ONLINE GAMBLING

BALANCING FREE TRADE & SOCIAL POLICY

What is Online Gambling & Who is ‘at it’?

• Gaming, Betting, Lotteries, Prize Competitions

• The concept of remote gambling

• Statistics

EXAMPLES

• Example Betting

• Example Horse-racing

• Example Online poker

• Example Virtual horse-racing

• Example Virtual race horse breeding

Risks associated with Online Gambling &Regulatory Objectives

• Problem gambling & addiction– Harm for individual and society

• Minors• Crime associated with (some) gambling

operations (fraud, money laundering)• Consumer Protection

– Ensuring gambling is conducted fairly and openly

Different Regulatory Models

• Outright prohibition of online Gambling– Workable?

• US Unlawful Internet Gambling Enforcement Act 2006

• State operator monopoly • Eg Svenska Spel or Norsk Tipping (games); Norsk

Rikstoto (horse race betting)

• Single private operator• Eg Pari Mutuel Urbain in France

• Restricted licensing system• Open licensing system

• Eg UK Gambling Act 2005

National Regulation as Trade Restriction

Divergent laws, no harmonisation, no country of origin rule

Excluded from scope of Services Directive, E-commerce Directive etc

The internet & cross-border access EU Treaty, Arts 43 and 49 (freedom to provide

services & establishment) Direct effect => lever for harmonisation?? Role of the courts in the absence of

harmonisation?

The Caselaw of the ECJ (1)

• Case C-275/92 Schindler• Case C-124/97 Lärää• Case C-67/98 Zenatti--------------------------------------------------• Case C-234/01 Gambelli• Case C-338/04 Placanica (6. March 2007)• Case E-1/06 Re Amendment to Game & Lottery

Law (14. March 2007)• Case E-3/06 Ladbrokes v Norway (30. May 2007)

The Caselaw of the ECJ (2)

• Jurisprudence under Art 234 (Prelim Ref)• Commission infringement procedure

Art 226– Notification against Denmark, Germany,

Finland, Italy, the Netherlands, Sweden and Hungary (April 2006)

– Austria and Luxembourg (December 2006)– Commission expressing concerns on the

German Inter-State Treaty in March 2007• Internet prohibition for sports bets and lotteries

What do the national courts do with this Guidance from the ECJ?

• The PMU v Zeturf case as an example– Situation following Gambelli & Placanica:

– PMU v Zeturf : Court of Appeal, Paris: (1) ordering cessation of operations; (2) quantifying the penalty amount due by Zeturf

– Maltese courts refuse enforcement

– French Cour de Cassation: Reversed to CA (13. July 2007)

GATS-WTO

• DS 285 Antigua & Barbuda v United States• Cross-border online gambling services

– Panel Report November 2004

– Appellate Body Report April 2005

– US not complied: February 2007

Conclusion• Online gambling growth sector => pressure to liberalise

cross-border provision• Potential for social & individual harm => risk assessment

specific to online gambling• Enforcement issues pertaining to national regulation

(arrests; payment providers)• Harmonisation unlikely• Role of the ECJ/WTO in determining the limits of social

policy – Proportionality test– But application by the national courts?– Result: Litigation battle