The European gambling and gaming market are experiencing dynamic times. In many of the major markets, gambling and gaming laws have been or are being amended and a number of recent developments have taken place throughout Europe. Michiel Willems spoke to Sigrid Ligné, Secretary General of the European Gaming and Betting Association, about new EU initiatives and recent legislative developments in Germany, Hungary, Greece, France and Italy. Ligné also spoke on match fixing, website blocking and a number of recent rulings by the European Court of Justice.

Sigrid Ligné

MW: The European gambling and gaming market is in a state of movement. Many of the major markets are experiencing significant change and at European level several developments have taken place. The close of 2011 saw the European Parliament change its attitude towards gambling regulation. The EP voted on 15th November in favour of the Creutzmann Report, which called for a European Directive providing minimum standards to regulate online gambling services throughout Europe. What is the value of this report?

Ligné: The Creutzmann report, supported by a large majority within the European Parliament, is a turning point in the EU policy discussions on gambling. The report acknowledged for the first time that national standalone solutions are not sufficient to tackle the cross-border dimension of the sector and called for the adoption of an EU framework for online gambling. The Parliament also urged the European Commission as ‘guardian of the Treaties’ to pursue those infringement proceedings which have been pending since 2008 and to act swiftly upon receipt of complaints about violations of the freedoms enshrined in the Treaties.

MW: The European Union’s Green Paper, published on 24th March 2011 , set the objective ‘to contribute […] to the emergence in the Member States of a legal framework for online gambling providing for greater legal certainty for all stakeholders’ – an objective which seems to demonstrate the European Commission’s will to play a more active role in European regulation of online gambling. What do you expect from this bold statement?

L: Commissioner Barnier has played a key role in refuelling the EU debate on online gambling. It was his personal initiative to launch the Green Paper consultation and to organise, in parallel, expert workshops on a number of key issues. Following the adoption of the Creutzmann report, Commissioner Barnier confirmed six priority areas of action at EU level. The adoption of a Communication and a concrete action plan for online gambling is now scheduled for July or September 2012. We have high expectations of this process and are calling for the introduction of EU level rules to safeguard adequate protection for consumers, while at the same time ensuring fair and transparent licensing conditions for EU operators. With the European Court drawing ever-clearer ‘red lines’ for national regulation, the European Commission has strong legal arguments to bring Member States in to co-operate.

MW: Germany is arguably one of the largest and most lucrative markets in Europe. Through Schleswig-Holstein’s recently adopted gambling legislation — a liberal law that has legalised most forms of gambling — many operators believe they have found an opening into the massive German market. Do you think this will hold? What changes would you like to see in Germany?

L: Germany has a turbulent history regarding gambling legislation. It is a disappointment after so many years of non-compliance with EU law that fifteen Länder may consider ratifying a new Interstate gambling Treaty which is not economically viable or legally sustainable.  Critics within the European Commission expressed these doubts in a letter sent to the German Authorities on 21st March. This law is unsustainable and should be either dropped or substantially amended. In contrast, German state Schleswig-Holstein recently passed its own online gambling legislation which did not raise any objections from the European Commission. It should serve as a model.

MW: Ever since the French market was opened to French and foreign operators in 2011, the liberalisation has led to disappointment and complaints, resulting in operators pulling out of the market and the country’s online gaming regulator, ARJEL, announcing in March 2011 the need for reforms. Why is the ‘French model’ not working?

L: A study published in 2011 estimated the costs for an operator already regulated within the EU to obtain the license and comply with French technical and administrative requirements at € 8.7 million. But the so-called ‘French model’ is also based on a prohibitive tax rate, on a capped payback ratio and on the very controversial sports betting right. Finally, it must be noted that online casino games are still prohibited in France. The French regulator confirmed that the economic model for the French online sports betting market was weak and ‘with the exception of the two incumbents FDJ and PMU, French licensed operators are not making profit’. The French model does not work because it is not competitive and does not meet consumer demand. We have filed a complaint on several protectionist requirements of the law which the European Commission is currently looking into. Other complaints have been filed by local operators, notably with the French Competition authority.

MW: Regarding the blocking of unregulated websites, courts in Germany have ruled that illegal, unlicensed websites cannot be blocked while France is doing the opposite. What is the EGBA’s stance on this?

L: Such blockings are highly questionable legally. Moreover, blockings are costly, easy to circumvent and drive consumers towards the black market- as evidenced in all markets where such measures have been introduced. Despite website and financial blockings being introduced by the French gambling law of 2010, fifty-seven percent of French consumers in 2011 continued to play on websites not licensed in France. The only way to channel consumers towards the regulated market is to provide them with an attractive and competitive legal offer.

MW: At the end of 2011, the Hungarian Parliament adopted a series of bills that comprehensively amend the country’s gambling act. Having now come into force, the radical changes are widely expected to have grave effects on the Hungarian gambling market. Is Hungary showing Europe the way forward?

L: No, we still have strong concerns. The new Hungarian law still contains provisions which clearly violate EU law. Accordingly, we lodged a formal complaint to the European Commission a couple of weeks ago.

MW: Match fixing and suspicious betting patterns have turned out to be significant issues in recent years. How do you think match fixing should be tackled? What should be the role of operators in this process?

L: Corruption in sport is a broad phenomenon that knows many motives. Studies have shown that today ‘doping’ is the biggest threat, accounting for nearly ninety-six percent of corruption cases while match fixing is accountable for three percent, of which nearly half are betting related. In May 2011, experts participating in a workshop organised by the European Commission confirmed sports betting is not a threat in principle and that risks emanate from new technologies facilitating consumers’ access to unregulated online gambling offers, which are mainly coming from the Asian markets. Regulated operators have a responsibility to guarantee that their systems cannot be abused by fraudsters. Furthermore, through platforms such as the one successfully developed by the European Sport Security Association (ESSA), operators also play an important role in detecting suspicious betting patterns and in passing this information on to the appropriate governing bodies and regulators.

MW: Since it usually is a cross-border issue, do you think national regulators can combat match fixing and is there a role for the EC at European level?

L: Yes, we believe the EU has an important role to play. A uniform definition of sports fraud should be adopted at EU level and included in the criminal law of all Member States. It is also crucial that campaigns educating sportspeople about the risks, such as those we started a couple of years ago with EU Athletes, ESSA and the RGA, get the support of the EU and national authorities.

MW: Do you expect these problems will increase during the London Olympics?

L: With regards to the upcoming Olympics, European regulated operators are already working hand in hand with the IOC and the competent authorities. This collaboration aims at optimising the monitoring, detection and reporting of suspicious betting patterns and should minimise the risks.

MW: The cosy relationship between sports federations and operators is often fiercely criticised for issues detailing co-operation, sponsorship and exchange of information. What is your take on this? How close can these relationships be?

L: The very purpose of such partnerships is to create a positive association between the operator and sports organisers. This creates incentive to ensure the integrity of the relevant sporting event, as both the operator’s brand and the reputation of the sport are on the line. It is essential that such partnerships remain closed to unregulated operators but it serves no-one to prevent highly responsible and licensed EU operators signing sports partnerships, as is currently the case in Poland and several other jurisdictions.

MW: The Greek Gambling law has also been fiercely criticised in recent months, especially its tax stipulations. Should the Greek Government press ahead with this law?

L: The law blatantly runs counter to key provisions of EU law and has already triggered several complaints at EU and national level. The law is not sustainable. If the Greek government decided to press ahead it would not only deliver a poor and uncompetitive offer to consumers but it would also ultimately be exposing itself to sanctions.

MW: The Court of Justice of the European Union has ruled against European Union laws for Member States which ‘discriminate against new operators under the aegis of consumer protection’. The CJEU decided in its long-awaited ruling in the joint Costa and Cifone cases that Member States ‘cannot protect vested economic interests’ by restricting access to individual markets for new operators. What will be the impact of this decision?

L: Italy has proved to be fertile grounds for the development of gambling jurisprudence by the Court of Justice of the European Union. The CJEU has already ruled in previous case law that economic interests cannot be a justification for restricting the market, although in this recent ruling the conclusions are especially clear. The Costa and Cifone rulings might be seen as even more significant because, for the first time, they set a detailed set of requirements which licensing authorities need to comply with. Not only should the licensing rules be clear and predictable for the operator but the CJEU state any award of licenses should “be based on objective, non-discriminatory criteria which are known in advance, in such a way as to circumscribe the exercise of the national authorities’ discretion.” The Court further explains “the purpose underlying the principle of transparency … is essentially to … preclude any risk of favouritism or arbitrariness on the part of the licensing authority.” This provides useful confirmation that the EU Treaties rules apply not only to national gambling legislation but also to the actions of licensing authorities. With this ruling, the Court has also given its views on the allegation; the broad discretionary power of Member States would stand in the way of an EU framework for gambling.

MW: Thank you for your time.