Written submission to the Green Paper on online gambling in the Internal Market

[COM (2011)128 final]

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Introductory statement

BetClic Everest is very pleased to submit its contribution to the European Commission within the

context of the public consultation on the Commission’s Green Paper on online gambling in the

Internal Market.

About us

BetClic Everest is one of the European leaders in online gambling, having a unique portfolio

comprising 4 diverse and complementary international brands: Betclic, Everest Gaming, bet-at-

home and Expekt.

Betclic Everest operates a broad on-line gambling offer: sports and horse-race betting, poker, casino and bingo. This is backed up by customer service facilities which are available in 25

languages.

With more than 12 million customers worldwide, our Group boasts 1,200 employees. In its day-to-day operations Betclic Everest is committed to promoting secure and responsible gaming.

Our companies are members of several international industry associations including the

European Gaming and Betting Association (EGBA) and the European Sports Security Association (ESSA).

Through our 4 brands, BetClic Everest places expertise, technological know-how and security at the heart of our strategy to deliver an on-line gaming offer attuned to our customers’ passions.

Group policy

Online gambling should remain an entertainment option, exclusively reserved for responsible adults.

Betclic Everest, which has a management team focused on ethical issues and responsible

gambling, is committed to promoting safe, responsible gambling on a day-to-day basis.

Gambling should be enjoyed in a responsible manner, in accordance with participants’ means

and wishes.

Our Group’s entire client-facing workforce has been made aware of issues surrounding problem

gambling and has received training on responsible gambling.

We have adopted a marketing and advertising code which prohibits targeting under-age or

problem gamblers. Furthermore, Betclic Everest advertising does not appear on websites clearly

targeting minors. Betclic Everest does not publish content that exploits players’ financial worries

and never suggests that gambling is an alternative to work or a way of getting out of financial

difficulty.

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The Green Paper and the role of the Commission

We welcome the Green Paper and the Commission’s willingness to have an open and real

debate about online gambling via the Green Paper. We truly believe that Commissioner

Barnier’s initiative and drive behind the Green Paper is laudable. It provides the opportunity to

examine thoroughly the state of the EU gambling market, which is necessary in order to build a

safe and well balanced market for the future.

A well balanced market is in our opinion:

- A market where players can play in a trust worthy environment;

- A market where players have tools which allow them to control their spending;

- A market where operators find a competitive and open business environment, which is

the best way to challenge illegal websites;

- A market where operators find harmonized technical requirements that offer high level

security;

- A market where Member States and operators have the tools to fight money laundering

efficiently; - A market where States and operators are able to protect minors and social order.

This process comes at a time when market fragmentation in Europe is accelerating due to

different regulatory requirements being put in place from one EU Member State to another.

In order to achieve a well balanced market we hope that the outcome of the present process of

debate, triggered by the Green Paper, will be the much needed targeted harmonisation of areas

such as consumer protection and prevention of fraud measures, mutual recognition of licensing

procedures, IT infrastructure, advertising and sponsoring rules and protection of minors.

We recognize that the Commission’s dual role as the guardian of the Treaty and as the instigator

of change is not an easy one.

We believe that, on the one hand, the Commission has a responsibility to ensure that the present consultation process generates sufficient political momentum. On the other hand, the

Commission, as guardian of the Treaty must ensure that Member States observe Treaty

principles.

There are currently eight pending infringement proceedings commenced by the European Commission against Member States relating to gambling. There are also a number of Member

States such as Belgium, Romania and Poland which, ignoring the Commission’s reasoned

opinions issues in the context of notification under Directive 98/34/EC, have pressed ahead to

enact legislation which runs counter to Treaty principles. Portugal and Poland have simply failed

to make notifications required, ignoring the obligations imposed on them by this directive.

It is only by properly fulfilling its above mentioned dual role that the Commission can contribute

to bringing about the much needed progress in the gambling industry in Europe.

Betclic Everest Paris, 29th July 2011

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1. Are you aware of any available data or studies on the EU on-line gambling market that

would assist policy-making at EU and national level? If yes, do the data or study include

licensed non-EU operators in the EU market?

Part 1

With regard to data or studies on the EU on-line gambling market we refer the Commission to

the following:

AFJEL White Paper on the regulation of online gambling in France (2011).

Annex 1 – due to the size of this document we will provide the Commission with a copy of

this report to follow.

This report focuses on the experiences drawn after 1 year of operations on the French

market and makes recommendations for improving the regulation of online gambling in

France. It contains very interesting performance indicators for the French online gambling

market.

Jean-François Lamour, Aurélie Filippetti Rapport d’information sur la mise en application

de la loi no 2010-476 du 12 mai 2010 relative à la concurrence et à la regulation du secteur

des jeux d’argent et de hasard en ligne (2011).

See: http://www.assemblee-nationale.fr/13/pdf/rap-info/i3463.pdf

Some of the main points of the report include:

Advertising: According to the Conseil supérieur de l’audiovisuel, in the eight months

following the coming into force of the French law on online gambling (but excluding the first

couple of weeks) the advertising expenditure for online and offline gambling on TV and

radio amounted to 320 million euros of which 120 million euros (i.e. just over 1/3 of overall

spend) were spent on advertising online gambling. This report also refers to a study by

Kantar Media which estimated that the overall advertising expense of online gambling

operators in the same time period (and including all forms of advertising, i.e. even online)

amounted to 194.4 million euros. The biggest spenders were la Française des Jeux (FDJ) and

Pari Mutuel Urbain (PMU).

The rapporteurs consider it very likely that advertising expenditure by online gambling

operators will diminish going forward, except that incurred by FDJ and PMU, the two

historical monopolies. To date PMU retains a monopoly on offline horse race betting and

FDJ retains a monopoly to offer pure games of chance offline and online to the general

public (outside land based casinos). FDJ also still has a monopoly on offline sports betting.

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Money laundering: The report point out that thanks to measures introduced in the French

law online gambling has given rise to few, if any, issues related to money laundering. The

rapporteurs quote ARJEL’s president who says that ARJEL has not to date identified any

money laundering issue related to or implicating any of its licensees.

Customer registration is key to deterring persons intent on laundering money. The fight

against money laundering needs to be taken to the lotteries, scratch cards and offline

betting. Concern was expressed about the lax control at several points of sale of FDJ and

PMU.

Sustainability of the online gambling market: Insufficient return from national licensed

online gambling could prejudice its durability.

The development of the online sector does not come at the expense of the offline

monopolies: the report states that offline activities of both FDJ and PMU have grown and

the casino industry has admitted that online gambling has not aggravated their structural

problems.

2008

Pari Mutuel Urbain (PMU): EUR 9.3 billion turnover

Française des Jeux: EUR 9.203 billion turnover

Casinos (200 in France): EUR 2.5 billion gross gambling revenues

TOTAL: EUR 21.003 billion

2009

PMU: EUR 9.3 billion turnover

Française des Jeux: EUR 9.997 billion turnover

Casinos (200 in France): EUR 2.3 billion gross gambling revenues

TOTAL: EUR 21.597 billion

2010

PMU: EUR 9.54 billion turnover

Française des Jeux: EUR 10.551 billion turnover

Casinos (200 in France): EUR 2.29 billion gross gambling revenue

Online sports betting and poker: EUR 5.02 billion turnover, of which 3.7 billion on poker

cash-games

TOTAL: EUR 27.401 billion

(Italy: Although not referred to in this report, it worth noting here that the experience with

lotteries in Italy has been similar, i.e. there has been continued growth for the lottery sector

concurrent with national regulation of online gambling.

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2007

Lotteries: EUR 15.8 billion turnover

Online sports betting: EUR 1.1 billion turnover

Total gaming market: EUR 41.6 billion (+17.4% on 2006)

2008

Lotteries: EUR 17.5 billion turnover

Online sports betting + poker: EUR 1.4 billion turnover

Total gaming market: EUR 47.5 billion

2009

Lotteries: EUR 18.7 billion turnover

Online sports betting + poker: EUR 3.7 billion turnover

Total gaming market: EUR 54.4 billion

2010

Lotteries: EUR 19.5 billion turnover

Online sports betting + poker: EUR 4.8 billion turnover

Total gaming market: EUR 61.4 billion)

Addiction: The report highlights the absence of studies on problem gambling. The French

government had announced that a prevalence study would be published before the end of

2011. The rapporteurs raise doubt about the relationship between a cap on return to

players (the so called TRJ) and prevention of addiction.

Online operators not licensed in France: the rapporteurs speak of an illegal market which

remains quite vibrant estimating it at about 15% of the regulated market and 30% of

gambling overall.

Jean-François Lamour, expresses his own opinion that sport betting taxes are too high for

the industry to sustain. He recommends a 20 % tax on gross gaming revenues (broadly

speaking equal to stakes less wins). He also considers that the TRJ should be at the level of

90% instead of 85%.

Study by the Research Institute of Industrial Economics (2011).

See: http://www.rentspel.net/2011/03/15/study-internet-accounts-for-26-of-swedish-

gambling-market/

This report shows that the online gambling in Sweden in March 2011 accounts for 26

percent of the Swedish gambling market, the highest market share for online gambling in

Europe. This report also shows that private companies related to the online gambling sector

have a market valuation of SEK19bn and employ 1,900 skilled people in Sweden.

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Report by the Spanish Competition Authority on the Spanish Gaming Law Bill (IPN 48/10

Anteproyecto de la Regulación del Juego) (2011).

See:

http://www.cncompetencia.es/Inicio/Informes/Informes/tabid/166/Default.aspx?pag=2

This report provides an assessment on the implications that the Gaming Law bill will have

from a competition law perspective and raises concerns on certain aspects of the law, such

as the fact that the state controlled lottery operator (Loterias y Apuestas del Estado) will

maintain a monopoly over lottery games, while competing with private operators in other

sectors.

IPSOS Media CT – Jeux d’argent en ligne (2011).

Annex 2 - attached.

This study, commissioned by Betclic Everest, shows that 800,000 players still play casino

online from France, although casino online is banned in France. It also shows that 16.3% of

people who use French licensed sites to bet on sports or horses or play poker also play

online casino.

“Jeux en Ligne” in the French Market, Key features, strengths and weaknesses of the

French legal gaming offer, MAG (2011).

See: http://www.mag-

ca.it/Download_k_files/%22Jeux%20en%20ligne%E2%80%9D%20in%20the%20French%20

Market_2011.pdf

This is a comprehensive report that provides an insight of the situation of the French

market. MAG’s research led to the conclusion that restrictions and high taxation are only

beneficial to the “black market”. According to MAG the “black market” represents 57% of

the entire online gambling market in France.

Avis n° 11-A-02 du 20 janvier 2011 relatif au secteur des jeux d’argent et de hasard en

ligne.

See: http://www.autoritedelaconcurrence.fr/pdf/avis/11a02.pdf

The French Competition Authority found that:

- The current framework for the so called “droit au pari” is inadequate, especially insofar

as the setting of the price is concerned.

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- Access to horse racing results should be available to all licensed operators rather than

PMU having a privileged access.

- The practises of PMU and FDJ of mixing pools of online and offline players is

uncompetitive.

Contributos para uma regulacao das apostas online em Portugal, P. Dionisio, and others,

(2010).

Annex 3 – due to the size of this document we will provide the Commission with a copy of

this report to follow.

A report which analyses the Portuguese online market and the current regulatory situation.

The report concludes that market reality is inconsistent with national laws and that

regulation would serve to “normalize” a situation which is today accepted as a reality as well

as that it would be of benefit to sports and national taxation. The report contains data

regarding sponsorship of sports by gambling operators.

Estimation du coût d’obtention de l’agrément et de l’homologation des jeux en ligne en

France, prepared by Pricewaterhouse & Coopers (2010).

This report reflects the operating cost for licenced online operators in France. For example,

the costs for a single EU operator to obtain and maintain a French licence is € 8.7 million,

even if the EU operator is already licensed in one or several other EU member states.

Gold Media - Betting & Gambling Market Germany 2015 (2010).

See:

http://www.goldmedia.com/uploads/media/Press_Release_Goldmedia_study_Betting_G

ambling_01.pdf

This report shows that the restrictive framework implemented by Germany since 2008 has

generated negative effects in the market. According to the report, Germany has lost tax

revenues of €2.4bn.

Sport Betting: Legal, Commercial and Integrity Issues prepared by the Remote Gaming

Association (2010).

See: http://www.rga.eu.com/data/files/Pressrelease/sports_betting_web.pdf

This is the result of a consultation on sports betting (including horse and greyhound racing),

most notably with regard to commercial and integrity issues.

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Xerfi – Paris et Jeux en Ligne. Poker, paris hippiques et sportifs. Panorama concurrentiel

et perspectives à l’horizon 2013 (2010).

This report is available at a fee from www.xerfi.com.

Amongst other things Xerfi had estimated that the size of the French online gambling

market was around Eur620m in GGR compared to Eur8.2billion GGR generated by the

French land based casinos, FDJ and PMU combined.

Overview of the Italian Regulatory Framework for Online Gaming, Evolution of the Italian

Online Gaming Regulation 2002-2009, MAG (2010).

See: http://www.ft.dk/samling/20091/lovforslag/l202/bilag/4/825547.pdf

A study that provides a comprehensive overview of the Italian model for online gaming, its

key provisions as well as its evolution into its current format.

KPMG, Online Gaming – A gamble or a sure bet? (2010).

See:

http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/

Market%20Sector/Technology/1001505.pdf

This report provides an overview of the global online gambling market.

H2 Gambling Capital January (2009).

See:http://www.h2gc.com/downloadfiles/newspdfs/gambling_goes_mobile_-

_presentation_egr.pdf

This reports shows that the size of the online market in Europe was 7.65 percent of the

whole gambling market in 2008 and forecasts that this sector will have a 12 percent market

share of the gambling market in 2012.

It must be highlighted that this report shows clearly that the online gambling market is not

cannibalising the land based gambling sector. Effectively, this report shows that the land-

based sector will continue growing up to 2012, only at a slightly slower pace than the online

market. While the European land based sector collected €78.5bn in GGR, it is expected that

in 2012 it will collect €82bn.

The online gaming sector is not developing to the detriment of the land-based sector for

two reasons:

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Different product profiles: The revenues obtained by the traditional gaming sector are

based in long established products.

Different customer profile: There is a very low substitution level between the online and

traditional land based sector because of the different player profiles (offline players tend to

have a lower degree of education). This was shown by the study undertaken by NOMISMA

– Società di studi economici s.p.a for the Italian gaming market

(http://www.egba.eu/pdf/Italian_market_online_betting_Exec_Summary_En.pdf).

Study on the Contribution of the Gambling Industry to the Funding of Sports in Two

Member States – the UK and France, EGBA, (2008).

See: http://www.egba.eu/pdf/Final_study_Nov_2008.pdf

Provides a comparison between the performances of two mature gaming markets that have

a different regulatory approach on internet gambling.

Part 2

We want to clarify that when we refer to the “black market” we understand:

a. unlicensed operators

b. operators licensed outside the EU and taking business from Member States and

c. operators which, even though licensed in an EU Member State, take business from

another Member State which requires a national licence and the laws of which are fully

in line with EU law.

While some of the reports mentioned in the previous section provide information on the

number of operators offering services in a specific European jurisdiction without a national

licence, we understand there is no data on how many of these operators do not have a licence

in any Member State.

For example, the report ‘“Jeux en Ligne” in the French Market, Key features, strengths and

weaknesses of the French legal gaming offer’, states that 57 percent of the French market is

served by operators without a French licence (p. 17). However, this report has no data on how

many of these operators do not have a licence in a Member State to back their activities. The

same comment applies to the report by Jean-François Lamour and Aurélie Filippetti as well as to

the report ‘Overview of the Italian Regulatory Framework for Online Gaming, Evolution of the

Italian Online Gaming Regulation 2002-2009’.

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2. What, if any, is your experience of EU-based online gambling operators licenced in one or

more Member State and providing and promoting their services in other EU Member

States? What are your views on their impact on the corresponding markets and their

consumers?

Part 1

According to a recent report prepared by KPMG, revenues from online gambling in Europe will

rise to €8bn in 2012. A report prepared by H2 Gambling Capital considers that gross gambling

revenue (GGR) for online gambling will amount to €11bn in 2012 (see our answer to question 1

for references to these reports).

As the Green Paper clearly signals in section 1.2, the Court of Justice of the European Union

(CJEU) has confirmed on different occasions that internet gambling is an economic activity

protected by the Treaty and that national legislation that limits operators established in one

Member State from accessing consumers in another Member State constitutes a restriction on

the freedom to provide services (Schindler (C-275/92), Gambelli (C-243/01) and Placanica (C-

338/04) and others).

Nonetheless, several Member States still defend barriers to online gambling services provided

by licensees of another Member State; on pretexts which are often incoherent. Typically

gambling in these Member States is available via monopolies which regularly expand their offer

and the availability of their products in order to increase revenues.

Experience shows us that prohibitive or restrictive regimes on internet gambling do not work.

Measures implemented to restrict access to certain sites can be easily circumvented. As the

internet is not subject to border limitations European customers are able to access sites located

in well regulated jurisdictions such as Malta, Gibraltar or the United Kingdom as well as

unregulated sites or sites regulated outside Europe.

We consider that the pressing matter for European authorities is to encourage consumers to

gamble on regulated sites that comply with player protection standards.

For example an IPSOS survey has shown that 800,000 people in France still play online casino

even though this product is prohibited by French law. 54% of them would like to play casino on

French licensed sites (see our answer to question 1 for reference to these reports). To put things

into perspective, according to ARJEL there are 2.1 million active accounts on French licensed

sites. So the proportion of players still playing casino online from France is very large in relation

to the number of accounts with French licensed sites.

Although the ARJEL has taken action against a few sites taking business from France without a

French licence, there is recognition that French facing operations of non French licensed

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operators are hard to control. The study conducted by MAG Consulenti Associati clearly shows

this. Even Mr Lamour’s report acknowledges the existence of a “black market” in France of up to

30% (see our answer to question 1 for reference to these reports).

Unfortunately, the information available does not discriminate between Member State licensed

and non Member State licensed, or unlicensed operators.

Part 2

Impact on consumers due to legislation and self regulation

For various reasons we are of the view that operators licensed in one or more Members States

provide a higher level of guarantees and protections for European Union consumers.

Consumer protection measures applicable by virtue of EU directives

Consumers using the services of Member State licensed operators can do so knowing that those

operators, by virtue of the fact that they are established in an EU Member State, are required to

comply with national laws transposing several EU Directives that provide significant protection

to consumers.

Every operator established in the European Union must abide by the national laws transposing

the following directives:

- The Unfair Commercial Practices Directive. This directive aims at protecting consumers

from unfair practices which are likely to induce a transactional decision which they

would otherwise not have taken.

- The Distance Selling Directive. This directive applies to most contracts where a

consumer and a supplier running an organised distance-selling scheme do not meet

face-to-face at any stage until after the contract has been concluded.

12-month post-opening estimate of the split of turnover between legal & black market (source: MAG*)

Legal

43%Black

57%

All products

Legal

72%

Black

28%

Authorised products

“[…] even if the current regulation ensures a decline in demand for unlicensed online gaming, the latter continues to be sizable.” MAG*

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- The Data Protection Directive and the Directive on privacy and electronic

communication. These directives regulate data protection in the on-line environment.

For gambling services these rules not only cover static data such as contact or financial

information but also behavioural data, like gambling frequency and pattern or the

stake.

Consumer protection frameworks under Member State online gambling regulations

Consumer protection is central to the legislation of every Member State which has regulated

online gambling to date.

Let us take Malta as an example, where all Betclic Everest group companies currently hold

online gambling licenses issued by the Malta Lotteries and Gaming Authority (LGA).

In so far as consumer protection is concerned, article 56 of the Maltese Remote Gaming

Regulations 2004 requires licensees to resolve any complaints by customers within a maximum

of 21 days of a complaint being made either to the operator or to the Malta Lotteries and

Gaming Authority. Failure to resolve the complaint within the statutory time period exposes a

licensee to liable to a fine and the possibility of prosecution.

Maltese regulations also require licenced operators to take measures to address problem

gambling. For example, article 42 of the Maltese Remote Gaming Regulations 2004 establishes

that licensed operators must display at all times, in a prominent place of the entry screen of the

website, a warning of the addiction possibilities of gaming and information and links to other

websites assisting compulsive gamblers.

Maltese regulations also allow customers to self-limit the amount of money they may wager

within a specified period of time.

Similar rules apply in Gibraltar where our group companies also hold a licence.

It is also well worth noting that Malta and Italy also require licensed operators to keep customer

balances in a segregated account in order for this money to be protected against any possible

creditors of a licensee.

Self-imposed consumer protection standards

The members of the EGBA, which includes Bectclic Everest companies, have adopted additional

protection policies in order to provide a better and safer service to their clients. A reputation

for integrity is fundamental when conducting online business therefore higher standards of

consumer protection are a vital tool to enhance brand value.

As a condition of membership of the EGBA, members have to comply with EGBA’s responsible

gaming standards and undergo a yearly audit to verify compliance. Following publication of the

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standards recently drafted by the European Committee for Standardisation (CEN) EGBA

members have agreed that going forward they will abide by and be audited against CEN’s

standards.

It is worth noting that a 2008 EGBA Standards benchmark study found that the majority (over

two thirds) of the EGBA consumer-facing standards benchmarked matched or exceed those of

the national gambling monopolies.

Impact on consumers of fragmentation due to different technology & business models

Having multiple licenses across the European Union means having to work with significantly

different technological and business models from one Member State to another. This leads to a

range of impacts on consumers.

Different technologies have an impact on consumers. The use of different “trail systems”, for

each Member State where licenses are held, requires the deployment of specific complex and

costly systems. All of these systems have substantially similar objectives: typically, traceability of

transactions, transparency of customer accounts vis-à-vis customers and regulators and secure

data storage.

In spite of objectives in common the different regulation across Member States results in

different methods of interaction with customers while the gaming functionalities do not really

change; Texas Hold’em rules do not change and a “bet is a bet”. The same consumer trying to

access the “betclic” site in France, Italy and the UK would in each instance be directed towards a

different site, with a different offer, different registration requirements, different display of

account information and different terms of business.

The statutory requirements which have been introduced in certain Member States to interact

with third party systems (for data recording or validation purposes) during gambling transaction

processing could also create issues such as degradation of the quality of service for customers in

case of unavailability or down time of the third party systems.

In Italy, the different real-time monitoring and reporting flows to the regulator’s systems go

through non-gaming related third parties, introducing a significant overhead of transaction

processing while waiting for the acknowledgement of the transactions.

In France, it is required that each action performed by the player must validated from its

standpoint. That leads to the continuous display of messages asking for validation during a

gaming session, damaging user experience.

These overheads of data processing lead to a delayed response for the client creating network

latency (jitter).

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During heavy processes such as user registration, this might create instability or significant

response times that require the customer to re-perform some actions and engender complex

data integrity maintenance while the process is under way.

Impact on consumers due to incoherent jurisdictional scope of regulation across Member

States

Currently a Betclic customer resident in the UK is unable to log on to his betclic.com account

while in France due to the fact that under French law access to non .fr French licensed sites is

prohibited while on French territory. That customer cannot currently access his betclic.com

account from France, even if only to verify his account balance. If that customer wanted to play

he would have to create a new account on betclic.fr, which is a service provided only in French

and which contains a separate and distinct product offer to that found on .com.

Conversely, a Betclic customer resident in France can create a betclic.fr account and play in

France as well as when in the UK or another EU Member State. This is because French licensed

operators can accept any foreign player on their French licensed .fr site provided that they

ensure that their gaming offer complies with the national law of the foreign player’s country of

residence.

So, whereas French law contains an express prohibition on foreign licensed sites being made

available in France, it allows French licensed sites to accept transactions from foreign residents.

Impact on consumers due to availability/non-availability of products

Under French law bets on most football friendlies are forbidden. Ironically they are allowed in

rugby. Under French law bets on some minor events (Ex: horseball, pétanque) are allowed,

while bets on some major international ones are prohibited (Second European divisions or the

French “National” championship).

The return which that customer can expect when betting on betclic.com and betclic.fr is also

different. Whereas no such cap exists on .com, on betclic.fr the average return to players is

capped by law at 85% of stakes. This means that, on average, a customer will have a return

which is of 8% less than he would have if he played on betclic.com. Average return on .com is

93% vs. 85% in France.

There is an impact on customers even when it comes to playing poker. The type of poker games

available to consumers varies according to the legislation applicable in different Member States.

In France only Texas hold’em and Omaha 4 are available online as opposed to Italy where

several poker games can be offered (Texas Hold’em, Omaha, Omaha Hi-Lo, Stud, Stud Hi-Lo,

Draw, 2-7 Triple Draw, 2-7 Single Draw, HORSE, Razz, 8-Game Mix, Badugi). At the same time,

the same customer who is prohibited from playing these several types of poker games in France

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can log onto a non French licensed web site and sit at a table where the game he wants to play

is offered.

We are of the view that due to the impossibility of effectively policing the internet, from a policy

perspective, it is far better to ensure that demand is channeled by proper regulation of all

mainstream online gambling products.

Consumer choice does not only come into play with the variety of games which can or cannot be

played online in a particular Member State.

In the online poker industry reference is made to “liquidity”, i.e. the number of players in a

poker room as well as the number of players at each stake and level. This is critical for a poker

player. A poker player must be able to play at a table where he considers he can compete and

where stakes are at the level at which he feels comfortable playing. If this choice is not available

the entire business model is undermined.

The impact of “liquidity”, or the lack of it, on a poker network is governed by Metcalfe’s law. The

math of 100 players – 50 players = 50 players does not work. If you take away 50% of all players

from a poker room, this does not mean that the other 50% remain; far from that.

In our view only the largest two or three member states in the European Union have large

enough populations to be able to sustain a competitive nationally ring fenced online poker offer.

Most Member States have populations which are far too small to provide sufficient liquidity

across multiple national ring fenced online poker rooms. Some Member States are so small that

even a monopoly in online poker would struggle to survive.

Impact on business

The impact of market fragmentation on business is without doubt financial and anti-

competitive.

A study by Price Waterhouse Coopers (see our answer to question 1), shows that an EU

operator, which is already licensed in one or several other Member States, needs to invest for

France only, EUR 8.7 million in order to cover administrative and technical costs for obtaining

and maintaining the national license to operate on the French market. The costs of this

fragmentation and duplication of national requirements are particularly high.

In order to comply with the recently introduced technical requirements in Italy we estimate that

over EUR 1 million is necessary for an operator already licensed in one or several other Member

States, including France.

Operators wishing to obtain licenses in Spain and Denmark will require further significant

resources simply to adapt or develop their technological systems to local specifications.

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The regulatory objectives ultimately remain more or less the same. Unfortunately, the method

varies and, we have found that, even where it is similar we have not been able to avoid

duplication due to national regulations which do not expressly recognise security measures,

licenses or audits undertaken in another Member State.

Another issue is the imposition of requirements which are unnecessary considering the

objective which they seek to achieve. For example in France, there is significant duplication in

storage of data as it is required by law to store the same data in different parts of the gaming

system during processing for validation purpose.

3. What, if any, is your experience of licensed non-EU on-line gambling operators providing

and promoting their services in EU Member States? What are your views on their impact

on the EU market and on consumers?

As mentioned above, while Member State licensed operators must comply with a plethora or

regulations geared at providing a secure environment for consumers, this is normally not the

case for operators that are licensed outside the EU.

In addition to the various implications for consumers referred to in our answer to question 2,

account should also be taken of the fact that unlicensed operators or those licensed outside the

EU are contributing far less to the EU’s economy than Member State licensed cross border

operators in terms of economic benefits: including in the fields of taxation, job creation and

innovation.

4. If any, which are the legal and/or practical problems that arise, in your view, from the

jurisprudence of national courts and the CJEU in the field of online gambling? In

particular, are there problems of legal certainty on your national and/or the EU market

for such services?

The lack of a clear and homogenous position on online gambling in the European Union has

generated legal uncertainty, litigation and market fragmentation.

In our view the main problems are:

- Lack of consistency amongst national courts when interpreting rulings of the CJEU.

Germany is a good example of this situation. The CJEU ruled in Case C-316/07 (Markus

Stoß) and Case 46-08 (Carmen Media) that the German Inter State Treaty on gambling

was not compliant with EU law. However, national courts have not been consistently

applying this decision as some regional courts decided to stop prosecution against

online betting operators (for example, the Administrative Court of Stuttgart (REF

18

3645/10 K)) while others continued prosecuting these companies (for example, in

November 2010, the Administrative Court of Oldenburg rejected a request by a private

operator to have a prohibition order revoked).

- As the Commission is aware, all decisions of the CJEU in relation to the online gambling

industry have come by virtue of the preliminary reference procedure. The CJEU has, to

date, not been able to have the last say on the matter.

- The Commission has failed to move forward with eight pending infringement

procedures (involving Greece, The Netherlands, Sweden, Hungary, Germany, Finland,

Denmark and Austria). We consider that the political signal this gives is that non-

compliance with EU law in the area of gambling is tolerated. We can begin to

understand that where real reform is undertaken the Commission may find it expedient

not to move ahead with proceedings. However, in the majority of Member States

against which proceedings are pending proper reform is not taking place. As a

consequence, Member State licensed cross-border operators face a risk of criminal

prosecution.

The disregard by certain Members State of internal market mechanisms such as that established

by Directive 98/34/EC also significantly contributes to legal uncertainty.

We believe that as the “guardian of the Treaty”, the Commission must act to resolve this

uncertainty.

One of the issues which we consider has led to the current state of affairs is a misplaced belief

by the offline gambling sector, most notably the existing monopolies, that they will lose

revenues if the online market is open to competition. That perception is misplaced.

As already mentioned, H2 Gambling Capital data shows the land-based sector in Europe will

continue growing up to 2012, at only a slightly slower pace than the online market. Perhaps

even more significantly the French market has shown that the opening up of the online

gambling market has not cannibalised the offline sector. The recent Lamour report states (see

our answer to question 1 for reference to this report):

« ..le développement de ce nouveau marché ne s’est pas fait au détriment des monopoles :

l’activité en dur de la Française des Jeux et du PMU connaît une croissance soutenue tandis que

les représentants des casinos, confrontés depuis plusieurs années à une crise structurelle, ont

admis au cours de leur audition que les jeux en ligne n’avaient pas aggravé leurs

difficultés. Aucune catégorie de jeux et de paris en ligne ne paraît, avec une année de recul,

s’être développée au détriment des deux autres : les paris hippiques, en dépit de leur restriction à

la forme mutuelle, n’ont absolument pas pâti – bien au contraire – de la commercialisation des

paris sportifs, majoritairement à cote fixe. »

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5. Do you consider that existing national and EU secondary law applicable to on-line

gambling services adequately regulates those services? In particular, do you consider that

coherence / consistency is ensured between, on one hand, the public policy objectives

pursued by Member States in this field and, on the other hand, the national measures in

force and/or the actual behaviour of public or private operators providing on-line

gambling services?

Part 1

We have indicated in our answer to question 2 that the online gambling laws of Malta, Gibraltar

and to our understanding the UK, do not prevent licensees in those jurisdictions from providing

cross border services. Denmark’s future online legislation will allow Danish players to play

poker with customers located outside of Denmark.

On the other hand the laws of Italy, Spain and France expressly purport to regulate only online

gambling services offered to persons within those countries’ territories. Germany, Portugal,

Hungary and the Netherlands amongst others do not currently have a national legal framework

which allows private operators to provide their services online to residents of those Member

States. Both Poland and Belgium have introduced laws which on various counts are inconsistent

with the principles set out in the Treaty and developed by the CJEU.

In Germany even state monopolies are not allowed to provide their services online. The CJEU in

its Markus Stoss (C-316/07) and Carmen Media (C-46/08) rulings essentially held that German

law in the field of gambling is not compliant with EU law. To date Germany has not reformed its

laws. On the contrary there are conflicting judgements by German courts as to whether or not

the German Interstate Treaty is valid (see our answer to question 3). In addition the new draft

Interstate Treaty being proposed by 15 out of Germany’s 16 states fails to comply with the

CJEU’s jurisprudence and the Commission’s interpretation of that jurisprudence on several

counts.

Part 2

Various inconsistencies between the purported public policy objectives of Members States and

the measures in force have already been pointed out in our answers to previous questions.

Following are some further examples:

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Focus on France

Cap on return to players (“TRJ”)

French regulation on slot machines establishes that the pay-back ratio for these games

must not be inferior to 85 percent. However, in the case of online betting, the pay back

ratio has been capped at 85 percent.

The idea behind the TRJ was to limit the attractiveness of the offer and hence reduce

addiction risks. The 85% cap on return includes bonuses offered according to

operators’ commercial policy. The limit cannot be overtaken for any two consecutive

quarters in a calendar year.

Considering that bonuses represent about 2% of the stakes, operators must generate

a minimum margin of 17% on sports bets. Actually, to overcome the risk of exceeding

the maximum player return rate in case of unfavorable sports results (i.e. favourites

winning less often than anticipated, as happened in Q4 2010), operators must

actually seek a 20% margin. In other words, 80% player return rate excluding

bonuses.

The consequences of the TRJ are the following:

In France, average players return rate dropped from 93% (typical in a .com

environment in Europe) to 81.2% (average from October 2010 to March

2011 on Betclic.fr).

Players placed an average of 33% less bets (56 per month vs 83) for a 25%

lower average value (4.2€ vs 5.4€). Average stakes per player dropped by half

(-48%, 235€ vs 451€).

Despite the dramatic decrease in stakes, actual average player’s loss increased

by about 25% (49€ per month vs 39€).

Therefore players spend 25% more to play 33% less, which results in a sharp

decline in customer satisfaction.

Capping the rate of return to players, which aims in theory at limiting the

attractiveness of the product to limit addiction risks, in reality brings about

higher player losses and leads punters to play on non-licensed websites, where

the rate of return is not capped.

We believe that the player return rate should not be capped. If any threshold is

introduced at all it should be a minimum threshold which guarantees that consumers

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get a fair return. This is what is in place in Italy, Malta and what is being proposed in

Spain.

Offer restriction

As discussed in our answer to question 2, in France only online poker and betting (sports

and horse races) are permitted. To play casino or other games, consumers visit

unlicensed websites; most of which operate outside the EU, which has dramatic

consequences on consumer protection (players’ funds and responsible gaming), fraud

and money laundering.

French law also limits the authorised offer to certain bet types and sports competitions

included on a list published by ARJEL. The purpose of the offer restriction is to limit the

risks of bets on possible fraudulent competitions. For example, handicap bets and bets

on European second football divisions are not allowed.

The offer allowed on sites approved by ARJEL (sports, competitions and types of bets) is

about one third less than any typical European site (pre-match). On live betting, the gap

may sometimes be 1 to 3 (50 events on .FR websites vs 150 on .COM websites).

In our view the offer restriction strongly deviates from the law’s objectives and has the

following impact:

Restricts sales (especially on live betting);

Lowers players’ retention;

Pushes punters to non French licensed websites which offer all possible bet types;

Creates impression that the competitions excluded are corrupt;

Could actually encourages black-market and corruption since there is an

impossibility of monitoring betting activity.

We believe the offer should be as wide as possible to benefit consumers and protect

them from sites which are beyond the reach of the law.

Stronger constraints online vs offline

The law applicable to online gambling is more onerous than the law applicable to

offline gambling. For example:

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Customer verification process is a lot heavier online than offline – offline FDJ and

PMU kiosks authorise anonymous bets (see question 14 on customer verification);

French regulation on slot machines establishes that the pay-back ratio for these

games must not be inferior to 85 percent. However, in the case of internet betting,

the pay back ratio has been capped in 85 percent, when according to different

studies slot machines games can be more addictive than sport betting.

In addition, FDJ and PMU still benefit from a monopoly on offline gambling. As their

structures offline/ online are not separated, they benefit from their offline position to

capture online market share, creating strong competition distortion. For example, FDJ

and PMU kiosks are present at practically every street corner in France. This issue was

highlighted by the French Competition Authority in its report earlier this year (see our

answer to question 1 for reference to this report).

We consider that French law, the purported objective of which is to protect players, in

fact is having the opposite effect:

By imposing a very low maximum return to player it accelerates the pace of loss of

players and by limiting the types of bets and competitions allowed online, clearly

limits the development of the sector.

The decrease in offer competitiveness is consistent with the gradual disappearance

of the most demanding players from most ARJEL approved sites to the benefit of

non-licensed sites based abroad.

Hungary

Hungary has granted a monopoly on lotteries and sport betting to a state controlled

company (SzRt). Hungary purports to justify its monopoly on need to protect the society

against gaming addictions and crime. However, in the last years few years SZRt has been

continuously expanded its offer and introduced new products and new distribution

channels for Hungarian customers. SzRt games can now be played through mobile

phones and ATM machines (source: http://www.szerencsejatek.hu/en/index). While the

Hungarian administration continues to take action against online gambling operators

licensed in other Member States and taking business from Hungarian residents, Hungary

has opened the market to private operators providing games such as land-based poker

and slot machines.

Portugal

Portugal has granted a monopoly on sport betting and lotteries to Santa Casa da

Misericórdia de Lisboa to safeguard consumer protection interests. However, Santa

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Casa continues developing aggressive advertising campaigns to encourage consumers to

gamble looking to maximise its profits. In 2008 alone, Santa Casa invested €23m in

advertising

(Source:https://www.jogossantacasa.pt/Content/images/uploadedImages/content/pjmc

/gc/ cont/1309/rc_2008.pdf).

6. How does the definition of on-line gambling services above differ from definitions at

national level?

We agree on the definition provided on page 14 of the Green Paper. However, we recommend

clarifying this definition explicitly stating that:

a) VLTS and offline betting terminals should not be considered so long as significant

differences remain in the registration process and payment methods used.

b) Mobile and mobile devices should be included in the definition.

Definitions at a national level differ from country to country. Some EU Members have not

enacted regulation defining this concept.

Others have defined this activity in a broader manner. For example, Gibraltar’s Gambling Act

defines remote gambling in the following way:

“remote gambling” means gambling in which persons participate by means of remote

communication , that is to say, communication using−

(a) the internet,

(b) telephone,

(c) television,

(d) radio, or

(e) any other kind of electronic or other technology for facilitating communication;”

Another approach is the Spanish one. Article 2 (h) of the new Spanish Gambling Law defines

“gambling via electronic, computer, telematic and interactive” the following way:

“Gambling which employs any device, equipment or system to produce, store or transmit

documents, data and information, including any open or restricted communication networks

such as television, the Internet, landline and mobile telephones or others, or interactive

communication, be it in real time or delayed.”

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10. What are the main advantages/difficulties associated with the coexistence in the EU of

differing national systems of, and practices for, the licensing of on-line gambling services?

Authorities in regulated markets have similar objectives, such as for example keeping crime out

of gambling, keeping gambling transparent and fair to the player, and ensuring that vulnerable

persons are not targeted by unfair or overly aggressive gambling practices, that minors are

excluded from ability to gamble, that addictive behaviour can be properly detected and

addressed.

However, the method of implementation of these objectives in each newly regulating Member

State has so far been different from the previous ones. This lack of coherence, lack of

structured sharing of best practices, lack of sharing of information and lack of recognition of

other Member States’ regulatory authorities and practices has generated an environment of

legal and regulatory uncertainty. One which is fettered with complex and seemingly

unnecessary duplication of costs, barriers to market entry and, often, practices which are still

fundamentally against Treaty principles: for instance, the requirement of establishment in

Poland, the failure of the French regulator to accept certification of gaming platforms

authorised in other member states and different advertising regulations for online gambling

across the internal market.

Developing specific IT environments, different types of player accounts and security policies for

each regulated country implies raising costs to obtain the same end result. Ultimately where

costs increase it is consumers who suffer.

We are of the opinion that agreement and targeted harmonization of the requirements which a

regulator would like to ensure compliance with on the part of licensees ought to take place at

European Union level.

The present situation results in an inefficient use of resources and time which might be better

expended on bettering products within an agreed framework, consumer protection, and correct

implementation.

11. With focus on the categories mentioned above, how are commercial communications for

(on-line) gambling services regulated for at national level? Are there specific problems with

such cross-border commercial communications?

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Part 1

Good examples of regulation of commercial communications regarding online gambling services

are the UK’s Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP

Code) and the Code of Broadcast Advertising (BCAP Code).

The Codes lay down rules for advertisers and media owners in the UK to follow. They include

general rules that state advertising must be responsible, must not mislead, or offend, and

specific rules concerning children and ads for alcohol, gambling, motoring, health and financial

products.

The UK Code of Broadcast Advertising (the BCAP Code) applies to broadcast advertisements

(including teleshopping, content on self-promotional television channels, television text and

interactive television advertisements) and programme sponsorship credits on radio and

television services licensed by Ofcom.

The UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing applies to

non-broadcast marketing communications.

France has regulations relating to advertising which are similar to the UK’s in their objectives.

For example commercial communications for gambling operators are prohibited in audiovisual

programmes primarily intended for children (article 7 Law 2010-476). A programme is

considered as primarily for children when several criteria are met: thematic, language,

marketing targets and programs’ presentation, time frame, program designed by children

dedicated broadcast teams etc.

Of course, in addition, the Unfair Commercial Services Directive applies across the EU.

Part 2

Sponsorships are a good example of problems encountered with cross-border communications

in our industry. Online gambling operators are one of the main sponsors for sports (see our

answer to question 42). Many of these sponsorships are shirt sponsors and/or include pitch side

advertising. As a consequence, online gambling brands can be seen across Europe and beyond

when sports events are broadcast.

However, sponsorships have been targeted by the national authorities of certain Member States

which have established prohibitive or restrictive legislation on online gambling.

Incredibly, in certain cases these restrictions have been enforced even when the promotional

activity took place in another Member State. A good example of this situation was UEFA’s

refusal (on the request of the French Football Federation) to let French football team

Olympique Lyonnais (Lyon) wear a BetClic logo for a Champions League match against Real

Madrid, played in Madrid in March 2010.

26

The match was held in Spain where there advertising of online gambling is allowed. However

UEFA decided to ban the use of BetClic logo due to the fact that, at the time, online gambling

was not regulated in France and French residents were going to be watching the match on TV.

To make matters worse, UEFA allowed Real Madrid to play with its shirt showing the team’s

main sponsor, Bwin (source: http://www.egrmagazine.com/news/520102/betclic-hits-out-at-

uefa-shirt-ban-no-legal-basis.shtml).

Poland provides another good example. In January 2010 Poland introduced a general ban on

gambling advertising. A measure which formed part of a new gambling not notified to the

Commission as required under Directive 98/34/EC. As a result of this ban, Polish sports teams

have lost sponsorships from online betting operators. However, Polish customers are able to see

advertisements of online gambling operators when watching international sports events and

also when watching cable TV channels broadcast from a territory where advertising of gambling

is permitted.

The well known Polish ex football player Zbigniew Boniek, commented in an editorial article

published in the Polish sport magazine Interia:

“In Poland, we are able to watch the marches of almost all the European Leagues. In addition to

this we can also see Champions League and other European tournaments. In a few days we will

see a rematch between Real Madrid and Lyon. During this match, if you look carefully, you will

notice that both teams are sponsored by online betting companies. These companies are primary

sponsors of the majority of teams, ranging from Spanish, Greeks, etc. Except us….the Poles!”

(source: http://sport.interia.pl/news/polski-sport-rezygnuje-ze-100-mln-euro-

rocznie,1609346%5C).

Another case in point which exemplifies the problems and inconsistencies with cross-border

commercial communications in the area of gambling in the European Union is that of Sweden.

Television channels broadcast from the UK but viewable in Sweden freely carry gambling

advertising. However, Swedish authorities have taken criminal action against local media for

publishing gambling advertisements. The former editor of the leading Swedish newspaper

Aftonbladet was convicted of publishing illegal advertising and sentenced to pay fines. Last year

a preliminary ruling was rendered by the CJEU in relation to this case (C-448/08). On 22 June

2011 the Svea Court of Appeal unanimously overturned the lower court’s judgement. It held

that due to discrimination between the treatment of promotion of gambling organised in

another Member State and that organised in Sweden the judgement of the first court could not

be upheld.

In our view, imposing national limitations to advertising within the EU is, in any event,

ineffective. Consumers are exposed to this advertising anyway.

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12. Are there specific national regulations pertaining to payment systems for on-line gambling

services? How do you assess them?

Types of payments, deposits and withdrawals

French law (article 17 Law 2010-416) provides that payment providers for gambling services be

based either in the EU or in countries from the EEA with a tax co-operation agreement with

France.

Payment providers established in the EU willing to offer their services in France must inform

their supervisory authority beforehand (FSA for England), which then has to inform the French

payment providers authority (ACP)

Malta’s Remote Gaming Regulations (section 35(5)) contain a provision which lists the

acceptable methods for funding of a player’s account. This regulation establishes that licenced

operators cannot accept cash. Funds may be received from the player only through any of the

following methods:

(i) credit cards;

(ii) debit cards;

(iii) electronic transfer;

(iv) wire transfer;

(v) cheques;

(vi) any other method approved by the Authority.

In France most payment methods are allowed for deposits, whereas withdrawals are only

possible via bank wires to a specific unique bank account owned by the customer. Unique bank

account details must be provided to operators before any withdrawal.

In our view regulation of payment methods is important in order to prevent money laundering.

However, we consider that the most important tool in the fight against money laundering is

proper identification of the customer and ensuring that any payment methods used are

registered to that same customer’s name.

« PSP blocking »

There has been a lot discussion around the introduction or proposed introduction in certain

Member States of regulations aimed at banks and other payment service providers (PSPs), the

intention of which would be to prevent them from accepting transactions to and/or from online

gambling companies. Such measures are known in the industry as PSP blocking measures. To

28

date no such measures are in place in European Union Member States. However PSP blocking

measures have been adopted in Norway and in the US.

Consumers can easily circumvent these blockings either through the use of changed IP

addresses, proxy websites, alternative payment mechanisms (e-wallets, pre paid cards), foreign

bank accounts or altered merchant codes.

In Norway, the Norwegian Gaming Authority’s preliminary evaluation six months after the

introduction of a payment blocking ban showed that 52 percent of Norwegian online gambling

players still managed to use credit or debit cards with foreign websites (source:

http://www.gamblingcompliance.com/node/46229).

The impact of such PSP blocks on banks and financial institutions is such that it increases their

liability and results in increased administrative and operational costs.

Merchant category codes

Merchant Category Codes are codes assigned by the International Standards Organisation (ISO)

to define and differentiate products or services by industry segment. The codes are then used

by the global card issuers to identify the source of payment transaction authorisations. The

gambling industry has been assigned one such code for gambling services, which is MCC 7995.

As part of the above mentioned PSP blocking measures financial institutions can be asked to

block credit card payments to and from online gambling websites.

Credit card payments represent in Europe 64 to 65 percent of online gaming transactions. The

rest is carried out mostly through popular e-wallet providers such as Neteller, Paypal or

Moneybookers, which are in turn being used by many other online platforms such as Ebay.

These payments methods, however, use a different code to MCC 7995.

13. Are players' accounts a necessary requirement for enforcement and player protection

reasons?

Player accounts are essential for a number of very important reasons. Member State licensees

are all required to oblige a player to register an account on the website as a pre-requisite for

that player to play for real money on the operator’s website.

The registration process forms the basis of the commercial and contractual relationship

between the customer and the business as it requires the player to:

i. Declare that he/she is over 18 years of age;

29

ii. Read and accept the operator’s General Terms & Conditions;

iii. Provide information including name, surname, date of birth, email

address, contact phone number, residential address, country (this

information is then used to enable identification of the player).

iv. Create a username.

v. Create a password

vi. Opt in/opt out of receiving marketing material.

Player accounts enable players to avail themselves of the player protection tools (also known in

the industry as responsible gaming tools) made available by the operator to all registered

players. These tools include setting of deposit limits (enabling a player to set a limit on the

amount he/she may wager over a specified time period); temporary and permanent self-

exclusion (enabling a player to block access to his account for a pre-determined time-frame or

permanently). Identification of players and access to a player’s history enables operators to

identify changes in a player’s gaming patterns and to alert the operator to changes which may

signify that a player has a potential gambling problem.

Player accounts are also essential in ensuring that a player is accountable to the operator in

cases of fraud and other abuse (credit card fraud being one such example). The operator’s

ability to access to the entire history of a player (player footprint including, transaction history,

gaming patterns, deposit and withdrawal patterns etc) is also crucial in enabling the operator to

detect and identify potential or actual money laundering.

14. What are the existing national rules and practices relating to customer verification, their

application to on-line gambling services and their consistency with data protection rules?

How do you assess them? Are there specific problems associated with customer verification

in a cross-border context?

The best way to identify customers would be to cross check personal information received

from them against the governments’ central ID card or passport database. All an online

operator would need is to send a name and receive in return either a validation of ID or a

denial from a central government system, without requiring access to the database per se.

To date this is not possible. Alternative rules for client verification have been adopted by various

Member States. The rules vary from one Member State to another.

In the UK for instance, companies like GB Group and Aristotle (leading third party verification

systems) can be retained to cross check the customer’s data with a number of public data

sources (credit card, directory inquiries, electoral lists) to confirm that the registered customer

is the right person. This process takes place real time and has achieved successful matching

rates in the order of 90%.

30

The UK model is of particular interest because it has proved particularly successful in keeping

children off gambling websites as confirmed by a study carried out by the Children Charities

Coalition on Internet Safety report in 2010 (see page 6 of report, source:

http://www.chis.org.uk/2010/11/08/briefing-on-the-internet-e-commerce-children-and-young-

people).

In France, the customer verification process is a paper verification system, which is not adapted

to the reality of the Internet. The customer identification process under the French system

works as follows:

Within one month of their registration, and before any withdrawal, customers must

submit:

- A valid ID

- A RIB or IBAN which gives unique bank account details

If discrepancies are observed between personal details submitted by customers and the

actual details observed on their ID, the account must be closed. If customers have not

submitted their IDs within one month from registration, the account is deactivated. If

customers have not submitted their IDs within one month from deactivation, the

account is definitely closed and shall not be reopened.

After customer’s ID validation, a validation code has to be sent by post to verify

customer’s address. Customer need to submit the validation code on their online

account 42 days after ID validation, otherwise the account is closed.

Under the French identification system operators lose many customers in the validation code

process. Validation codes received by post might be lost on the way, taken as advertising, and

customers feel it is very intrusive.

In France, the Ministry of Inner Affairs maintains a list of people excluded from any gambling

activity, either by self-exclusion or by a judge’s decision. Anyone can contact the Ministry to be

included on this list. Operators need to cross check customers with the list upon registration and

every month. If a player is identified as listed on the banned players’ list, either upon

registration or during regular customer base checks, the account must be closed. We believe

this is a good way to verify customer base does not contain addicted players. A similar system is

being introduced in Spain, though at the time of writing details are not available to us.

Italy has a system that is broadly similar to France’s. Upon entering into the gaming account

contract, the customer has to send in his tax number and a passport copy. If he does not do so

within 60 days, the contract is considered to be terminated. No payment of winnings is made

unless the customer has identified himself. However, documents may be emailed or uploaded;

hardcopies on paper sent by post are also considered.

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15. Do you have evidence that the factors listed above are linked to and/or central for the

development of problem gambling or excessive use of on-line gambling services? (If possible,

please rank them)

In our view ranking of the identified factors would not be beneficial. In our experience a risk

factor which may be highly dangerous for one player would pose no risk whatsoever for another

player and vice versa. Therefore it would be more efficient, if rather than ranking risk factors by

a subjective order of importance, resources were spent on carrying out fact-based research to

identify new risk factors and to provide scientific confirmation of those currently identified risk

factors.

16. Do you have evidence that the instruments listed above are central and/or efficient to

prevent or limit problem gambling relating to on-line gambling services? (If possible, please

rank them)

As far as we are aware there are only a few academic pieces of research investigating the

effectiveness of these tools. This could be a result of the fact that the identified rate of problem

gaming (including offline and online) in Europe lies at around 0.5 to 3%. Hence the vast majority

of people experience no problems from gambling. Online gambling is not treated separately

from the broader gambling industry as both sectors are considered to be interrelated in this

respect.

In line with our view in the previous question, we do not recommend ranking the instruments in

order of importance as we believe that the importance is very subjective. The instruments are

rather complimentary in nature and our experience shows that at times one instrument alone or

a combination of instruments suffices in providing a consumer with the tools he or she requires

to gamble responsibly.

The responsible remote gambling measures identified in the CEN Workshop Agreement are an

instrument which comprises a suite of responsible gambling measures for the online gambling

industry (see Written statement from Andrew Beveridge, Chairman of CEN Workshop

Agreement 16259:2011 on “Responsible Remote Gambling Measures” for the Internal Market

and Consumer Protection Committee, (IMCO) 7 June 2011).

17. Do you have evidence (e.g. studies, statistical data) on the scale of problem gambling at

national or EU level?

32

The different studies available indicate that the scale of problem gambling online and offline are

the same. The rate of problem gambling in Europe probably lies at around 0.5 to 3% of those

who gamble. This means that the vast majority of people experience no problems from

gambling. It is worth noting that the growth of the availability of online gambling has seemingly

not led to an increase in the incidence of problem gambling.

As stated in the Green Paper, the United Kingdom is (by far) Europe’s largest gambling market

and yet the prevalence rate of problem gambling in the UK is one of the lowest in Europe

(British Gambling Prevalence Surveys, 2007 & 2010) which proves that opened and regulated

systems do not lead to more problem gambling.

The 2007 empirical study carried out by the Division on Addictions, Cambridge Health Alliance, a

Harvard Medical School teaching affiliate, monitored and analysed the behaviour of 40,000

sports betting customers over eight months. The findings revealed that 99 % of these customers

exhibited moderate gaming behaviour. Only 1 % is considered highly involved bettors, of whom

a certain percentage may exhibit problematic gaming (Disordered gambling, type of gambling

and gambling involvement in the British Gambling Prevalence Survey 2007, Debi A. LaPlante,

Sarah E. Nelson, Richard A. LaBrie, Howard J. Shaffer, 2009).

In France there is a lack of studies on problem gambling related studies, apart from a report

published in France by INSERM. A study is due to the published by the government before the

end of 2011.

We believe that studies should be carried out at a European level.

18. Are there recognised studies or evidence demonstrating that on-line gambling is likely to

be more or less harmful than other forms of gambling for individuals susceptible to develop a

pathological gaming pattern?

Notwithstanding the substantial increase of internet accessibility over the past few years,

available prevalence studies indicate that there is no corresponding increase in problem gaming.

It has often been speculated, that with the expansion of the internet and 24/7 access to online

gaming services, problem gaming would be on the rise. Factual data, however, does not support

this assumption.

Research conducted by Harvard Medical School Faculty (see our answer to question 17 for

reference) also highlights the fact that gaming behaviour is determined by the interaction

between the individual and environmental conditions. Hence a person’s gaming behaviour can

be modified in the course of a lifetime. Recent research increasingly disclaims early speculations

that online gambling might be more dangerous. It has recently been acknowledged that

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problem gamblers typically use all types of gambling, offline and online. They are likely to use

online gambling as an additional medium.

19. Is there evidence to suggest which forms of on-line gambling (types of games) are most

problematic in this respect?

As far as we aware, there is no evidence of a link between a particular type of game and a

perceived increase in problematic behaviour for online players.

21. Is treatment for gambling addiction available at national level? If so, to what extent do on-

line gambling operators contribute to the funding of such preventive actions and treatment?

Most Member States offer treatment for gambling addiction at national level. However the key

issue here is one of prevention rather than treatment.

In terms of prevention, regulated online gambling operators contribute significantly both

financially as well as by other means:

Through self-regulatory initiatives, such as the CEN Workshop Agreement on

‘Responsible Remote Gambling Measures’, which already identifies a wide range of tools

to be used by customers in assisting them to gamble responsibly.

For example, as part of these actions, Betclic Everest group companies work with Adictel

(http://www.adictel.com/), an organization for prevention and support for problem

gamblers, to help us deal with customers who have gambling addiction problems.

Regulated operators undergo regular compliance audits (at national level via regulators

as well as resulting from self-regulation). These audits ensure that the operator has

provided players with all those tools which have been identified as assisting players in

controlling their gambling (deposit limits, self-exclusion etc) and they also verify that the

operator has in turn abided by its responsible gaming processes, policies and

procedures.

All expenses associated with these audits are paid for exclusively by the operator and

these include training of staff, entire teams of full time personnel dedicated to

constantly reviewing and monitoring the implementation and compliance with

responsible gaming measures.

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In regulated markets, there is the possibility for the state to direct license fees and taxes as the

state deems fit, potentially directing portions of such income to national treatment centers and

to fund research on prevention of problem gambling. However, currently there is a lack of

transparency to establish how these funds are spent by Member State governments.

23. Are the age limits for having access to on-line gambling services in your or any other

Member State in your view adequate to attain the objective sought?

Age limits for people to gamble vary from one Member State to another and at times they vary

even between types of gambling. For example age limits for access to casinos and for playing

the lottery are not the same in some Member States as the age limit to bet on sports.

In our opinion it makes sense for the age limit for gambling to be set at the same age at which a

person is considered to be eligible to vote to elect the government in their respective country.

24. Are on-line age controls imposed and how do these compare to off-line 'face-to-face'

identification?

Member States which regulate online gambling impose online age controls. Age limitation

appears directly on an operator’s homepage, in the general terms and conditions and

registration page.

Betclic Everest companies, similarly to other Member State licensed operators require the

registrant to confirm and declare that they are over 18 years of age and they also make it clear

that no person under 18 years of age is authorized to open an account. Drop down menus

requiring insertion of date of birth are customized such that persons under 18 years of age

cannot insert their date of birth.

As with other online services there are several websites offering tools for parents who wish to

restrict and/or control the way in which their children access the internet. While these tools

such as netnanny.com and others are available online there is no offline equivalent.

Internet provides more sophisticated possibilities through online registration process compared

to offline face to face identification:

The UK Children’s Charities’ Coalition on Internet Safety report 2010 (see

http://www.chis.org.uk/2010/10/18/evidence-to-the-office-of-fair-trading-e-consumer-

protection-) quotes the online gambling sector as a successful sector managing to keep

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children off their sites and as an example that should be followed by others e-commerce

industries.

Mystery shopping exercises show as well that on-line age controls are more efficient

than off-line 'face-to-face' identification:

A UK Gambling Commission mystery shopping exercise conducted in 2009

revealed that while 95% of online players had registered with operators that had

no weaknesses in there underage gambling procedure, 98% of betting land-

based shops allowed underage individuals to place a bet at the counter (see

http://www.gamblingcommission.gov.uk/pdf/online%20mystery%20shopping%

20programme%20july%202009.pdf ).

A mystery shopping exercise conducted in 2009 by the Belgian consumer

organisation (CRIOC) also revealed the lack of enforcement of age restrictions in

the offline gambling market with an impressive rate of 71% of offline point of

sale which were found selling illegally lottery tickets to minor (see

http://www.crioc.be/FR/doc/x/y/document-4434.html)

See also other study from CRIOC in April 2011 (see http://www.oivo-

crioc.org/files/fr/5820fr.pdf)

British survey of children, the national lottery & gambling 2009 (see

http://www.natlotcomm.gov.uk/assets-

uploaded/documents/Children%20and%20gambling%20-

FINAL%20VERSION%20140709.pdf)

In certain Member States, there are unsupervised automatic vending machines (for

instance for scratch cards) that are freely accessible.

Parental tools are available online:

Education and parental control is the key. It is the responsibility of parents to prevent

their children from using their ID, banking or credit cards details. It is also their

responsibility to use the various parental control or filtering devices available to prevent

their children from accessing age restricted services or products online. However,

studies from the European Commission found that only a quarter of EU parents use

parental control software (sources: Safer Internet Programme report on "Benchmarking

of parental control tools for the online protection of children" January 2011 and

EUKidsOnline report. See press release here:

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/32&).

Example of age and identity verification available from GB group (see:

http://www.gb.co.uk/) and Aristotle group (see: http://integrity.aristotle.com/).

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In France the law requires operators to verify customers’ date of birth at registration

and at each connection.

ID is not required in ‘Française des Jeux’ and ‘PMU’ kiosks. On these off line gambling

premises, underage customers can easily buy lottery tickets, bet on sports or on horse

races. Since betting is anonymous on these premises there is a higher risk of money

laundering.

We believe that the measures applicable to online gambling regarding underage play and

customer verification should be observed offline as well.

25. How are commercial communications for gambling services regulated to protect minors at

national or EU level? (E.g. limits on promotional games that are designed as on-line casino

games, sports sponsorship, merchandising (e.g. replica jerseys, computer games etc) and use

of social on-line networks or video-sharing for marketing purposes.

See answer to question 11.

26. Which national regulatory provisions on licence conditions and commercial

communications for on-line gambling services account for these risks and seek to protect

vulnerable consumers? How do you assess them?

The tools currently made available by regulated operators in Europe such as self imposed

deposit limits, temporary and permanent self-exclusion should suffice to cater for this segment

of vulnerable players.

28. Are there rules regarding the control, standardisation and certification of gambling

equipment, random generators or other software in your Member State?

Yes, there are different rules on these matters in every Member State where Betclic Everest

companies have licenses. Please see our answers to questions 2 and 3.

29. What, in your opinion, are the best practices to prevent various types of fraud (by

operators against players, players against operators and players against players) and to

assist complaint procedures?

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There is no single practice to prevent various types of fraud. Betclic Everest follows the

standards established by the most reputable online gambling jurisdictions in Europe (Malta,

France, Italy, Gibraltar) and also complies with the CEN standards.

That is why we have our own dedicated anti-Fraud and Risk teams whose daily task includes

monitoring player practices to detect and curb fraud and minimize the risk to the company as

well as to customers.

Players against operators

We consider that the best measure in order to protect customer funds would be, following the

Maltese and Italian examples, to require that customer funds be segregated from operational

funds. We have recently seen with Full Tilt Poker and its Alderney licence what the

consequences are when this is not required.

Apart from segregation of customer funds, established documented processes, policies and

procedures as well as anti-fraud tools are fundamental in order to monitor, flag and track

potential or actual fraud.

Betclic Everest’s Registrations, Payments and Fraud Department is responsible, amongst

others, for the following tasks:

Combating fraud and money laundering;

Securing fast and secure processing of payments and withdrawals;

Ensuring collection of information during & after the registration process;

Professional external training for key employees & internal training programme

designed to detect suspicious customer behaviour in line with European AML practices.

In this department we have more than 50 full-time employees appointed to the following areas:

- Registrations & Payments Team.

- Fraud Team.

- Operational Risk & Compliance Team.

Players against players

Member State licensed operators who provide their customers with the opportunity to play on

reputable poker networks would have entered into contractual arrangements with the poker

network whereby the network has taken on certain obligations vis-à-vis the operator with

reference to monitoring of suspicious player game play. Hence, besides poker experts

monitoring player game play on the operator’s side, operators may also rely on additional or

equivalent checks and monitoring being carried out by the poker network experts, which checks

are aimed at identifying various types of fraud, cheating, use of robots etc., all of which would

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be in clear contravention of the network rules as well as the operator’s terms and conditions

agreed to by the customer.

See also the study on regulatory and self-commitment options in online gaming, by TÜV

Rheinland Secure IT GmbH, June 2009

(see http://www.egba.eu/en/studies/whatcantheinternetdostudy).

Operators against players

While this type of practice may exist, Betclic Everest believes it is confined to non Member State

licensed operators. Licensing conditions prevent such types of practices and any attempts to do

so would appear counter-productive as it would put the license at risk. Reputational risk is very

important to established operators and operators do not want to risk their reputation and their

licences playing foul with customers.

Betclic Everest shares the assessment and conclusion of the Europe Economics 2009 report for

the European Parliament in which it stressed that it “found limited hard evidence of gambling

operators defrauding consumers. We do not say that it does not happen, but there is little

evidence in the public domain and prima facie it happens on a very small scale’ (page 7).

Players who play on sites belonging to Member State licenced operators have access to a variety

of complaint procedures.

Normally this would commence with access to dedicated and knowledgeable Customer Service

Operators to assist players with their initial queries and complaints. If the matter cannot be

resolved by the Customer Services Operator, the Customer Services Operator escalates the

matter to his/her superior. After that there is an entire escalation process which ends with the

customer services team informing the player of his right for redress and complaint to the

competent regulatory authority. The Operator is obliged to provide specific contact details to

the competent Regulatory Authority and these are also included within the operator’s general

terms and conditions.

Once a player has filed a complaint with the competent regulatory authority, the authority will

analyse the complaint and contact the operator demanding responses to queries and

satisfactory responses within a pre-stipulated time-frame (normally requiring a response no

later than 7 working days)

For specifics on the complaint procedure in Malta, please see our answer to question 3.

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30. As regards sports betting and outcome fixing - what national regulations are imposed on

on-line gambling operators and persons involved in sport events/games to address these

issues, in particular to prevent 'conflicts of interest'? Are you aware of any available data or

studies relating to the magnitude of this problem?

Part 1

As evidenced by the recent FIFA presidency election and Qatar 2022 World Cup sagas, as well as

the recent high profile match-fixing scandals in Italy and Greece, sports integrity is a very topical

issue.

Match, or “outcome”, fixing is only one aspect of sports integrity. It is an odious phenomenon

which, together with drugs and doping, financial irregularities and mismanagement and

underhand dealings and bickering for power at the highest levels of sport poses a real threat to

the values which sports, sportsmen and those responsible for administering sports should seek

to promote. Sports integrity requires a rounded approach.

Betting related match-fixing

Betting related match fixing is one of the most talked about, most sensational and perhaps the

easiest to pin point form of match fixing. However, profit through gambling is not the only

incentive for matches to be fixed. Tacit agreements reached between clubs for a determined

result, based on positioning in a league or due to tie breaking rules are equally detrimental to

sports.

The number of proven cases of betting related match-fixing in Europe remains relatively low

(Oxford research, Examination of threats to the integrity of sports, April 2010).

What emerges, even from just a quick overview of some well known betting related match fixing

scandals (Mark Waugh and Shane Warne case; Charlton Athletic case; South African cricket

Hansie Cronje affair; Hoyzer affair; the more recent betting scandal in Italy) is that:

(1) In the recent past, bookmakers associated with match fixing have been those which are

(a) unlicensed and

(b) based outside the European Union, primarily in Asia.

(2) Bookmakers who are not “in” on a fixed match (i.e. all bookmakers except for the one or

two corrupt bookmakers complicit in the match fixing, where there is a bookmaker

involvement) make a loss since a fair evaluation of risk associated with a match cannot be

made.

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(3) A match cannot be fixed without the involvement of one or more players, match officials

or club personnel.

(4) It is not uncommon for players or club personnel to be the instigators of a fixed

match.

(See:

http://www.theage.com.au/articles/1998/12/09/1060588497968.html;

http://news.bbc.co.uk/1/hi/uk/422742.stm;

http://www.telegraph.co.uk/sport/cricket/international/7765224/How-Hansie-Cronje-became-

most-infamous-villain-in-crickets-fixing-scandals.html

http://www.spiegel.de/international/0,1518,339640,00.html

http://www.corriere.it/sport/11_giugno_02/scommesse-calcio-telefonate_0fd5558c-8cd9-

11e0-8b49-ca4aa220e493.shtml)

The latest research clearly shows that the number of gambling related fixed matches in the EU

constitutes an extremely small fraction of the large number of sports that it is possible to bet on

every day. Maennig (Maennig, Corruption in International Sports and Sport Management:

Forms, Tendencies, Extent and Countermeasures. European Sport Management Quarterly, Vol.

5, No. 2, 187/225. 2005) and Forest et al (Forest et al, “Say it ain’t so”: betting-related

malpractice in sport”, International Journal of Sport Finance, 2008, 3, 156-166) observed

respectively 22 and 26 suspected or attempted cases of match fixing in sports related to betting

since between 2000 and, respectively, 2005 and 2008.

The ESSA, which operates an early-warning system to alert sport federations about suspicious

betting patterns, found 45 incidents of irregular betting across a range of sporting disciplines in

2009 but only one event proved to be suspicious and was referred to the respective sport’s

governing body. In 2008, when ESSA had fewer members, 38 incidents were detected and four

were passed on to sports federations.

The UK Gambling Commission Industry Statistics 2009/2010 states that 108 cases of suspicious

betting activity were reported to the Commission between 1 September 2007 and 31 March

2010, including 37 new cases since 1 October 2009. Of these, 74 were reported by betting

operators; 34 by other sources, for example sports governing bodies, the media or the public. In

60 of these cases the grounds for suspicion of criminal activity were not substantiated.

This shows that – for the most part – criminals involved in match-fixing avoid bookmakers

licensed in European Union Members States.

In spite of this we have to acknowledge that there is widespread concern over the risk that

betting related match fixing poses to the integrity of sport and the perception of a problem can

be a threat as serious as the actual problem itself. Both the problem and the perception are

therefore important to tackle. We believe that a formal declaration by the European

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Commission is required acknowledging that online sports-betting businesses licensed in one

or more European Union Member States are substantially not associated with match-fixing

but rather they are the victims of it.

Match-fixing is a big problem for bookmakers

Member State licensed bookmakers are victims of match fixing for 2 reasons:

Bookmakers suffer financially. It is practically impossible to be refunded for

winning bets paid out where a game is shown to be fixed ex-post and a customer

has already withdrawn his winnings. Investigations by public prosecutors into

whether a match was fixed and recourse to judicial proceedings to recover funds

from customers where a match is shown to be fixed are both lengthy and

complex.

Bookmakers suffer from the loss of confidence in the fairness of sports results.

This results in customers not betting out of fear that that they cannot quantify

the risk due to there being an unfair bias.

It is therefore essential for our business to detect bets which are suspicious and to take

conservative measures in order to limit our liability. It is also essential for the sustainability of

the licensed bookmaking industry that sports stays clean and free of match-fixing.

Measures taken to combat match-fixing

Our group companies operating bookmaking services:

Are members of the ESSA

As the Commission is aware, ESSA is a non-profit organisation whose members are the leading

online sports book operators in Europe. It was initiated in 2005 as a result of the “Hoyzer

affair”, which led to the offline German state monopoly to lose millions of euros because they

lacked the means to detect betting patterns. While the ‘Hoyzer affair’ did not impact online

gambling operators, it nevertheless acted as a catalyst for them to work together to share

information about games that they found suspicious. ESSA works quite simply by acting as a

nexus for all its members to report and share information on any suspicious betting patterns

when they are identified. By sharing this information among all leading betting operators,

members are able to identify suspicious betting patterns in real time.

Adopt ESSA’s common system for monitoring the sports integrity (Early

Warning System (EWS))

Alerts are shared among ESSA members for investigation and, in the event of them being

deemed suspicious, passed to the relevant sport governing body for investigation.

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Are equipped with technological tools to monitor the levels and type of

betting activity on their betting platforms.

The Internet is the best transparency tool, where every transaction can be monitored,

registered and traced in real-time.

Our business’ main internal analysis resource is the Back-Office system, proprietary software

which offers a vast range of tools for the entire betting process, from events and odds

generation to results settlement. Odds and risk management is core to the system.

After events have been entered into the system and put online, betting activity can be

monitored in real-time. This tool is particularly helpful in promptly spotting anomalous betting

patterns. Users with access to this information are screened in our recruitment process and

receive extensive in-house training.

Another tool we use is Betradar. Betradar is an international market leader that supplies

betting companies with a system that monitors thousands of betting markets by comparing

odds of hundreds of bookmakers and betting exchanges. It highlights our company’s position

within those markets, sending alerts when our out-of-line position may lead to our company

being exposed.

Monitoring tools, as part of risk management are thus essential in the bookmaking business.

Apply licensing requirements and cooperate with regulatory bodies such as

ARJEL in France, AAMS in Italy and the LGA in Malta.

As soon as a suspicious event relating to sports betting is confirmed, alerts are raised with

respective regulators.

We have already pointed out that French law allows bets to be offered online on a restricted

number of sports. The legislator’s rationale behind such restriction is to minimise the risk of

prejudice to sports integrity. Laudable as that may be the restrictions imposed are inconsistent

(please refer to our answer to question 5).

In Italy, we can find similar discrepancies. AAMS is sometimes inconsistent when allowing bets

on certain sports and not on others.

Although there are to date no specific laws regarding match fixing in Europe which we are

aware of, we consider that compliance with all of the other licensing conditions relating to

transparency on the website and mechanisms to prevent money laundering – especially

customer identification, contribute significantly to keeping persons involved in match-fixing

away from Member States regulated sites.

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Have clear betting rules and terms and conditions which customers are required to

observe.

Our terms and conditions, which every customer is obliged to sign up to before a customer

account is created, make it clear that customers are prohibited from placing bets on events in

which they are involved in any capacity.

To our knowledge, all of the above or similar measures are implemented by the leading online

bookmakers licensed in one or more EU Member States, but not necessarily by off-line

operators, including most state monopolies currently offering sports-betting.

Conflict of interests between bookmaking and sports

French law (article 32 – Law 2010-476) is very clear on this matter. Sport federations must

integrate within their codes of conduct provisions designed to prevent those involved in sports

competitions from engaging, directly or through intermediaries, in betting on competitions

and communicating to third parties privileged information obtained in connection with their

sporting duties.

Please also refer to our response to question 32.

Distinction between match-fixing and arbitrage

Online gambling operators offering a sports betting service from time to time find themselves in

the position of having to decide whether certain unusual or unexpected bets are, or can be,

considered to be suspicious. In order to make that assessment operators in such a situation

have to investigate the circumstances related to the placing of the unusual or unexpected bet.

Most unusual or unexpected bets are the result of arbitrage, advantage gambling, or advantage

play.

Arbitrage relies on the pricing of a particular bookmaker not being in line with the probability of

an event happening.

Let’s take a Football match, Team A vs Team B; a bookmaker opens betting with Match

Result odds of 1.85 (Team A wins), 3.40 (draw) and 4.00 (Team B wins);

The following day, the 3 most important players of Team A get injured during a training

session and will surely miss that match;

Before this information reaches the media, someone (perhaps a fan who was watching

the team training, or even a journalist) places a €1,000 bet on Team B at odds 4.00

(potential payout = 4,000; potential net win 3,000);

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At the bookmaker’s end, the person on liability control duty observes the bet going

through the system but decides to take no action, because the bookmaker had taken

other bets on Team A and the Draw, so the book is still rather balanced. The bookmaker

keeps monitoring;

The bookmaker then notices more unusually big bets on Team B. He checks the betting

markets and realises that a number of other bookmakers have cut Team B’s price (either

because they got the latest news before him, or because they also laid big bets on Team

B, or because they followed a market movement);

The bookmaker checks the team news to try and understand what’s going on and learns

about the injured players. With this evidence in hand the bookmaker changes the odds

to 4.00 (Team A wins), 3.40 (draw), 1.85 (Team B wins) meaning that Team B are now

favourites to win the match. The punter who placed a bet on Team B at odds of 4.00 in

favour of a Team B win now has some options:

Option 1

He takes no further action and waits to see if his bet is a winner; as the

chances of Team B winning the match are approximately 50% (this is

calculated from the new 1.85 odds), he has 50% chances of winning 3

times over his stake, which puts him in a good position, and would

ensure a profit out of a series of similar bets, but is no guarantee of profit

from that single bet.

Option 2

In order to make a sure profit, no matter what, he could place a second

bet on Team A, and then a third bet on a Draw. Had he done it with the

initial odds, he would have done it at a loss, because bookmakers apply

an over-round margin. However, with such a radical odds change, he

could bet on all selections at a profit.

This could be impractical and normally there’s a better option.

Option 3

The punter goes to a betting exchange and lays Team B (i.e he accepts

bets on Team B as though he were the bookmaker. This is a peculiarity of

betting exchanges over normal bookmakers).

In the above example, as all the other bookmakers sooner or later cut

Team B to odds of around 1.85, it is likely that the punter would manage

to lay Team B (i.e. find someone wanting to back - that is, bet on – Team

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B) at around 2.00 for the amount of his choice, say €2,000. This means

that if Team B wins he gets a 3,000 net payout from the bookmaker and

has to payout to a betting exchange customer(s) who is unknown to him

the net sum of 2,000 (i.e. 2,000 stake x 2.00 odds less the 2,000 stake),

for an overall profit of 1,000.

Instead, if Team B does not win (it is irrelevant whether Team A wins or

whether the match ends as a draw) he would lose the bookmaker’s bet

(1,000) but would win the betting exchange bet. In that scenario the

punter would keep the 2,000 staked by other betting exchange user, so

ensuring a profit of 1,000. Summing up, this would ensure a net profit of

€1,000 no matter what the result is.

In the above example the opportunity for arbitrage arises from a punter’s ability to access

information that was public but not widely known yet. Essentially the punter had more efficient

access to information than the bookmaker. That resulted in the bookmaker noticing an

unexpected movement in the market and taking corrective action accordingly. In this case there

is certainly no indication of match-fixing.

“Insider trading”

If the above example were adapted slightly so that the information in the hand of the punter is

not publicly available, there could be illegality under certain sport governing body rules. We

consider it of paramount importance for there to be legislation enacted across Member States

which criminalises the disclosure by persons connected to sports events of sensitive

information regarding those events or persons involved in them. We consider that this is

necessary even irrespectively of online gambling.

Part 2

BEG is aware of the following data or studies:

Oxford Research, Examination of threats to the integrity of sports, April 2010 (Oxford

Research, Examination of threats to the integrity of sports, April 2010).

ESSA’s 2011 Integrity Report (available at www.eu-ssa.org).

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32. What risks are there that a (on-line) sports betting operator, which has entered into a

sponsorship agreement with a sports club or an association, will seek to influence the

outcome of a sports event directly or indirectly for profitable gain?

Any doubt or suspicion on the integrity of the team would automatically damage the reputation

and image of the sponsor and its very own commercial interests. In fact sponsorship agreements

normally allow the sponsor to terminate the contract where the team or its team’s

management, officials, etc... brings sports into disrepute (e.g. by being involved in match-fixing).

Jean-François Lamour, rapporteur for the online gambling law at the Assemblée Nationale, put it

quite well when he said: « S’il devait y avoir un acte de tricherie ou de corruption, je suis

intimement convaincu qu’il n’émanerait pas de l’opérateur « sponsor- maillots » de

l’équipe concernée, mais plutôt d’un autre qui tenterait, de manière sournoise, de convaincre tel

ou tel joueur de faire un geste négatif ou de falsifier le résultat » (Débat parlementaire :

8octobre 2009 3ème séance).

We firmly believe there is no conflict of interest in a situation where a bookmaker sponsors a

team and also accepts bets on the competition in which that team participates.

It is worth noting that this “so called risk” was raised in the preliminary discussion preceding the

French online gambling reform in 2010 but withdrawn as 1) it was not based on any concrete

evidence and 2) it would make the law commercially unattractive.

“Connected persons”

In France, article 32.1 of Law 2010-476 prohibits:

gaming operators’ owners, executives, administrators, personnel to bet

on games proposed by the operators

sports & turf competitions actors (organisers, teams, players, jockeys,

trainers) to bet and communicate privileged information unknown by the

public

Conflict of interest with operators’ extended personnel (owners, executives, administrators and

employees) is minimized by employment contract clauses which prohibit employees from

betting on that operators’ website. Similar terms are normally included in the operator’s

customer terms and conditions of business.

As already mentioned in our answer to previous questions operators, like the Betclic Everest

companies, forming part of EGBA have to adhere to the compulsory membership requirement

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which are the EGBA standards. These standards require zero tolerance approach for fraudulent

and criminal behaviour.

Moreover, being members of ESSA requires operators to comply with requirements which

include the prevention of conflicts of interest: Members must avoid ethical conflicts and

observe at all times the necessary precautions to preserve integrity in sports. This means

members’ personnel cannot bet on their own betting product. Members should play absolutely

no role or have a direct influence on decisions taken by any athlete, team, and the event they

sponsor or contribute towards. They should also not allow sports organisations to have a

controlling interest in their company. According to ESSA’s Code of Conduct, “members will

support action from any sports event organisers or sporting body to prevent players, athletes,

coaches, club managers or any other individuals that are directly associated with that sport from

betting on any event in which they are participating”.

The idea that there should not be a controlling interesting by a sport organisation in a gambling

operator and vice versa is found also in French law (article 32.4 and 32.5 of Law 2010-476)

which provides that operators:

Must declare to ARJEL when operators’ owners, executives, administrators, employees

own any personal interest, or any interest linked to participation in any legal entity, any

horse race, any sports competition on which the operator organizes bets

Must not control, directly or indirectly, any sports competition organiser or party on

which it offers bets

Maltese and Gibraltarian legislation requires that an applicant for a licence must be a “fit and

proper person”. When due diligence is performed at the application stage, it is very likely that if

an applicant controlled a sports club, it would be raised at this stage.

In relation to Malta, Regulation 5(2)(iii) of the Remote Gaming Regulations 2004 state that an

applicant for a licence must disclose its “participation in legal activities, including but not limited

to, any interest or equity in any other commercial activity.”

Moreover, regulatory bodies (AAMS in Italy, LGA in Malta and the GRA in Malta) would in our

experience, all be keen to ensure that no conflicts of interests are present and would take due

action if this should happen.

Sports betting integrity panel

In 2010, a set of rules and guidelines was put forth by the Sports Betting Integrity Panel, chaired

by Rick Parry. This panel set out a strong code of conduct that was aimed at all sports governing

bodies, clearly stating that players and sports people should refrain from any bets related to any

competition in which they are involved, and should not solicit or facilitate others to do so. It also

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set forth in no uncertain terms the need to end the use of ‘insider information’, impose strong

sanctions and encourage information sharing. The panel’s report also pointed out that while

some sports had made serious efforts to protect sports integrity with regards to betting, others

had done little or nothing.

(see:

http://webarchive.nationalarchives.gov.uk/+/http://www.culture.gov.uk/images/publications/r

eports_sports_betting_integrity_panel.pdf).

In case of unusual transactions, our group companies’ trading and compliance teams undertake

searches (primarily online amongst publicly available information) in order to determine

whether there is any connection between the customer and the event on which the customer

has placed a bet. However, updated official lists of clubs officials and employees, referees and

other match officials are not available to us or to ESSA.

In our view, there should be a system across all EU Member States which allows online

gambling operators to submit the name of a new registrant to a central database which either

confirms or denies that the person concerned is a participant in a sport activity or an official of

a sports club and which specifies which club that is. In this way bets by the individual on his

club could be banned on the operator’s side. This follows the French method of having an

operator verify in real time whether a person has been listed on the national register of

persons interdicted from gambling.

37. Are there national on-line gambling transparency requirements? Do they apply to cross

border supply of on-line gambling services and are these rules enforced effectively in your

view?

Part 1

Most of the illegal activities referred to at this point in the Green Paper (gambling services

provided by illegal operators, offering non authorised games, tax evasion) involve either

unlicensed operators or non Member State licensed operators.

All the jurisdictions where Betclic Everest businesses are licensed require transparency from

operators at several stages, commencing with the licensing process itself.

Probity on licensees

For example, in France, license applicants need to provide information on its finances and

accounting. Among the most important elements of disclosure are the obligations to reveal:

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(i) The identity of any individual owning more than 5 percent of the capital of the company

making the application.

(ii) The name of any manager who person with a position of control within the company.

(iii) Any court proceedings against the company or its owners in the last 10 years in France for

theft, fraud, blackmail or corruption, money laundering and a number of other offences.

As for finances, the applicants must demonstrate that have the funds to support the operation

of the gaming activities and that their financial planning is in order.

Another good example is Malta. Applicants for a Maltese licence must provide the following

information:

(i) Personal background information

(ii) Financial information

(iii) Participation in legal activities, including but not limited to, any interest or equity in any

other commercial activity

(iv) Criminal record information

(v) Information concerning all pecuniary, equity and other interests in the applicant; and

(vi) Any other information required by the Authority, for every director, key official and chief

executive officer of the applicant and for every shareholder with five per centum or more

ownership of, or controlling interest in the applicant. Provided that the Authority may, at its sole

discretion, require that all beneficial owners of shares in the applicant provide the information

herein mentioned.

The Maltese gaming authorities will not issue or renew a licence unless it is reasonably satisfied

that all persons involved in the applicant company are fit and proper persons. In determining

whether the applicant is a fit and proper person, the authorities shall have regard to the

following matters:

(i) the character of the persons vested with executive powers in the applicant, and the business

reputation of such persons

(ii) the current financial position, financial background and business reputation of the

applicant’s promoters, shareholders and directors

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(iii) whether the applicant has the appropriate business ability to conduct remote gaming

successfully

(iv) whether the applicant has, or is able to obtain, appropriate resources and is able to maintain

minimum required reserves as may be established by the Authority in order to ensure that

players shall have winnings paid and deposits returned

(v) whether the applicant is, in the Authority’s opinion, untainted with illegality

(vi) whether the applicant has followed policies and will take affirmative steps to prevent money

laundering and other suspicious transactions; and

(vii) whether the applicant has the capacity and the internal control structures to enable it to

comply with the policies and directives which the Authority deems appropriate.

A similar principle is applicable in order to obtain a licence in Gibraltar. Gibraltar only grants

licences to applicants that can prove that each shareholder, director, executive manager and

interested person, is a ‘fit and proper person’. To establish this, the Gibraltarian Licensing

Authority may take into account the following:

(i) the person’s character, honesty and integrity;

(ii) his business reputation, current financial position and financial background;

(iii) the business plan in respect of the activities;

(iv) his experience of conducting the gambling activity to which the proposed licence would

relate; and

(v) his conduct, or that of any person associated with him, under any similar licence granted by

the appropriate authorities in any comparable jurisdiction outside Gibraltar;

(vi) the actual or proposed ownership and the structure of the business;

(vii) the ability to maintain a minimum required reserve so as to ensure that all winnings or

prizes, as the case may be, are paid;

(viii) the technical infrastructure and ability to conduct the gambling which would be authorised

under the proposed licence;

(ix) the proposed control measures to ensure that any internet website proposed to be

operated by the licence holder would contains no obscene or indecent content nor any links to

such content;

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(x) the proposed control measures to ensure that, so far as is reasonably practicable, compulsive

gamblers and persons under the minimum permitted age are not able to gain access to any of

the gambling facilities which would be authorised under the proposed licence; and

(xi) the proposed control measures and procedures to seek to identify money laundering and

other suspicious transactions, and in paragraph (e) “similar licence” means a licence to conduct

activities which are similar to those in respect of which a licence is sought in Gibraltar.

Anti-money laundering

We consider that all online gambling operators should be obliged to report suspicious activities

in the sense of the Third Anti Money Laundering Directive (Directive 2005/60/EC). In France all

gambling operators are required to comply with this directive but the directive, as the

Commission is aware, is not transposed in the same way in all Member States. Also, under the

current rules, operators could be obliged to report in more than one jurisdiction, which can lead

to duplication and overlapping investigations.

Transparency in terms of ongoing reporting requirements to regulators.

In practice, reporting obligations to authorities are quite difficult to implement and time

consuming. In France the scope of the reporting is very wide. Operators need to provide ARJEL

with weekly and quarterly reporting on activities, a reporting on actual player return rate, tax

reporting, and any other ad hoc reporting which ARJEL might ask. Data required by the regulator

varies strongly from one period to another, which impedes reporting automation.

Among the most important elements of disclosure are the obligations to reveal:

(i) The identity of any individual owning more than 5 percent of the capital of the

company making the application.

(ii) The name of any manager who person with a position of control within the

company.

(iii) Any court proceedings against the company or its owners in the last 10 years in

France for theft, fraud, blackmail or corruption, money laundering and a number of

other offences.

As for finances, the applicants must demonstrate that have the funds to support the operation

of the gaming activities and that their financial planning is in order.

Reporting is heavy. For example, the weekly reporting includes the following detailed

information:

o General reporting

Total number of accounts

Number of new accounts

Number of closed accounts

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Number of accounts closed upon players’ demand

Number of definitive accounts

Number of temporary accounts

Number of active players (on the period and since the agreement)

Amount of deposits for the period and the calendar year

Amount of withdrawals for the period and the calendar year

o Sports

Number of bets and amount of stakes per sport competition

Number of active players

Total number of bets (detailed live/prelive)

Average stakes

Total amount of winnings

Gross Gaming Revenue

Net Gaming revenue

Taxes

Bonuses given by the operator

VAT if applicable

o Poker

General

Number of active players

Gross Gaming Revenues

Taxes

Bonuses given by the operator

VAT if applicable

Split

Active players, stakes, winnings, Gross Gaming Revenues and

taxes split by game type (Omaha, Hold’em, Cash game,

tournament)

o Turf

General

Number of active players

Number of bets

Amount of stakes

Average stakes

Winnings

Gross Gaming Revenues

Taxes

Bonuses

VAT if applicable

Net Gaming Revenues

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Split

Active players, stakes, winnings, Gross Gaming Revenues and

taxes split by race type (Trot or Galop)

Under article 42 Law 2010-476, operators are also obliged to answer any ad-hoc ARJEL request,

which is very intrusive and happens to be time and resources consuming.

Part 2

There is a cross border element only insofar as Maltese, Gibraltarian and UK laws do not

purport to restrict the scope of operation of operators licensed by them to their own territories.

Otherwise there is to date no functional and meaningful co-operaton between any of the

licensing authorities in so far as transparency and sharing of information is concerned.

In this respect we welcome the recent agreement announced between ARJEL and AAMS if, as

reported in the media (http://www.egrmagazine.com/news/1664892/aams-and-arjel-to-sign-

agreement-in-june.thtml), it provides for mechanisms of information sharing between these

regulators. However, even this is insufficient.

We consider that there should be a central EU organism that controls this type of information

sharing and that has a co-ordination role between the various national regulators.

38. Are there other gambling revenue channeling schemes for the public interest activities at

national or EU level?

In France, 1.5% of stakes bet on sports are directly attributed to the CNDS (National Center for

Sports Development). This amount will increase to 1.8% in 2012. The CNDS is a public body

reporting to the Ministry of Sports. Its objectives are the development of sports for persons of

all ages, the planning of sports development, the promotion and international influence of

French sport. To achieve its objectives the CNDS awards financial assistance through grants or

financing sports associations.

A part of social contributions are used for addiction prevention and treatment.

We should point out that Member State licensed operators contribute to the funding of public

interest activities through the payment of taxes in the jurisdictions where they are licensed. The

commercial relationships which several operators seek out and foster, mostly with sports and

with providers of new technologies (e.g. in the field of payment security) in our view also

contribute to good causes, these being primarily innovation, enterprise and sports.

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Apart from this, EGBA launched in 2010 an initiative with EU Athletes (the leading association in

Europe representing over 25,000 athletes) to assist them to educate players about sports

betting.

A year into the campaign, the main lessons learnt from the programme were:

There is a real lack of information at the grass-roots level of sport;

Some countries and sports federations have no rules on sports betting;

Where there may be rules by sports federations, there are sometimes too opaque to

understand and not communicated clearly and effectively.

The added value of this programme lies in the fact that players’ associations are best placed to

provide guidance to athletes through direct locker-room contact. The programme is now in its

second year.

Through the code of conduct, professional athletes are taught about the fundamental principles

to respect when it comes to sports betting. This includes knowing the rules of the game, never

betting on yourself or the opponent, never betting on other events within your sport, being

careful about sensitive information, not seeking to fix an event or part of it, and reporting any

approaches for match fixing (see: http://www.egba.eu/en/press/576).

40. Are funds returned or re-attributed to prevention and treatment of gambling addiction?

Please refer to our answer to question 48.

In addition we note that Betclic Everest companies contribute to the prevention and the

treatment of gambling addiction through partnerships with Adictel (http://www.adictel.com/).

Adictel provides to our clients a 24 hour call centre, operated by a team of qualified and trained

psychologists and consultants, to support and counsel them if they are suffering from problems

related to compulsive gaming.

42. Do all sports disciplines benefit from online gambling exploitation rights in a similar

manner to horse-racing and if so, are those rights exploited?

Horse-racing

The Commission asks whether all sports disciplines benefit from online gambling exploitation

rights in a similar manner to horse-racing and if so, are those rights exploited. In our view the

term “exploitation rights” is misleading. What exists in respect of horse racing in the UK and

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France are different models of mandatory contributions required to be made by bookmakers to

the horse industry.

Horse racing is an industry set apart from sports, as the term is commonly understood. It is an

industry whose history and preservation have depended to a very large extended on gambling.

In the UK already under the reign of Queen Anne during the period 1702-1714, horse races

involved several horses on which spectators placed bets (http://www.equine-

world.co.uk/horse_sports/horse_racing_history.htm).

There is such a close correlation between horse racing and gambling that the industry would

struggle to exist without some form of support from bookmakers. However, we are also of the

view that where no horseracing tradition exists, and where there is no industry to preserve,

financial contributions to the industry would be completely un–justified and would only serve as

a subsidy to create a new economic activity.

Sports

The ‘fair return’ claim made by certain sports quarters is a misnomer, as it assumes from the

outset that sports are not receiving the appropriate level of fiscal benefits from the licensed

gambling industry.

The gambling industry already provides €3.4bn per annum to EU sport alone, with €2.1bn (62%)

contributed by private gambling companies. This is by no means an inconsequential amount,

and while it may not be as much as sports would like - no robust evidence or figures to support

its claims for additional revenues from the gambling industry has been provided by the sporting

sector - it clearly counters any suggestion that the licensed gambling industry puts nothing back

into sport.

Sport sponsorship and advertising

Bookmakers are amongst one of the business categories most engaged in sport sponsorship.

Indeed, sports and sports betting have mutually beneficial interests. As well as generating

interest in sports events, betting adds excitement and provides additional revenue streams for a

variety of sports at different levels. In that sense, bookmakers are an important source of

sponsorships for sports clubs and federations.

Our group alone sponsored over 40 professional sports teams and events in 2010, ranging from

leading European football teams Olympique de Marseille, Olympique Lyonnais and Juventus to

all teams participating in Portugal’s Division of Honour Leaugue, to Malta’s Birkirkara FC, Italy’s

Trentino Volley, Montpellier’s Hand-Ball team and the World Fencing Championships.

Sports clubs and associations ranging from football, to cycling, fencing to padel, basketball to

Moto GP all have found a mutually beneficial relationship with gambling.

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Broadcasting rights

All the main online bookmakers provide live streaming to their customers of wide range of

events including sports events, which due to the lack of a mass-market appeal normally do not

have any exposure on TV.

Payment for the broadcasting rights amount to several score millions per year which at the end

of the day filter down to the broadcasting rights holders whether they’ll be major or minor

federations or clubs. The added value to sports is not simply the financial gain but the wider

promotion and broadcasting of sports event themselves.

43. Do online gambling exploitation rights that are exclusively dedicated to ensuring integrity

exist?

None that we are aware of.

The French law of the 12th of May 2010 on the introduction of competition and regulation of

gambling and online gambling sector provides that operators have to pay sports organisers in

consideration of offering bets on that organiser’s events.

In our opinion, real uncertainty exists as to whether the objective of these payments is to foster

sports integrity or to finance the sport industry. This uncertainty transpires in the decision of the

French Conseil d’Etat upon BetClic’s application to have decree n° 2010-614 of the 7th of June

2010 annulled as well as in the French law’s Travaux Préparatoires..

Moreover, this mandatory contribution to sports organisers is something peculiar to France. No

other Member States impose such payments to sports organisers. This “droit au pari” is a first

ever creation in Europe, with no precedent nor any legislative equivalent whatsoever, of a major

impact. Its result is to make a whole industry (the sports betting sector) dependent upon

another (the organisation of sporting events) to offer its services in an appropriate manner vis-

à-vis the consumer. One wonders whether if this right is extended throughout Europe it won’t

be news organisations who will be next to have charges imposed them for publishing sports

pages. One also wonders whether in case of bets on events other than sports whether or not

the organisers of those events, be it Big Brother or a royal wedding would also be entitled to

claim compensation from bookmakers and so on and so forth.

A year after the coming into force of the French law, no significant measures that we are aware

of have been put in place by sports organisers to prevent fraud. The implementation of the new

sports rights into the contractual framework between sports federations/organizers and sports

betting operators confirmed the totally unbalanced aspects of the concept and regime

instituted, at the expense of online gambling operators and in favour of the sports organisers.

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For instance this is reflected in the obvious disconnection between the amount of remuneration

and the expenses allegedly incurred for the control and detection of match fixing.

ARJEL’s non-binding opinions rendered on draft cahier des charges (as requested by Article L.

333-1-2 of the Sports Code), systematically recall the obligation for sports federations to

genuinely and specifically describe the fraud detection system they intend to set up. Several

federations have not produced a contract, which means that bets cannot be taken on that sport.

In terms of the effectiveness of this system and the initiative taken by sports federation to

combat fraud and foster sorts integrity it is rather revealing that no French sports federation has

to date asked Betclic whether any players affiliated with the federation have placed a bet or

attempted to place a bet on Betclic.

It also needs to be said that it is mainly the larger sports federations that benefit from this “droit

au pari”. Also, it is our understanding that the money does not filter down to grassroots sections

where it should be used to educate up and coming sportsmen on sports integrity issues.

Neither does it reach less known or less popular sports which according to a study by the

University of Salford, is where corruption is the likeliest to occur.

Whereas the willingness to combat fraud is the reason of “general interest” invoked by the

French authorities to justify the restriction set forth by Article 63 of the law of 12 May 2010, it

results from various sources ranging from statements by the French Government (see the

statement of former Budget Minister Eric Woerth during the press conference of 5 March 2009:

“financial return to the sports world will be ensured by different means (…) as for professional

sports: (…) signing of commercial agreements in the context of the property right of the sporting

events organizers” (“le retour financier au monde du sport sera assuré de plusieurs manières

(…) pour le sport professionnel : (…) signature d’accords commerciaux dans le cadre du droit de

propriété des organisateurs d’évènements sportifs”) to the parliamentary process and manner

of application of the decree that the fundamental goal pursued was really the financing by the

gambling industry of the sports industry.

It is in our view worth recalling that according to constant CJEU case-law, the financing of social

activities through a levy on the proceeds of authorized games must constitute only an incidental

beneficial consequence and not the real justification for the restrictive policy adopted (Gambelli

judgment, para.62).

In this context, it appears that the restrictions to the freedom to provide betting services on the

French market introduced by Article 63 of the French law are deprived of any justification linked

with general interest preoccupations.

As Jean-Francois Vilotte, president of ARJEL himself put it: “online sports betting hasn’t created

corruption in sport”

(see: http://lesrapports.ladocumentationfrancaise.fr/BRP/114000165/0000.pdf).

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Moreover “if some say online gambling increases the corruption, the internet is a tool to detect

them easily. Online gambling actually brings transparency into sports betting thanks to their

control process” ("La corruption dans le sport : une réalité" Rapport EPAS (Accord Partiel Elargi

sur le Sport), Conseil de l'Europe, Strasbourg 12 octobre 2008- Etude réalisée par Transparency

International – République Tchèque, p.13).

With that in mind, we strongly believe that any mechanism granting to sports associations or

governing bodies greater control over the betting product and requiring payment from licensed

gambling operators is neither necessary nor proportionate.

44. Is there evidence to suggest that the cross-border "free-riding" risk noted above for on-

line gambling services is reducing revenues to national public interest activities that depend

on channeling of gambling revenues?

The fact that an online gambling operator licensed in one EU Member State offers better returns

than another located in another EU Member State cannot be labeled as “free riding”. It is just a

logical effect of competition that finally benefits consumers.

Now, there is no evidence that internet competition is reducing revenues for public interest

activities. H2 Gambling Capital data shows clearly that the online market is not cannibalising

the land based gambling sector and that both sectors continue to grow.

(see: http://www.h2gc.com/downloadfiles/newspdfs/gambling_goes_mobile_-

_presentation_egr.pdf )

Consequently, online gambling does not jeopardize revenue contributions made by land based

operators. On the contrary, online gambling has generated new sources of revenue.

43. Are there transparency obligations that allow for gamblers to be made aware of whether

and how much gambling service providers are channeling revenues back into public interest

activities?

We understand that there is no such obligation. Also, we consider that to establish such an

obligation would be contrary to EU law. In Case C-316/07 Markus Stoß the CJEU ruled that a

gambling monopoly that tries to stimulate gambling or make it more attracting, by promoting

that their revenue will be used to finance public interest activities, would run afoul of EU law.

This principle was strongly reaffirmed by the CJEU in Zeturf (case C-212/08).

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46. Is there a regulatory body in your Member State, what is its status, what are its

competences and its scope of action across the on-line gambling services as defined in this

Green Paper?

Betclic Everest companies hold licences in Malta, Gibraltar, Italy and France.

The regulatory authorities in these jurisdictions are:

France (ARJEL): http://www.arjel.fr/

Gibraltar(GRA): http://www.gra.gi/index.php?site=gambling

Italy (AAMS): http://www.aams.gov.it/?id=home

Malta (LGA): http://www.lga.org.mt/lga/home.aspx

All these entities are in charge of issuing licences, controlling and supervising the market and

enforcing online gambling regulations.

47. Is there a national register of licensed operators of gambling services? If so, is it publicly

accessible? Who is responsible for keeping it up to date?

All the above mentioned regulators do publish a register of licensed operators:

France (ARJEL): http://www.arjel.fr/-Liste-des-operateurs-agrees-.html

Gibraltar (GRA): http://www.gra.gi/index.php?site=gambling&section=licences

Italy AAMS : Online Fixed Odd betting : http://www.aams.gov.it/?id=2736

Online tournament poker : http://www.aams.gov.it/?id=4000

Malta : http://www.lga.org.mt/lga/content.aspx?id=86949

48. Which forms of cross-border administrative cooperation are you aware of in this domain

and which specific issues are covered?

Betclic Everest supports cross-border cooperation between EU authorities. However, there is

still a long way to go before we have an efficient cooperation system between EU Member

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States with regards to online gambling. The Gaming Regulators Forum (GREF) is an interesting

initiative but it still has not generated the required cooperation that would avoid duplication

and fragmentation in the European market. We consider that bilateral cooperation agreements

can only be a partial solution to current market fragmentation.

As per our answer to question 37, we consider that what is needed is a central EU organism

which can coordinate between national regulators, ensure that duplication is avoided and

work in the interest of transparency and information sharing.

The European Committee for Standardisation Workshop Agreement on “Responsible Remote

Gambling Measures” is the first pan-European agreement aimed at providing a high level of

consumer protection for online players in the European Union. The agreement defines 9 policy

objectives for the protection of online players and 134 concrete measures to ensure that those

objectives are actually met.

These standards are a compulsory membership requirement for EGBA members. Their

compliance is verified by a mandatory annual audit carried out by eCOGRA, a leading

independent standards and player protection body, which itself is audited by KPMG in London.

49. Are you aware of such enhanced cooperation, educational programmes or early warning

systems that are aimed at strengthening integrity in sport and/or increase awareness among

other stakeholders?

We have already referred to ESSA and to ESSA’s EWS (please refer to our answer to question

30) and to the education campaign launched by EGBA and EU Athletes in 2010 which this year

also involves the Remote Gambling Association and the Professional Players Federation.

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Annexes

Annex 1* - AFJEL White Paper on the regulation of online gambling in France (2011).

Annex 2 - IPSOS Media CT – Jeux d’argent en ligne (2011)

Annex 3* - Contributos para uma regulacao das apostas online em Portugal, P. Dionisio, and

others (2010)

*These annexes have not been uploaded to the Commission’s site due to the file size. They will be sent to the Commission

to follow.