right2bet: EU CONSUMERS LEFT DRASTICALLY SHORT-CHANGED BY STATE GAMBLING MONOPOLIES

RIGHT2BET has exclusively revealed that throughout the World Cup European state betting monopolies offered their customers, on average, 32% worse odds than those available with private betting companies.

Monopoly customers wishing to back their home nation in South Africa were subjected to 35% worse odds than those being offered by the EU-licensed private sector operators that their governments do not allow them to use.

The startling figures have been revealed in the Right2bet World Cup Report which analysed the odds offered on every World Cup match by seven of Europe's biggest betting monopolies, before comparing them to the equivalent prices being offered by other licensed European operators.

The aim of the report was to investigate whether or not Europe's betting monopolies were short-changing their customers via the help of legislation which protects their existence and market dominance.

Right2bet is campaigning for the right of all European consumers to be able to bet with the licensed operator of their choice, regardless of the Member State in which they are based.

Right2bet spokesman Ari Last said: "The figures emanating from this report are quite shocking. Millions of EU consumers who wanted to bet during the World Cup were subjected to hugely inferior prices by the monopolies that their governments strive so hard to protect."

"The protectionist behaviour of certain Member States when it comes to online gambling is a situation that does not conform to the ethos of the single-market, and we hope that the findings of this report will highlight what is undoubtedly an unjust reality."

Right2bet World Cup Report key points:

• Monopolies offered their customers 32% worse odds than licensed private operators
• The 'Perfect Bettor' forced to bet with a monopoly would have made €629 less than they would have done if they were allowed to bet with other EU-licensed operators in the private sector
• On average, a monopoly customer choosing to back the 'favourite' throughout every one of the 64 tournament matches would have received 38% less value, while one who chose to back the 'outsider' throughout each game of the tournament would have received 35% less value
• Monopolies offered customers wishing to back their home nation 35% worse odds than private operators
• It is clear from the results published in this report that consumers using online gambling services in the EU are receiving significantly lower value when forced to use a state monopoly provider

Country breakdowns:

• Germany: 48% worse off
• Sweden: 40% worse off
• The Netherlands: 35% worse off
• France: 31.5% worse off
• Greece: 31% worse off
• Denmark: 14.4% worse off

Referral to ECJ from UK with regard to the taxation of FOBTs ("Rank Group")

Reference for a preliminary ruling from The Upper Tribunal (Tax and Chancery Chamber) (United Kingdom) made on 26 May 2010 - Commissioners for Her Majesty's Revenue and Customs v The Rank Group PLC

(Case C-260/10)

Language of the case: English

Referring court

The Upper Tribunal (Tax and Chancery Chamber) (United Kingdom)

Parties to the main proceedings

Applicant: Commissioners for Her Majesty's Revenue and Customs

Defendant: The Rank Group PLC

Questions referred

Where a Member State in the exercise of its discretion under Article 13B(f) of the Sixth VAT Directive1 subjected certain types of machines used for gambling ("Part III gaming machines") to VAT, while retaining exemption for other such machines (which included fixed odds betting terminals, "FOBTs"), and where it is contended that in so doing the Member State infringed the principle of fiscal neutrality: is it

(i) determinative, or (ii) relevant, when comparing Part III gaming machines and FOBTs that

(a) FOBTs offered activities that were "betting" under domestic law (or activities that the relevant regulatory authority, for the purposes of exercising its regulatory powers, was prepared to treat as "betting" under domestic law)

and

(b) Part III gaming machines offered activities subject to a different classification under domestic law, namely "gaming" and that gaming and betting were subject to different regulatory regimes under that Member State's law relating to the control and regulation of gambling? If so, what are the differences between the regulatory regimes in question to which the national court should have regard?

In determining whether the principle of fiscal neutrality requires the same tax treatment of the types of machine referred to in Question 1 (FOBTs and Part III gaming machines), what level of abstraction should be adopted by the national court in determining whether the products are similar? In particular, to what extent is it relevant to take into account the following matters:

a. similarities and differences in the permitted maximum stakes and prizes as between FOBTs and Part III gaming machines;

b. that FOBTs could be played only on certain types of premises licensed for betting, which were different, and subject to regulatory constraints that were different from those applicable to, premises licensed for gaming (although FOBTs and up to two Part III gaming machines could be played alongside each other in premises licensed for betting);

c. that the chances of winning the prize on FOBTs were directly related to the published fixed odds, whereas the chances of winning on Part III gaming machines could in some cases be varied by a device that ensured a particular percentage return to the operator and player over time;

d. similarities and differences in the formats available on FOBTs and Part III gaming machines;

e. similarities and differences as between FOBTs and Part III gaming machines in the interaction which could occur between the player and the machine;

f. whether or not the matters referred to above were either known to the generality of players of the machines or regarded by them as relevant or important;

g. whether the difference in VAT treatment is justified by any of the above?

In a situation where a Member State, in the exercise of its discretion under Article 13B(f) of the Sixth VAT Directive, exempted gambling from VAT but subjected a defined class of machines used for gambling to VAT: -

a) is there in principle a defence of due diligence available to a Member Sate to a claim that the principle of fiscal neutrality has been infringed by that Member Sate; and

b) if the answer to (a) is "yes", what factors are relevant in determining whether or not the Member Sate is entitled to rely on that defence?
____________

1 - Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment OJ L 145, p. 1

And yet another referral to the ECJ from Italy with regard to the cross-border provision of sports betting ("Minesi")

Reference for a preliminary ruling from the Tribunale del Riesame di Verbania (Italy) lodged on 4 June 2010 - Criminal proceedings against Matteo Minesi

(Case C-279/10)

Language of the case: Italian

Referring court

Tribunale del Riesame di Verbania

Party to the main proceedings

Matteo Minesi

Question referred

The Court of Justice is requested to interpret Articles 43 and 49 of the Treaty establishing the European Union with reference to freedom of establishment and freedom to provide services in the sector of betting on sports events in order to establish whether or not those Treaty provisions permit national rules establishing a State monopoly and a system of licences and authorisations which, within the context of a given number of licences:

(a) tend generally to protect holders of licences issued at an earlier period on the basis of a procedure that unlawfully excluded some operators;

(b) in fact ensure the maintenance of commercial positions acquired following a procedure that unlawfully excluded certain operators (by, for example, prohibiting new licensees from locating their kiosks within a specified distance of those already in existence);

(c) provide cases in which the licence may lapse with forfeiture of very large guarantee deposits, including the case in which the licensee directly or indirectly carries on cross-border gaming activities analogous to those under the licence.

New referral to the ECJ from Italy with regard to the cross-border provision of sports betting ("Sacci")

Reference for a preliminary ruling from the Tribunale di Roma (Italy), made on 23 March 2010 - Criminal proceedings against Alessandro Sacchi

(Case C-255/10)

Language of the case: Italian

Referring court

Tribunale di Roma

Party to the main proceedings

Alessandro Sacchi

Question referred

What interpretation is to be given to Articles 43 EC and 49 EC with reference to freedom of establishment and freedom to provide services in the sector of betting on sports events, regard being had also to the principle of effective judicial protection, in order to establish whether or not those Treaty provisions permit national rules establishing a State monopoly and a system of licences and authorisations which, within the context of a given number of licences,:

(a) tend generally to protect holders of licences issued at an earlier period on the basis of a procedure that unlawfully excluded certain operators;

(b) ensure the de facto maintenance of commercial positions acquired at the conclusion of a procedure that unlawfully excluded certain operators (by, for example, prohibiting new licensees from locating their betting outlets within a specified distance from those already in existence);

(c) lay down cases in which the licence may lapse, with forfeiture of large guarantee deposits, including the case in which the licensee directly or indirectly carries on cross-border gaming activities analogous to those under the licence?

Online gaming and betting: Polish draft legislation fails EU screening test

The European Commission issued yesterday a detailed opinion against the Polish draft legislation regulating online gaming and betting. The Polish draft legislation also raised concerns among a number of Member States such as the United Kingdom and Malta.

Sigrid Ligné, Secretary General of EGBA said: “We support the Polish government’s intention to join the growing number of countries regulating the online gaming and betting market in the EU. However, the current draft foresees a wide range of obstacles and obligations which will make it highly difficult for EU licensed and regulated operators to apply for a license in Poland. We urge Poland to revise its draft and align it with the requirements of the EU Treaty.”

According to the EGBA, a number of key provisions in the draft are highly doubtful under EU law. This includes:

- the requirement for licensees to be established in Poland either in the form of a joint stock company or in the form of a limited company with a very high share capital

- the possibility to exclude companies whose shares are quoted on the stock exchanges

- the requirement for online betting companies to install and store their servers in Poland

- the obligation for all transactions related to the betting services to be carried out through a Polish bank or in a branch of a foreign bank established in Poland

- the unjustified exclusion of certain games such as online poker

- the huge differences (in terms of financial guarantees and license fees) required for online and offline operators

“Some of these provisions seem to stem from a legitimate wish to regulate and enforce the rules for the online gaming market but they duplicate requirements already fulfilled in other jurisdictions. EU licensed and regulated companies can fulfill all necessary requirements on fraud prevention and consumer protection without being necessarily established in Poland. This draft law would leave Polish consumers without a fair, secure and competitive online gaming market” added Sigrid Ligné.

In addition, some of the provisions such as the licensing requirements and advertising restrictions also beg the question as to whether the law will be economically attractive for EU licensed operators. The Polish draft law was notified to the European Commission and Member States on 14 April 2010. Today’s detailed opinion extends the standstill period until 16 August, during which time Poland cannot adopt its draft legislation. Poland is required to reply to the Commission’s views. If Poland fails to take into account the Commission’s objections, the Commission can immediately launch infringement proceedings.

press release of EGBA

ECJ: Judgment in Joined Cases C-447/08 and C-448/08 - Criminal proceedings against Otto Sjöberg and Anders Gerdin

Court of Justice of the European Union
PRESS RELEASE No 75/10
Luxembourg, 8 July 2010

Swedish legislation which prohibits the promotion of gambling organised on the Internet by private operators in other Member States for profit is consistent with Community law

However, Community law precludes national legislation which penalises the promotion of gambling organised in Sweden without a licence differently from that of gambling organised outside Sweden

Swedish legislation on gambling prohibits and penalises the promotion in Sweden of gambling organised outside that Member State. It reserves the right to organise gambling to operators pursuing socially beneficial objectives or those which are in the public interest.

Mr Sjöberg and Mr Gerdin were the editors in chief and publishers, respectively, of the Swedish newspapers Expressen and Aftonbladet. Between November 2003 and August 2004, they published on the sports pages of their newspapers advertisements for gambling offered on the Internet sites of the companies Expekt, Unibet, Ladbrokes and Centrebet, established in Malta and the United Kingdom. On the basis of those facts, considered to infringe the Swedish law on gambling, they were each sentenced to a criminal penalty of a fine of SEK 50 000 (approximately EUR 5 200) at first instance.

The Svea hovrätt (Stockholm Court of Appeal, Sweden), which must rule on the appeals brought by Mr Sjöberg and Mr Gerdin, questions whether the legislation on which the convictions are based and, more specifically, the provisions which fix the penalties applicable to promotion in Sweden of gambling organised outside that Member State, comply with Community law.

In today’s judgment, the Court observes first of all that Community law requires the abolition of all restrictions on the freedom to provide services, even if those restrictions apply without distinction to national providers of services and to those from other Member States, when they are liable to prohibit, impede or render less advantageous the activities of a service provider established in another Member State where it lawfully provides similar services.

The Court states that the effect of the Swedish legislation, which prohibits the promotion in Sweden both of gambling organised legally in other Member States and of unlicensed gambling in Sweden, is to restrict Swedish consumers’ participation in such gambling.

However, Community law allows restrictions justified, inter alia, on grounds of public policy, public security or public health. In the absence of harmonisation at European Union level as regards gambling, it is for each Member State to determine in that area, in accordance with its own scale of values, how to protect the interests in question. The Member States are therefore free to set the objectives of their policy on gambling and, where appropriate, to define in detail the level of protection sought. The restrictive measures that they impose must nevertheless satisfy the conditions laid down in the case-law of the Court as regards their proportionality and it is necessary to examine in particular whether the Swedish legislation is suitable for achieving the legitimate objective or objectives invoked by that Member State, and whether it does not go beyond what is necessary in order to achieve those objectives.

The Court observes that it is clear that the exclusion of private profit-making interests from the gambling sector is, according to the referring court, a fundamental principle of the Swedishlegislation in this field. Those activities are reserved in Sweden to bodies pursuing objectives which are socially beneficial or in the public interest and licences for the operation of gambling have been granted exclusively to public or charitable bodies.

The Court states in this connection that considerations of a cultural, moral or religious nature can justify restrictions on the freedom of gambling operators to provide services, in particular in so far as it might be considered unacceptable to allow private profit to be drawn from the exploitation of a social evil or the weakness of players and their misfortune. According to the scale of values held by each of the Member States and having regard to the discretion available to them, a Member State may restrict the operation of gambling by entrusting it to public or charitable bodies.

Since the gaming operators which caused the advertisements on account of which the criminal proceedings in the main actions were initiated to be published are private undertakings run for profit, which could never have obtained licences for the operation of gambling under Swedish legislation, the Court concludes that the Swedish legislation reflects the objective of the exclusion of private profit-making interests from the gambling sector and may be regarded as necessary in order to meet such an objective. Community law therefore does not preclude such legislation.

Next, the Court notes that the Swedish law referred to by the Svea hovrätt provides for criminal sanctions only in relation to the promotion of gambling organised in another Member State and does not apply to the promotion of gambling organised in Sweden without a licence, that latter offence being punishable only by an administrative penalty. It observes, however, that there is a disagreement between the Swedish Government, on the one hand, and Mr Sjöberg and Mr Gerdin, on the other, on the issue of whether another Swedish law provides for penalties for the promotion of gambling organised in Sweden without a licence which are equivalent to those applied in respect of the promotion of gambling organised in another Member State.

The Court points out that, in the context of these proceedings, the interpretation of provisions of national law is a matter for the courts of the Member States, not for the Court of Justice. Consequently, it is for the referring court to examine whether the two infringements at issue, although covered by different laws, are nevertheless subject to equivalent treatment. That court must in particular ascertain whether, on the facts, those infringements are prosecuted by the competent authorities with the same diligence and culminate in the imposition of equivalent penalties by the competent courts.

Thus, the Court concludes that, if the two infringements at issue receive equivalent treatment, the national legislation cannot be regarded as discriminatory. On the other hand, if the persons carrying out the promotion of gambling organised in Sweden without a licence incur penalties which are less strict than those imposed on the persons who advertise gambling organised in other Member States, then the Swedish arrangements are discriminatory and thus infringe Community law.