Stanleybet Newsletter - Issue 15 | September 2009
Legal and political developments in Europe
A well-regulated and competitive sports betting market is in everybody’s interest
Although it accounts for less than 5 % of the total gaming market, sports betting has developed over the years into an increasingly popular part of sports entertainment. Despite these market developments, there is regrettably still no genuine level playing field in Europe: while half of the 27 EU member states allow private operators to compete in a regulated and open environment, other member states have abusively maintained exclusive rights to protect vested interests.
For the past decade, we at Stanleybet have fought against such unlawful restrictions which are incompatible with European Union law. We were the principal party behind the landmark Gambelli (2003) and Placanica (2007) European Court of Justice rulings, which confirmed that the right to offer a service across borders can only be restricted by national legislation if restrictions genuinely contribute to public interest objectives, do not go beyond what is necessary to achieve the objectives and are applied without discrimination.
A number of member states have continued to openly circumvent European law by discriminating against EU based private operators. Despite the numerous infringement proceedings pending at the Commission’s desk, little concrete action has been taken against those recalcitrant member states since February 2008. This is in our view simply not acceptable. We will continue maintaining that this situation is no longer tenable neither for consumers nor companies and we call upon the European Commission to take urgent action.
Simultaneously, a number of persistent myths have continued to circulate on the EU scene: “sports betting operators are behind attempts at match-fixing”; “a regulated market leads to an increase in problem gambling” and “restricting the sports betting market to state-owned operations results in more money being returned to society” are three notable examples. We regret that the European Parliament's own-initiative report adopted on 12 March 2009 repeats and endorses some of these false premises.
Stanleybet has always argued that the proper regulation of sports betting markets across Europe must be based on facts, not myths. EU and national policy-makers must base their work on solid evidence and not false allegations which are often motivated by national or self-interest rather than what is best for the European consumer.
We therefore call on Members of the new European Parliament to challenge these myths and to base policies on hard facts. The emphasis must be on evidence-based policymaking which reflects the true nature of the issues, rather than gut reactions. Otherwise, the Internal Market will remain little more than a dream for responsible sports-betting companies.
We encourage all interested parties to join us in the debate and to work together to achieve a safe and competitive sports betting market in Europe.
Swedish EU presidency
Working Party meetings scheduled
The Swedish EU Presidency confirmed that there will be 4 meetings of the Working Party on Establishment and Services. Building on the work of the French EU Presidency, the Swedes are planning to address social consequences of gambling (addiction, methods of payments, advertising). The outcome of the work is likely to be a Presidency progress report (not a Council report or resolution). Taxation is unlikely to be on the table. The first meeting took place on 23 July. Its agenda included an exchange of views on responsible gaming and the cost of gambling (a Svenska Spel study served as a basis for discussion). Following meetings should take place on 10 September, 8 October and 12 November.
Portrait of the newly-elected Parliament
Strasbourg was the location of the first plenary session of the 7th European Parliament legislature, which took place from 14 to 16 July and during which former Polish Prime Minister Jerzy Buzek (EPP) was elected as President. This constitutive session was dedicated to assigning the key posts of the Parliament and to the composition of the parliamentary committees.
The two major changes of this 7th legislature are the departure of the British Conservatives from the EPP-ED Group to form the group of European Conservatives and Reformists (ECR) and the merger between the European Socialists Group (PES) and the Italian Democrats to create a single political group, the Socialists and Democrats (S&D).
New IMCO committee: main features
The new Parliament consists of 20 committees and 2 sub-committees. The Committee on Internal Market and Consumer Protection (IMCO) is the main one competent on gambling-related issues. It consists of 39 members allocated as follows: EPP: 14 (14); S&D: 10 (9), ALDE: 4 (4); Greens/EFA: 3 (3); ECR: 3 (2); GUE/NGL: 2 (2); EFD: 2 (2) and Non-attached: 1 (1). This new balance of power could therefore favour an EPP-ALDE alliance.
Malcolm Harbour (ECR, UK) is the new IMCO Chair. Andreas Schwab (Germany) is the EPP coordinator and Cristian Silviu Bu?oi (Romania) is the ALDE one. Coordinators of other political groups will be known soon.
Marco Cappato (ALDE, Italy)
On 16 April, Marco Cappato MEP lodged a written question on the criminal penalties provided in the Italian Bill on online betting. He stressed that the Bill provides for a sentence of 3-month imprisonment and a fine of up to €180,000 for anyone betting on a website that is not licensed in Italy. He questioned the EU compatibility of such provisions. On 15 June the EU Commission answered by stating that member states “do have the right to establish their own national provisions when it comes to gambling, including measures aimed at fighting criminality or protecting consumers from addiction, but they must do so in conformity with the EC Treaty”. However, the Commission requires “that [these provisions] are imposed in a non-discriminatory way”. It concluded that it “will continue to monitor Italy’s draft legislation in order to verify its compatibility with Community law”.
Karin Riis-Jørgensen (ALDE, Denmark)
On 16 April, Karin Riis-Jørgensen MEP tabled an oral question on the French provisions relating to sports integrity and “sport betting rights”. She stressed in her introduction that “these rights would force sports betting operators to enter into compulsory financial agreements with French sport federations”. She therefore asked the Commission if they could “clarify whether such restrictions in the French online betting market are acceptable and compatible with EU law” and if the French government has provided any statistical evidence to back up such claims. On 5 May the Commission answered by saying that it was “in the process of analysing the draft law in question and has not finalised its position yet, but will do so before the expiry of the standstill period on 8 June 2009”.
Simon Busuttil (EPP, Malta)
On 19 May, Simon Busuttil (EPP, Malta) tabled a written question on the French draft law on online gaming and betting. Referring to the EFTA case law, he asks the Commission whether it “agrees that the obligation to take into account requirements already fulfilled by the provider in another EEA member state is essential to ensure that the freedom to provide services is upheld and also to avoid the development of 27 national Internet markets for online gaming and betting”. The Commission’s answer is not yet available.
Karin Resetarits (ALDE, Austria)
On 19 May, Karin Resetarits MEP (ALDE, Austria) tabled a written question on the current pending infringement cases in the gambling sector. She asks specific questions on the infringements, following Commission President’s spokesman Johannes Laitenberger’s recent statements in the WirtschaftBlatt notably on President Barroso and Commissioner McCreevy’s positions, the delay of the infringements, and the Commission’s intention to resolve these cases being “the ultimate guardian of the Treaty”. Since Karin Resetarits was not re-elected as MEP, her written question has lapsed. It needs to be re-tabled by another MEP to get an answer from the Commission.
Gaming reform on track
Both the European Commission and Malta issued late June Detailed Opinions on Belgium’s project law, which extended the standstill period of the notification procedure to 30 July. Despite this deadline and the negotiations between the Commission and the Belgian government, it seems like the Belgians have not transmitted yet a formal reply to the Commission.
Meanwhile, the adoption process of the project law continued in the House of Representatives (Lower Chamber of the Belgian Parliament) with a series of Justice Committee meetings and votes from 10 June to 14 July as well as a debate in plenary followed by a vote on 16 July, during its last plenary session before the parliamentary holidays. Parliamentary activities will officially resume on 8 October. The Senate (Upper Chamber) should start examining the text in October.
Greek State imposes new betting tax
On 25 June, Mr. Ioannis Papathanasiou, Minister of Finance, announced a series of financial measures in order to battle against the growing national debt. Among the measures announced was a 10% betting tax. Originally, this tax was to be levied on the revenues of OPAP and therefore on each bet placed by the players.
OPAP’s agents started on 16 July an indefinite strike in order to protest against the implementation of this tax and also the ban of smoking in OPAP outlets. Since the ban, the turnover of OPAP’s agents dropped by 20%-30%. It is also estimated that each day that the outlets remained closed OPAP lost 5 million euros in revenues. After negotiations between the government and OPAP, the government clarified that the tax will be implemented only to players’ winnings rather that the entire bet placed.
OPAP’s shares have lost almost a quarter of their value since the announcement. The tax is expected to earn an extra €180m (£155m) for the government.
European Parliament investigates judicial abuses
In late May the European Parliament Committee on Petitions accepted as admissible a petition by a number of Stanleybet customers and intermediaries who were illegally arrested by the Greek authorities in November 2008 for offering Stanleybet’s sports betting services in outlets in Greece. Furthermore the Committee has asked the European Commission to conduct an investigation of the facts. Submitted on 28 January, the petition co-signed by customers and intermediaries, concerning the November closures of outlets and arrests of both intermediaries and customers, lists a number of complaints:
The committee on Petitions should put Stanleybet’s petition on its agenda when the Commission transmits its report, most probably in the autumn.
Commission requests France to clarify online draft law
On 8 June the European Commission sent a Detailed Opinion on France’s draft law on online gaming and betting. The Commission considers that the draft is not compliant with EU law, and has given France a month to come up with a new version.
The Commission requests that the French authorities clarify and amend the draft law so as to make explicit that they "take into account when assessing applications for authorization, the requirements (...) to which the applicant is already operating submitted in its country of establishment”. The Commission's remarks also concern the pay-out ratio. The Budget Ministry was asked to provide evidence about the need for such thresholds and about the link between addiction and the rate of return to players. Finally, the Budget Ministry was asked to provide additional information on the two observations of the Commission, regarding the means used to record specific data flows and about the recognition of ownership rights of the organisers of sporting events. On this last point, the Budget Ministry said that recognition of this right, hailed by national and international professional sport, is justified “by the need to preserve the ethics of sports”. The French National Assembly (Lower Chamber of Parliament) should vote on the draft law by mid-October.
New Sports betting Integrity Panel
In late June UK Sports Minister Gerry Sutcliffe announced plans for a new Sports Betting Integrity Panel which will report to the UK Government on ways to spot suspicious betting patterns and “ensure that everything possible is done to maintain the integrity and reputation of sport.”
The panel, which will be headed by outgoing Liverpool FC chief executive Rick Parry, will consist of representatives from the betting industry, the police, players, fans, sports governing bodies, the legal profession and the Gambling Commission.
In a bid to address the challenges and risks facing the industry in this area the panel will be tasked with assessing current sports betting rules to ensure that they remain robust, as well as working towards what they see as a need for improved communications between sportspeople and those tackling sports betting corruption.
The thirteen man strong body which also includes Darren Bailey, Director of Football Governance and Regulation at the Football Association, Dave Boyle, Chief Executive, Supporters Direct and Nick Tofiluk, Director of Regulation, Gambling Commission will also be charged with examining the scale of the current risk to sports’ integrity through betting corruption, including how suspicious betting patterns are identified and assessed in markets both within and outside the UK.
The panel is set to report its first findings and recommendations within the next six months.
Scratchcard tender terms announced in Italy
The new bidding process for what promises to be a controversial Italian scratchcard tender were announce on August 17 in the EU Official Gazette.
The tender will see four licences up for grabs and bids must be made by October 12th along with a €5m bank guarantee.
Those awarded a licence will have to provide further bank guarantees - €40m to cover the initial eight months before the announcement of new licence holders, as well a €75m guarantee for tax revenues for the duration of the licence.
The licences will run from 1 June 2010 to 31 May 2019 and operation conditions will require 11.9 percent of turnover going to the operator, 8 percent of which is payable to the reseller network.
Italy has recently been hit by summer lottery fever thanks to the jackpot for the Superenalotto draw on August 17th reaching a record €139.9m, resulting in record vendor and the state revenues.
The tender process for the four licences available under Italy’s lucrative gratta e vinci tender however, have been dismissed by many as being skewed in favour of Lottomatica.
Operators wishing to bid for one of the nine-year licences are required to demonstrate that they have enjoyed annual turnover from the sale of gaming products for each of the last three years in excess of €500m. Further, operators must have managed a network of at least 3,000 points of sale in 2008.
Other onerous specifications stipulated in the government’s Official Gazzette include the requirement that a 10,000 outlet strong network be established by 31 December 2010, covering all of the country’s provinces and at least 30 percent of towns.
Even though the criteria are tough and may favour certain parties, competition should be strong as the scratchcard lottery generated annual revenues of over €9bn, a figure in 2008 and could to rise to more than €10bn this year.