Canadian Gaming SummitApril,29- May,1stMontréal, Québec

Gaming in Europe,

Thibault Verbiest,Attorney at law, partner at ULYS

www.ulys.netwww.gaminglaw.eu

European Law brief

EC Treaty guarantees 4 freedoms:

• free movement of goods; (art.28)• free movement of services (art.49) and

freedom of establishment (art.43) • free movement of persons; • free movement of capital.

Within 27 Member States (“M.S”) (few exceptions)

European Law brief

According to the EC treaty:

Gambling

=

Service

=

Free movement

European Law brief

• These provisions have direct effect

• Consequence: M.S. must modify national laws that restrict freedom of establishment, or the freedom to provide services, and are therefore incompatible with these principles.

BUT…

European Law brief

According to Article 46 and Case law, exceptional national regulations restricting free circulation of services may be adopted if they are:

1. justified by imperative overriding general interest (consumer protection, prevention of fraud etc.)

2. proportionate and necessary

Member States must have a systematic and coherent gaming policy.

European Law brief

Who controls if restrictions imposed by M.S. are justified?

The European CommissionThe E.C.JNational courts

European Law brief

The European commission:• Infringement procedure

1st stage: letter of formal notice.2nd stage: reasoned opinion.3rd stage: referral to the ECJ.

• Standstill clause: M.S. notify new draft technical regulations and apply standstill periods during which the Commission and all M.S. can react. (Directive 98/34)

Towards liberalization in the EU

France: before

• 2 State controlled monopolies (FDJ and PMU)

• Blanket prohibition of online gaming and betting with an exception for the two monopolies.

• The monopolies operate an aggressive strategy with marketing which even targets children.

• Recent law (March 2007) reinforcing criminal sanctions against private gaming operators.

• Arrest of Peter Nylander ( October 2007)

France:after• July 2007: PMU vs. Zeturf: Groundbreaking decision from

the French supreme court. Is the barrier to free provision of services justified and necessary? Questions proportionality of the blanket prohibition need to check if

the MS of origin protects consumers.

• October 2007: France starts to negotiate with the European Commission after 2nd stage of infringement procedure is launched.

• March 2008: Durieux report published

• Next week: the French government is going to announce the opening of online gaming market

Internet Payments Ban

This idea from the US inspires many M.S. such as France, Germany, Holland, Norway, Spain or Estonia.

Commission’s reaction: Draft French law deemed likely to be contrary to EU treaty.

(art.56 EC Treaty granting free movement of capital).

German Interstate Treaty adopted in January 2008: Negative opinion of the Commission+ Since January referral to the ECJ.

Recent changes in the EU… …towards liberalization

ITALY: After Gambelli, Placanica and infringement

procedures = new decrees Decree on remote skill games = where “skill

predominates over chance” Online Gambling draft proposal criticized by

the Commission (on 04.28.08) for 3 reasonsCost of licenses (around €300.000)Obligation to connect to a national database for controlsBetting turnover threshold required to obtain a license.

Recent changes in the EU… …towards liberalization

DENMARK:• March 2007: 2nd stage of infringement

procedure launched by the Commission for restrictive practices in the sport betting market.

• April 2008: Government preparing to formally liberalize the market with a licensing system.

Recent changes in the EU… …towards liberalization

SWEDEN:• 2 ongoing infringement procedures (sport

betting and poker)• February 2008:The Supreme court questions

the Swedish banning foreign gambling adds.• March 2008: Prosecutors not allowed to

prosecute cases of illegal foreign gambling adds until further notice.

Recent changes in the EU… …towards liberalization

HOLLAND

April 2008: Dutch Senate rejects a bill granting State Monopoly the right to be for 3 years the exclusive online gambling operator.

WTO: EU v. US

• September 2006: UIGEA is passed• December 2007: RGA lodges a complaint

before EU Commission since UIGEA causes a ban of gambling in violation of GATS between US and EU.(market access and national treatment.Compensation deal for the future Investigation from the EU Commission is pursued

to assess past impact of UIGEA on trade.Further to this report of the EU, WTO could launch

proceedings.

Thank you for your attention!

Thibault VerbiestPartner, Ulys www.ulys.net

www.gaminglaw.eu