Online gaming and betting: Commission raises serious doubts about the compliance of German gambling regime with EU law

Brussels, 7 December 2012: EU online gambling operators welcome the European Commission’s ‘detailed opinion’ against the Draft Act amending acts pertaining to gambling law of the land of Schleswig-Holstein (Gaming Amendment Act S-H) which is seeking to replace its existing legislation with the controversial German State Treaty on gambling (GST). The detailed opinion confirms that there are real concerns with Schleswig-Holstein’s proposed switch from a transparent licensing model to one that is restrictive and opaque, raising further doubts about the overall compliance and consistency of the German gambling regime with EU law. Under Directive 98/34/EC, Schleswig-Holstein must not adopt its draft legislation before January 2013.

Schleswig-Holstein notified its proposed legislation to the Commission on 6 September 2012 (see link). Today’s detailed opinion (see link), which has also received the support (see link) of Malta (detailed opinion) and the U.K (comments), extends the standstill period until 7 January 2013.

The proposed alignment of Schleswig-Holstein’s gambling legislation with the GST marks an abrupt policy reversal. If confirmed, Schleswig-Holstein would move from a sustainable and EU-compliant licensing model introduced in 2011 (see link) to a prohibitive and restrictive model which bans online poker and casino, imposes an uncompetitive tax regime, and restricts the online sports betting offering to 20 licenses.

Sigrid Ligné, Secretary General of the EGBA, commented: “Schleswig-Holstein’s proposed move from a sustainable and EU compliant licensing system to an inconsistent and unjustifiably restrictive regime would be a significant step backwards, one that - as confirmed today - the European Commission cannot approve”.

The European Commission already confirmed its concerns about the non-compliance of the German gambling legislation with EU law in July 2011 (see link). Today’s detailed opinion shows the consistent position of the Commission towards Germany’s gambling reform. 

The tendering procedure for the allocation of the 20 online betting concessions under the GST is currently managed by the state of Hessen and has already resulted in more than 100 applications but fails to provide the applicants with clear, transparent and reliable information on the criteria which will be used for allocating the 20 concessions.

Sigrid Ligné added “The European Commission’s detailed opinion against Schleswig-Holstein sends a clear message that Member States are no longer going to be allowed to impose gaming regulations that fail to meet the tests set by the CJEU. The German states cannot continue to ignore the warnings coming from Brussels and the growing criticism evidenced by the multiplication of complaints and litigation even before the new legislation is introduced. This creates an extreme level of legal uncertainty which is a damaging for all parties and German consumers in particular. At this stage, only the EC can restore legal security by acting on the many complaints it has received, not only against Germany, but also against Greece, Belgium and several other Member States.”  

The European Commission confirmed on 23 October 2012 in its Communication on online gambling that “ensuring compliance of national law with the Treaty is […] a prerequisite of a successful EU policy on online gambling”¹ and that it would take action against all Member States whose legislation does not comply with EU law.

For further information or comment please contact:
Sigrid Ligné: +32 2 554 08 90
sigrid.ligne@egba.eu

EGBA: Remote gambling industry calls on European Commission to safeguard notifications

Brussels and London, 26 November 2012: The Remote Gambling Association (RGA) and the European Gaming and Betting Association (EGBA) have filed a complaint with the European Commission regarding the non-notification of regulations that will extend OPAP’s monopoly on online gambling and impose harsh enforcement measures while the compliance of the new law with EU law remains in question.

The EGBA and RGA, which between them represent the majority of the largest European remote gambling operators, are concerned that the Greek Government has failed to begin licensing online gambling operators. This was a central measure of the new gambling law passed in August 2011. Instead the Greek Government has decided to grant OPAP, the incumbent monopoly gambling operator for offline games, an extension of its licence for 10 more years from 2020 to 2030 and also to extend the monopoly to include online gambling. This process has shown a disdain for EU law and has been wholly non-transparent. The failure to notify the Commission under directive 98/34/EC reflects that.

The regulations introduce wide-ranging enforcement measures including ISP and payment blocking, fines on banks and internet providers who facilitate gambling and fines on operators who have not been granted a licence.

According to Sigrid Ligné, Secretary General of EGBA, “Commissioner Barnier recently confirmed that the he would take his responsibilities seriously in ensuring the compliance of Member States’ gambling legislation with EU law. We trust the Commissioner will urgently investigate our complaint and take action accordingly against Greece as well as on several other pending complaints.”

Clive Hawkswood, CEO of the RGA added: “When the Greek Government said it was going to license and regulate the domestic online gambling market we welcomed this as a positive step. However, instead of encouraging the development of a competitive and well-regulated market, the Greek Government and Gaming Commission are blocking major European private operators from it. We therefore look to the Commission, as guardian of the Treaties, to ensure that Greece follows the correct procedures and that the laws that it is seeking to introduce are fully compliant with EU law.”
 

Licensing procedure in Germany: A never-ending story

By Attorney-at-law Martin Arendts, M.B.L.-HSG

Under the new Interstate Treaty on Gambling 2012, 20 sports betting licenses will be awarded. When this might eventually happen, remains still open. The deadline for the first step has been prolonged once. Due to several serious mistakes, the deadline for the second step has now been prolonged for the second time (and the end is not near). Applicants which survived the first step are now required to send in their concepts and other documents until 21 January 2013.

If more than 20 applicants fulfill the (confidential) minimum requirements, the 20 best will be chosen by the Hessian Ministry of the Interior and for Sports. The information memorandum (which explains the procedure) and the selection criteria (a maximum of 5000 points can be awarded) have not been published yet (as required under EU law). So, the whole procedure might be declared null and void.

bwin.party digital entertainment plc: Exclusive partnership agreement with Zynga

• Zynga to enter real money gaming in the UK using bwin.party technology
• New services to be Zynga-branded and will be offered online
• Zynga’s real money poker players to join bwin.party dotcom liquidity pool
• FarmVille slot being developed by bwin.party for Zynga’s real money casino

 

bwin.party has entered into an exclusive partnership agreement with Zynga Inc., the world's leading provider of social games, to develop and operate real money online and mobile poker and casino services in the UK.

 

bwin.party will provide a turnkey solution including the requisite operating platform, software and related support, to power Zynga’s real money poker and casino services. These services will initially be focused exclusively on UK-based customers and will operate under our Gibraltar gaming license. Once operational, Zynga’s real money UK poker customers will join the bwin.party dotcom player liquidity pool. Zynga’s real money casino will be based upon our market-leading PartyCasino and will be differentiated with a number of bespoke features including FarmVille-branded slots. Zynga and bwin.party are focused on corporate responsibility and have a shared vision for real money games.

 

Commenting on today’s announcement, Jim Ryan and Norbert Teufelberger, the Co-CEOs of bwin.party, said:

 

“Today’s announcement is a further example of our success in leveraging our assets through strategic blue-chip partners. Zynga is the world’s leader in social games with hundreds of millions of active players and a significant player base in the UK. We are delighted to have been selected as their chosen partner for this important step in their evolution and hope to expand our relationship into other products and markets.”

 

Barry Cottle, Executive Vice President, Corporate and Business Development, Zynga, said:

 

"Bringing together Zynga’s expertise in social gaming with the top international real money gaming operator is the best way to create the highest quality gaming experiences for our players in the UK. Partnering with an established leader like bwin.party is a strategic and prudent way for us to enter a key RMG market while giving local players the real money games they've been asking us for.”

Contacts:bwin.party digital entertainment plc

InvestorsPeter Reynolds +44 (0) 20 7337 0100

MediaJohn Shepherd +44 (0) 20 7337 0100

Zynga
Stephanie Hess +1 415 503 0303

CJEU: THE END OF COPYRIGHT CLAIMS FOR SPORT FIXTURE LISTS

press release of RGA and EGBA

Brussels, 1st March 2012

The Court of Justice of the European Union (CJEU) today delivered its ruling (case C-604/10) in a case referred from the Court of Appeal (England & Wales).

The fixture lists, for each season of the leagues, set the dates and venues for every match to be played. Football Dataco et al, claimed that there was in the fixture lists a sui generis right and a copyright under the Database Directive and a copyright under UK law. It consequently initiated legal action against certain media and sports betting companies in the UK, including Yahoo! and Stan James, who had refused to pay fees for those alleged rights.

Today’s decision by the CJEU is consistent with their previous ruling in (Fixtures Marketing C-46/02, C-338/02 and C-444/02; British Horseracing Board v. William Hill C-203/02) which held that football fixture lists and ‘runners and riders’ horseracing lists do not give rise to a sui generis database right.

The ruling furthermore reaffirms that fixture lists do not give rise as such to a copyright. As such, the key points are:

• The copyright protection provided for by the Database Directive concerns the ‘structure’ of the database, and not its ‘contents’. That protection does not extend to the data itself”.

• “The notion of ‘intellectual creation’, which is a necessary condition in order to be eligible for copyright protection, refers to the sole criterion of originality”.

• “significant labour and skill on the part of its author does not justify, as such, the protection of it by copyright if that labour and that skill do not express any originality”

The CJEU also makes it clear that the Database Directive aims at completely harmonising copyright protection for databases across the EU and therefore precludes national rights other than those provided for by the Directive.

Clive Hawkswood, Chief Executive of the RGA, said: “We welcome the ruling of the CJEU in relation to the claims of Football Dataco and hope that this will, finally put an end to attempts by sporting organisations to extract significant funds from media and betting organisations using the threat of intellectual property infringement. It is disappointing that it has taken so long to reach this position of clarity; nevertheless we are grateful to the CJEU for providing such an unequivocal judgement. As we have said before, this will hopefully encourage professional sports to build on the current commercial relationships with the betting industry in the best interests of all concerned.”

Sigrid Ligné, Secretary General of the EGBA added: “We welcome today’s ruling, which should put an end to copyright claims for sport fixture lists. The focus now should be on strengthening the commercial ties between the online betting industry and professional sports. The fact, though, is that sport is still missing out on commercial opportunities with the betting industry in countries like Germany, Portugal and Poland because of sponsorship and advertising restrictions. We encourage the European Commission to take actions against these countries in order to remove these regulatory barriers.”


For further information or comment please contact Sigrid Ligné: +32 2 554 08 90, EGBA Secretary General or Brian Wright, RGA Director of Business, +44 (0)20 7831 2195


Notes for Editors

1. The RGA is the largest online gambling trade association in the world, representing the world’s largest licensed and stock market-listed remote gambling operators and software provider’s .The organisation provides the remote gambling industry with a single voice on all issues of importance to regulators, legislators, and key decision-makers.

2. Its members include: 888; Ash Gaming; bet365; Betfair; Boylesport; bwin.party; Gala Coral; Gamesys; IGT; Ladbrokes; Microgaming; Paddy Power; PKR; Playtech; Rank Group; SBOBET; Skybet; Sportingbet; Sportech; Stan James; Stanleybet; Talarius; Unibet; VCBet; Virgin; William Hill; and WMS.

3. The EGBA is an association of leading European gaming and betting operators Bet-at-home.com, BetClic, bwinparty, Digibet, Expekt, Interwetten, and Unibet. EGBA is a Brussels-based non-profit association. It promotes the right of private gaming and betting operators that are regulated and licensed in one Member State to a fair market access throughout the European Union. Online gaming and betting is a fast growing market, but will remain for the next decades a limited part of the overall European gaming market in which the traditional land based offer is expected to grow from € 80.4 Billion GGR in 2010 to € 92 Billion GGR in 2015, thus keeping the lion’s share with 86% of the market. Source: H2 Gambling Capital, September 2011.

4. A full version of the CJEU ruling can be found at:
http://curia.europa.eu/juris/document/document.jsf?text=&docid=119904&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=1759892

RGA challenges new online gambling taxation proposals in Greek Courts

The Remote Gambling Association (RGA), the largest trade association for remote gambling operators in the world, has submitted a legal challenge to the Greek Government's taxation regime for remote gambling. The action in the Greek Council of State was co-signed by bet365, Betfair and William Hill.

The new tax regime will require licensed gambling operators who have been active in the Greek market to pay taxes retrospectively on any revenues earned from Greece-based customers from 1 January 2010 until the new licences have been awarded. In addition licensed gambling operators will be required to pay a retrospective 10% withholding tax (WHT) on winnings for the year up to 16 December 2011. This provision is equivalent to a market entry fee that will have to be paid by all of the operators who have until now been unable to obtain a licence to operate in Greece.

The RGA's action seeks an annulment of the Ministerial Decision to introduce retrospective gross gambling revenue tax and a tax on customers' winnings. The action is founded on the grounds that the proposed taxation measures are unconstitutional as they contravene the right to conduct a business activity and are disproportionate. Furthermore, the proposals do not accord with the principle that international treaties supersede conflicting provisions of Greek law.

The proposal of what are unconstitutional and non EU-conforming tax obligations on remote operators came at the same time as the Greek Government granting OPAP, the incumbent monopoly gambling operator for offline games, an extension of its existing licence for an additional 10 years. This extension, for the period from 2020 to 2030, was granted in a wholly uncompetitive and non-transparent fashion. Furthermore, OPAP currently pays no gambling tax on its offline activities, whereas online operators will be required to pay 30% GGR, and its customers are not subjected to a 10% withholding tax (on winnings under €100).

In October and November 2011 the RGA filed two separate complaints with the European Commission regarding the recently adopted Greek online gambling law – one on its own on the grounds of State Aid, and the other one jointly with the EGBA on internal market grounds. The complaints detail a range of non-EU compliant barriers to new market entrants and request that the Commission, as guardian of the EU Treaties, addresses these discrepancies as a matter of urgency.

The RGA will continue to lobby the Greek Government, on the basis that its actions are not in line with fundamental EU law and Greek domestic laws. Crucially, implantation of the proposed taxation regime and other anti-competitive conditions within the new online gambling legislation will ensure that potential market entrants will be driven out of the Greek market. This will in turn see the potential tax take of the Greek government shrink, while at the same time Greek consumers will be encouraged to bet outside of what will be an uncompetitive and unviable market.

Clive Hawkswood, CEO of the Remote Gambling Association said:

"The RGA believes that the opening of the Greek on-line gambling market is a welcome step. However, the taxation regime proposed will create a huge and uncompetitive financial burden for potential licensees. There is no doubt that implementation of current proposals will see the newly regulated market fail to the detriment of the Greek government and Greek consumers. There is still time to amend the Ministerial Decision and for the tax rates to be reviewed and I hope the Ministry of Finance will be willing to discuss viable alternatives with us.

"At the same time, we await the European Commission's response to the two complaints filed so far, and we urge them to ensure that fundamental EU market principles are upheld in Greece."

Remote Gambling Association (RGA)

For more information, contact:
Sue Rossiter, Director of Projects and Policy (+44 (0)20 7831 2195 or srossiter@rga.eu.com.)

EGBA: European Court calls into question the compliance of the new Italian regulation

Gambling: European Court calls into question the compliance of the new Italian regulation. EU law precludes national legislation designed to protect the market position of incumbents.

CJEU confirms fundamental ‘red line’ for regulated gambling markets and the obligation to ensure full transparency, legal certainty and equal treatment.

Today the European Court of Justice (CJEU) issued its preliminary ruling in the joint cases Costa and Cifone regarding the access of European operators to Italian gambling licences (cases C-72/10 and C-77/10) under the 2006 reformed Italian gambling legislation. The CJEU confirms that Member States cannot protect vested economic interests and thereby discriminate against new operators under the aegis of consumer protection or fraud prevention.

In particular, the Court ruled:

• That a national restriction is justifiable only if it does “not have as a true objective the protection of the market positions of the existing operators” – Para. 65

• “The very fact that the existing operators have been able to start up several years earlier than the operators unlawfully excluded ,[…] confers on them an unfair competitive advantage [which] [...] constitutes a new breach of Articles 43 EC and 49 EC and of the principle of equal treatment.” – Para 53.

• As regards possible justifications for unequal treatment "the objective of ensuring continuity, financial stability or a proper return on past investments for operators […] cannot be accepted as overriding reasons in the public interest" – Para 59.

• The Court rejects the justification by the objectives of reducing gaming opportunities and combating criminality, when a Member State "has long been marked by a policy of expanding activity with the aim of increasing tax revenue" – Para 62.

• The Court also points out that national measures intending to achieve such objectives must be proportional, consistent and systematic – Para 63. This is not the case if national measures, for example "rules on minimum distances were imposed exclusively on new licence holders and not on those already established" – Para 64.

• “In order to enable any potential tenderer to assess with certainty the likelihood that such penalties will be applied to it, to preclude any risk of favouritism or arbitrariness on the part of the licensing authority […] it is therefore necessary [… to set out the circumstances for the withdrawal of licenses] in a clear, precise and unequivocal manner” – Para. 78

• The Court further repeats its consistent case law that no penalties may be imposed on operators having been excluded from obtaining a license in breach of EU law – Para. 85.

In its ruling, the Court notes that the Italian legislation, in the manner in which it regulates the gambling market, is not consistent with the claimed objectives of protecting consumers from gambling addiction and limiting gambling activity in Italy. The Court points out that the aim of the Italian legislation is to protect incumbents and increase tax revenues. Such objectives cannot serve to justify violations of EU law. This ruling is in line with a series of recent rulings in which the Court focusses on the lack of consistency between the claimed objectives of Member States and the actual legislation that in fact aims to protect incumbents' interests.

Sigrid Ligné, Secretary General of the EGBA commented on today’s ruling: “This very positive ruling confirms that national legislation that opens up and regulates the gambling market may not discriminate against new operators but must guarantee fair market access.”

Ligné adds: “The Court has made particularly clear the ‘red lines’ that Member States must observe when they regulate gambling; it is high time for the European Commission to enforce the consistent case law of the CJEU and pursue complaints and infringements procedures accordingly ”