'Blow' to online gaming industry - 'No consensus in EU yet on remote gaming industry'

[clevfan]

Monday, 8th March 2010

'Blow' to online gaming industry

'No consensus in EU yet on remote gaming industry'

Times of Malta
Ivan Camilleri, Brussels

European Union member states were not obliged to allow gaming firms to penetrate their territory just because they were licensed in another EU state, the Advocate-General of the European Court of Justice decreed in an opinion seen here as a setback to Malta's lucrative remote gaming industry.

Advocate General Paolo Mengozzi, whose opinion is usually followed by the Court, released his conclusions on seven cases referred by different German regional courts about the compatibility of German gaming rules with EU legislation.

He said the offshore and extraterritorial licences granted by Malta and Gibraltar distorted the mutual trust between member states when it came to gaming laws.

He said a member state could have a monopoly for some gambling and betting services. Furthermore, since there was no mutual recognition in gambling, member states were not obliged to allow operators on their territory on the mere grounds that they were licensed in another EU member state.

He ruled that gambling monopolies had the right to advertise their products in an adequate manner in order to present an attractive legal alternative to an illegal offering.

Over the past years, Malta has seen its remote gaming industry flourish, with hundreds of foreign companies opening offices on the island attracted by an array of favourable legislative incentives introduced by the government. The industry employs hundreds of people and pays millions of euros in taxes every year.

There is no consensus yet in the EU on how the remote gaming industry should move forward. The European Commission has not enacted any specific laws and has preferred to treat it as just another service to be regulated by the general free movement laws.

However, member states disagree in their interpretation of the EU treaties on the matter. Some, particularly those wanting to defend their monopolies, like France and Portugal, say they have the right to regulate their market and, thus, use certain laws to keep online competition at bay. Others, including Malta and the UK, insist the treaties give companies registered on their territory the right to operate in every EU member state without any barriers, according to the spirit of free movement.

The different interpretations have led to many new legal cases being filed before the ECJ, including some by offshore companies licensed in Malta, which are finding it difficult to penetrate the gaming markets of some member states.

Industry sources said the Advocate-General's opinion was therefore being seen as a blow to the burgeoning business in Malta.

On the other hand, the Association of European Lotteries, representing state monopolies, welcomed Mr Mengozzi's decision: "This is a further defeat for the many commercial operators that continue to ignore the legislation of the member states, contrary to the clear jurisprudence of the European Court of Justice."

The association's president, Fredrick Stickler, explicitly welcomed the harsh criticism of the Advocate-General towards "tax havens Malta and Gibraltar".

He referred to Mr Mengozzi's statement that "their practice (of Malta and Gibraltar) to issue offshore licences to hundreds of commercial online gambling operators distorts the trust between EU member states".

The sources said this opinion amounted to a direct accusation of Malta for using loopholes in the EU laws to give an advantage to companies wanting to introduce online gaming in markets that have been protected for a long time.

"This is what the Advocate-General means by a distortion of trust. However, the internet has changed the world and the EU has to move on," the sources said.

The Advocate-General's opinion is not binding on the Court of Justice but is only intended as a proposal to the Court as a legal solution to the cases for which it is responsible.

However, it is very rare that the ECJ decides against the opinion of the Advocate-General.

The judges have now started their deliberations and a judgment will be handed down later.

[clevfan]

Online gaming speculation ‘can only harm the industry’

by Annaliza Borg
The Malta Business Weekly

It appears that there is no uniformity in the opinions being delivered by European Court of Justice Advocate Generals in relation to online gaming companies and their compatibility with EU law, The Malta Business Weekly has learnt.

Contacted by this newspaper following the opinion published recently by Advocate General Paolo Mengozzi, the Finance Ministry said that Malta will attentively follow developments before commenting and reacting further. This slams reports on other sections of the media published this week referring to the opinion of AG Mengozzi as “a blow to the online gaming industry”.

On 4 March, AG Mengozzi delivered his opinion on a number of cases in which German courts had asked the ECJ to rule on whether the laws on games of chance in Germany were compatible with EU law.

In this opinion, AG Mengozzi said that “the mutual recognition of national licences for games of chance is not viable as EU law now stands”.

Explaining his view in detail, AG Mengozzi believed that a Member State may prohibit, under certain conditions, games of chance on the internet and may provide for a state monopoly on sports betting even if those games are actively promoted and if games involving a greater risk of addiction may be offered by private operators.

The opinion was communicated in a press statement issued by the European Court of Justice. It noted, as it does with every other opinion, that the AG’s opinion is not binding on the European Courts of Justice. The role of the Advocates General was to propose to the Court, in complete independence, a legal solution to the cases for which they are responsible. Court judges then deliberate on the cases and hand down judgements at a later date.

In its comments, the Ministry explained specifically that “this is an AG’s opinion and is not binding on the final decision to be taken by the Court”.

Meanwhile, another European Court of Justice Attorney General, Yves Bot, opined on 26 January in the Winner Wetten case, that German gaming legislation in one of Germany’s regions constitutes a restriction to the freedom of movement of services.

It noted a conflict between a rule of domestic law and a directly applicable community provision. The task of the national court was therefore to ensure the application of Community law by refusing to apply the rule of domestic law.

The Finance Ministry said that, therefore, there is no harmonisation of EU laws in this sector.

“Hence, Malta argues that the principles enshrined in the EU treaty namely the provision of the free movement of services and freedom of establishment reign supreme,” it said.

The Malta Business Weekly asked whether Malta will be affected in any way, since a multitude of foreign remote gaming companies set offices in Malta in recent years, after being attracted by government incentives. They are paying millions of euros in taxes to Malta.

“Speculation can only harm the industry, hence we will be following developments attentively before commenting further,” the Ministry said.

“It is important to take note of the recent proposal made by European Commissioner responsible for the Internal Market and Services, Michel Barnier, to the European Parliament that is, the tabling of a Green Paper to act as a consultation document in the field of online gaming.”

Malta will argue its case during these discussions.

Similarly, in a brief comment on the matter, the Lotteries and Gaming Authority said it was not opportune to speculate on cases which still need to be decided upon by the ECJ. However it was monitoring and analysing all communication and developments.

Meanwhile, a major remote gaming operator said the gaming market in Europe has been facing uncertainty for some time with conflicting viewpoints being expressed. While pointing out that the company was not about to take decisions on the back of single opinions, it added that ECJ had yet to take decisions.