Ladbrokes’ online casino ad campaign fails to get clearance

Ladbrokes breached advertising standards in television commercials for its online casino as the Advertising Standards Authority (ASA) felt that the adverts

The complaints were levelled against two ads. The first commercial showed a diver who attached raw bacon and sausages to his wet suit and leapt into shark-infested water dressed in a seal costume. A character at the end of the clip said: “All we could bury was his flipper.”

The second advertisement showed a sky diver jumping out of a plane using an empty crisp packet as a parachute.

Both clips finished with: “If only he’d seen ladbrokecasino.com it would have quenched his thrill buds.”

The complainant said the ads: portrayed gambling in a context of toughness or linked it to risk taking and reckless behaviour; portrayed, condoned or encouraged people to gamble in a way that was socially irresponsible and could lead to financial harm; exploited the susceptibilities and aspirations of vulnerable people.

The ASA banned the ads on the first ground.

While the ASA noted the ads were humorous and showed the protagonists engaging in ridiculous and extreme behaviour; it considered that the activities shown in the ads would be unlikely to be seen as realistic or aspirational by viewers.

“We further noted Ladbroke and M&C Saatchi’s argument that the ads were cautionary tales and encouraged caution and moderation, not risk taking and reckless behaviour. We nevertheless considered that the overall context of the ads, including the claim If only had seen ladbrokescasino.com it would have quenched his thrill buds, portrayed gambling in a context of toughness, and linked it to excessive risk taking and reckless behaviour. Although we acknowledged that the scenarios shown in the ads were intended to be cautionary tales, we concluded that they breached the Code by portraying gambling in a context of toughness and linking it to recklessness,” stated the ASA.

Ladbrokes said in a statement the advertisements were light-hearted and humorous, and it would appeal against the decision.

Tim Duffy, UK chief executive of M&C Saatchi, said if the appeal were unsuccessful, the ruling could present serious challenges for creating gambling campaigns.

Live Real money Texas Hold’em Poker tournaments legalized out of casinos in France

After a crisis meeting with casino representatives in the middle of November, the French Home Affairs Minister, Michèle Alliot-Marie promised to reflate the casino industry by authorizing the organization of live real money Texas Hold’em tournaments out of the confines of casinos but under their control and responsibility. The 24 December 2008 decree concerning casino games concretizes this proposal.

Live real money poker tournaments have become more and more popular, and casino managers needed more flexibility to organize such tournaments. According to casinos representatives, even if this point was not one of the major priorities to relaunch the sector (1), it will have a positive impact.

The 24 December 2008 decree modifies an important decree of 14 May 2007 which introduced Texas Hold’em Poker into casinos for the first time and specified detailed rules concerning the different sequences of the game. The scope of these decrees is limited to casino games’ regulation.

Article 19 of the 2008 decree specifies that “casinos can organize texas hold’em poker tournaments, with prizes at stake, in their gaming room or in premises guaranteeing the same level of sincerity and security in games operations”.

From this article we can infer that the responsibility to ensure sincerity and security in games operations rests on casinos shoulders as though the tournament took place in their own premises.

In order to ensure transparency, tournament rules and conditions shall be transmitted to public authorities and notably to the Home Affair Ministry at least twenty one days before the event.

The decree does not specify any territorial limit to the organization of live real money Texas Hold’em Poker tournaments. In theory, a casino is thus authorized to organize such tournament every where in France as long as honesty and security are ensured.

The decree also relaxes the regime applicable to preliminary tournaments (2) originally limited to 100 per casino and per year. The amount of such tournaments is no more restricted and following article 20, casinos are no longer required to award cash money to winners but can offer stakes for another tournament.

If the new decree makes casino games’ regulation look more flexible, there is no doubt that public authorities will keep on imposing a strict control. Nevertheless these measures are favorable to casinos who are now free to organize larger and plentiful events.

(1) Casinos’ representatives firstly requested a tax suspension and the right to operate casino games online

(2) Small tournaments in which the winner gets the right to take part in a major tournament at least cost. Such tournaments are organized before the main event to attract more people to major tournaments.

Source: Arrêté du 24 décembre 2008 relatif à la réglementation des jeux dans les casinos, JORF n°0303 du 30 décembre 2008 page 20411, texte n° 40, NOR: IOCD0829527A

Breaking of state-monopoly in Sweden recommended

A public commission in Sweden has suggested that the monopoly should be broken up, at least partially.

A local media report, highlighting that Sweden’s state-monopoly on providing betting has been criticised by the European Commission for violating the EU competition regulations, has shared that the commission proposes that companies other than Svenska Spel shall get the right to offer sport betting in Sweden.

They also say that foreign betting sites on the Internet which do not fulfill the criteria to operate in Sweden shall be blocked.

According to stockholmnews.com, the commission wants the monopoly to remain on Internet poker and casino since these are considered particularly dangerous for people with gambling problems.

“Svenska Spel brings in large amounts of money to the Swedish state every year. A big part of its profit also goes to the sports movement. But the most common defense for the monopoly is that Svenska Spel is suppose to take more responsibility for people with gambling problems than the private companies. Critics say however that this is just an excuse and that the real purpose is to get more money for the state,” reported the publication.

Meanwhile, another report has indicated that an official study of Swedish gambling legislation has recommended the introduction of a licencing system that would divide gambling offers on the basis of their risk to players, and proposes that Svenska Spel be allowed to maintain its monopoly over land-based casinos, lotteries and online poker. But with the changes not scheduled to take effect for a further two years, observers question whether the proposals will be enough to placate the European Commission in Brussels.

RGA urges authorities to address unfair restrictions

The Remote Gambling Association has welcomed the French Council Presidency initiative to review gambling laws and calls on the European Commission to continue infringement proceedings against Member States.

According to the RGA, these efforts should not, however, slow down infringement proceedings against Member States that are failing to apply EC Treaty rules in this area.

Referring to issues such as crime prevention, consumer protection and the maintenance of public and social order mentioned in the Presidency report , the RGA said it agrees that these are all worthwhile objectives, but believes it is important to remember that the online gambling industry already addresses these issues through codes of practice established by the industry itself and through compulsory licence conditions in the European jurisdictions where they are based and regulated.

Clive Hawkswood, chief executive of RGA, said: “All RGA members already operate to our own code of practice on social responsibility. Codes such as these, combined with existing regulations in EEA jurisdictions that issue online gambling licences already set high standards for consumer protection.”

Going forward, the RGA called on the Council to give greater attention to another issue addressed in the Presidency report: the rulings by the European Court of Justice on the opening of national markets to competition from operators who are licenced in other EU jurisdictions.

“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 urges the Council and the Commission 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,” stated the RGA.

“You cannot address standards and Member State involvement without mentioning the basic principles of access to markets for online gambling operators licensed in Europe. We hope that any future iteration of this report will make this abundantly clear and serve as a starting point for further consideration of these issues,” said Hawkswood.

An outlook of the Italian gaming market at two years from its liberalisation

The paragraphs below try to summarise the most relevant regulatory and commercial developments that dramatically affected the Italian gaming business over the last biennium.

The paragraphs below try to summarise the most relevant regulatory and commercial developments that dramatically affected the Italian gaming business over the last biennium.

The 2006 year marked the beginning of a new era for the Italian gaming industry. In an effort to put an end to the thriving business of many foreign-based gambling sites that had long since been aggressively targeting and profitably servicing Italian players without holding an Italian licence, in early February the local authorities enacted the infamous and very controversial measures aimed at restricting Italian residents from accessing a large number of blacklisted ‘.com’ sites. Yet shortly thereafter (August) the Prodi-led cabinet suddenly opened up the domestic market by legalising remote skill games and launching a licence tender that resulted in some 14.000-plus fresh terrestrial licences and 33 pure remote gaming licences being awarded.

Notably the liberalisation pushed by the Italian authorities was much more driven by budgetary needs than by a genuine desire to free up the domestic gaming market after decades of unchallenged oligopoly by the three Italian sisters (SNAI, Lottomatica and SISAL). Whatever the reasons that may have actually spurred the government’s action, such regulatory breakthrough resulted in a wave of new operators being at long last able to legally and legitimately offer their gaming services to Italians.

The 2007 year was mainly a transition one during which the new licensees worked hard to set up their Italian online gaming platforms and organise the launch of their terrestrial networks of betting outlets (shops and corners) with very few of them, if indeed any, managing to launch operations in the first semester. In the meantime the gaming regulatory authority (AAMS) implemented the online bingo and the skill gaming rules and in particular legalised online poker tournaments by making them eligible for skill game classification. In December then Italy notified the European Commission with the proposed new remote gaming rules and relevant lighter licensing requirements which look more EU-friendly than those currently in place. Such move by the Italian authorities had been triggered by a combined effect of a landmark ruling issued by the European Court of Justice earlier that year in re Placanica where the Luxembourg magistrates had heavily criticised the regulatory regime currently in place in Italy, as well as by the need to defuse the enormous political pressure that Brussels had been placing on Rome over the past several months by opening up to seven different dossiers on charges that Italy was enforcing gaming laws and regulations not fully in compliance with EU law.

At the end of April 2008 the European Commission sent a letter of remarks and observations to the Italian government suggesting also a few amendments aimed at rendering the proposed new rules fully consistent with the recommendations of the EC as well as with the jurisprudence of the European Court of Justice. Further contacts and meetings took place since between the Rome and the Brussels authorities to fine-tune the draft new regulations which are now understood to be ready for issuance any time soon.

Even though the new rules are not yet in place it is interesting to outline below their most relevant aspects:

· Any gaming company licensed and operationally based in another EU jurisdiction may apply for an AAMS licence subject to proving a global gaming turnover of no less than €1,5mln over the last biennium
· Even a non-gaming operator will be able to apply for an AAMS remote gaming licence subject to: (i) proving that he holds all required logistic, technical and organisational infrastructure, (ii) releasing an €1,5mln bank guarantee in favour of AAMS, (iii) setting up a company in an EU jurisdiction and locating there the hardware and software infrastructure that will be running the games covered by the AAMS licence

Among the fresh licensing requirements set out above is worth noting in particular the server location rule which will make it possible for a foreign-based AAMS licensee to keep his gaming servers abroad provided (i) they are within the European Union space, and (ii) a 24/7 remote linkup with the AAMS centralised system is guaranteed for bets validation, compliance monitoring and tax purposes.

The 2008 year also coincided with the time when most (if all) of the 2006 tender licensees went actually live with the first online poker tournaments being launched by a couple of Italian operators (Gioco Digitale and Microgaming) as from September. Notably a few other AAMS-licensed major operators like Bwin and Lottomatica launched their online poker product since and two of the largest poker rooms worldwide (PokerStars and PartyGaming) also got licensed in Italy in the second semester and are now preparing to launch their own tournaments.

The first figures available on the impact of poker (tournaments) on the Italian gaming market are quite impressive as while we are still in the very early stages with just a few platforms already offering it, the monthly turnover is already at around €65mln despite the fact that for the time being AAMS allows tournaments open to local residents only (national pool liquidity as opposed to international pool liquidity). Given such a good response notwithstanding the game is only available at domestic level, it can be quite safely predicted that in 2009 the poker tournaments turnover will by far exceed the rosiest expectations of the Italian authorities that were initially forecasting for next year a total turnover in the region of €400mln.

Such key factors as (i) a relatively favourable regulatory framework and (ii) a very responsive domestic market, coupled with a much less online operator-friendly environment across most of the other first-tier continental Europe jurisdictions like France and particularly Germany, lead to believe that in 2009 Italy will be yet again at the forefront of the online gaming business in the EU. Actually the “stick-and-carrot” regulatory model adopted by AAMS (blacklist restrictions enforced flat out on the unlicensed foreign-based sites and full right to offer online gaming services to local residents only granted to those operators holding an Italian licence) is now being carefully analysed by other EU regulators with a view to assessing whether it could be usefully exported across the Alps too. Indeed in the past few months there was an intense traffic of delegations of regulators from France and from Northern European countries too that repeatedly met with AAMS to better understand the Italian model.

Italy’s chances to become a champion in Europe of a pragmatic and profitable regulatory model placed somewhere in between the Franco/German-style monopoly-driven approach and the pro-market, de-regulated UK regime, may prove even higher if once the new remote gaming rules are enacted AAMS should also adopt in due course a “whitelist policy” along the lines of what the UK Gambling Commission has already been doing for a while. In this respect it is understood that bilateral talks and meetings already took place earlier this year between Rome, Alderney and the Isle of Man competent authorities and the “whitelist policy” is on the AAMS’ 2009 agenda.

All in all 2009 is promisingly set to be another buoyant year for the Italian gaming business altogether given also the traditional attitude of Italians to spend even more money in betting and gambling under gloom economy times like the present ones. Other important market growth drivers will be the following:

· The implementation of the new remote gaming and relevant licensing rules
· The possibility as from 1 December 2008 for each AAMS licensee to propose to his own regulator new sporting and non-sporting events on which he would like to take fixed odds bets (AAMS publishes on a weekly basis the full list of all “bookable” events and up until now bookmakers were not allowed to accept bets on any unlisted events)
· The likely advent of other top online poker rooms not yet licensed in Italy
· The likely introduction by AAMS of the international pool liquidity rule
· The possible legalisation and subsequent regulation by AAMS of online poker and other cash games over a time period realistically ranging from 1 to 3 years

With specific regard to the latter aspect, it should also be said that legalising and regulating online poker and other cash games seems an almost inevitable outcome for the Italian authorities if they do aim at making the ‘.it’ gaming platforms fully competitive in commercial terms vis-à-vis the ‘.com’ ones. Hence the real question is not if poker and other cash games will be introduced in Italy, but when this will in fact happen. The only sensible answer one could presently give to such question is: time will tell.

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