will still have an online monopoly by 2010.”

If the restrictive legislation covering poker in Holland does indeed have to be redrawn to accommodate the game’s inexorable rise in popularity, then Marcel Luske’s sunglasses may not be the only thing turned upside down on the Dutch poker scene in the coming years.

—

The author of this article is Alex Wade. This article was published on 11/09/2007 on GamblingCompliance.com (http://www.gamblingcompliance.com)

© Gambling Compliance Ltd 2006

Dutch Lawmakers KO Remote Gambling Bill

The Dutch Senate yesterday voted down proposals that would have granted the state-run operator Holland Casinos a three-year exclusive license to operate internet gaming in the Netherlands. The proposal was rejected by a narrow margin, but the outcome nevertheless sparked celebration among private gambling operators.

Under existing rules no operator is licensed to offer casino and poker online in Holland, despite the presence of many dozens of foreign companies doing just that. The proposal – contained within the remote gambling bill – to give online exclusivity to Holland Casinos, consequently raised the prospect of a well-advertised and state-run operator quickly building market share in the fashion of Svenska Spel in Sweden.

The bill, put forward by the Dutch Ministry of Justice, was defeated yesterday afternoon by the slim margin of 35 votes to 37. Lobbyist Justin Franssen of the Dutch law firm Van Mens & Wisselink, said it was, “a very good day for our industry”.

He noted that in some ways it signalled the return of business as usual in Holland but also observed, “the important point is that there can now be no new powerful competitor in the online market in Holland, and that is good for all operators who have a market in the Netherlands.”

The vote against the bill was the result of a sustained lobbying effort by Franssen’s firm. “We worked very hard the last months to convince the individual senators that the Remote Gaming Act does not comply with European law,” he said.

“For some senators the deciding factor was the European argument, for others I think it was that the bill represented a new gaming offering that was going to stimulate gaming in a way that was not compatible with their restrictive market policy.”

The vote represents a setback for Holland Casinos, which had already prepared an online poker and casino operation for launch.

Holland Casinos vice president Ron Goudsmit told GamblingCompliance: “We were sure we would have done well online, but what this vote means is that all the illegal offerings we have now will continue”

The situation whereby no company is licensed to operate online has created a situation in which many major European online companies are operating Dutch language sites. “There have been some measures taken against them but there are still an enormous number of sites, more than 100, offering their services into Holland” confirmed Goudsmit.

According to Goudsmit, yesterday’s Senate vote hinged on unpredictable party allegiances.

“Only one party was going to make a difference in the vote and that was the Green Party. They had voted in favour of the bill in the Lower House but surprisingly they didn’t follow that in the Upper House,” he said.

One block voting steadfastly against the measure was the Dutch Liberal Party, which objects to monopolies of any sort, but Goudsmit noted that Holland Casinos itself had raised the possibility of additional licences and had proposed that VAN, the Dutch Gaming Machine Association, also be granted a license.

“It’s not us that has been fighting for a single licence but the Ministry of Justice who themselves thought it would be better to put their case to Brussels if Holland Casinos were granted a sole license for the trial period.”

Observers from the private sector have speculated over whether an arrangement that existed between Holland Casinos and software firm Cryptologic to share revenues from their online venture might have also swayed the Senate vote. Questions had been previously asked about the deal in the Lower House, but not at Senate level.

“There was a question from an MP which the Minister of Justice answered,” counters Goudsmit. “But while there is a contract between us and Cryptologic, it is a commercial agreement with a confidentiality clause applying to it.”

With one issue now decided, the next stage of the battle between private operators and the Dutch Government shifts to the even more contentious issue of financial services and ISP blocking.

The Dutch Ministry of Justice last month indicated that it intended to take action against online gambling operators listed by the ministry and against intermediaries, such as payment service providers and ISPs, that facilitate the activities of the operators.

With Holland currently facing infringement proceedings issued by the European Commission against the Dutch sports betting monopoly, the European Gaming and Betting Association (EGBA) this week wrote to the Dutch Minister of Justice Dr Hirsch Ballin urging a change of direction.

“The position of the Dutch authorities is not sustainable or EU compatible and the EGBA therefore takes a clear stance against the enforcement of financial and ISP blockings directed at EU licensed operators. The EGBA believes that private companies (in this case financial and/or internet service providers) should not be made into the enforcers of ineffective government legislation,” said the letter signed by EGBA Secretary General Sigrid Ligné.

© Gambling Compliance Ltd 2006

—

The author of this article is Andrew Gellatly. It was published on 02/04/2008 on GamblingCompliance.com (http://www.gamblingcompliance.com)