Live from Bet-Markets: Day Two

1 April 2008

Lawyers and legal issues dominated the second day of the Bet-Markets conference in Vienna. Most of the morning was taken up with a series of round-table discussions hosted by legal experts from different jurisdictions, among them Italy, France and Sweden.

Quirino Mancini, an attorney with Sinisi Ceschini Mancini & Partners, chaired the discussion on Italy. After summarizing the history of gambling regulation in the country, and how budgetary pressures forced the opening of its market, he moved on to talk about some of the most recent developments.

Italy’s original licence requirements are being reviewed with the aim of making them more "EU friendly," he said. In return, Brussels might consider dropping the infringement proceedings that were initiated against Italy for its blacklisting and blocking of gambling Web sites in 2006.

These proposed revisions include:

  • Removal of the original stipulation that licence applicants had to establish a company in Italy -- under the new rules it can be a company anywhere in the European Union

  • Previously, gaming servers also had to be based in Italy -- again, these can now be located outside Italy in the European Union

  • The license fee will also be reduced and will continue to decrease for every year the license is renewed

These new proposals were sent to Brussels in December 2007. Since then they have been subject to the European Union's "standstill" notification period, during which the new rules cannot be implemented and can be assessed by other EU member states.

Indeed, Malta has filed a reasoned opinion objecting to Italy’s new licensing requirements. As a result, the standstill period -- which was due to expire at the end of March -- has been extended by a month to allow for further EU assessment.

Malta has objected to the fact that operators still need a local license in Italy and must negotiate with the Italian regulator. There has been no change to the requirement that operators still have a dot-IT platform linked directly to the regulator, which the authorities believe helps prevent operators from avoiding paying tax on their bets. This objection by Malta and the subsequent extension of the standstill period means that Italy continues to regulate under the old regime.

Another area of contention in the Italian market is that of international pool liquidity for online skill games such as poker. Having sufficient liquidity of players is obviously a key element for an online poker room. In Italy, however, there remains an argument as to whether poker players from outside Italy will be allowed to join games hosted on Italy-based servers.

The local operators in Italy are concerned that their business will suffer badly if established international companies can compete in the Italian market and are allowed to mingle both Italian and non-Italian players in their poker tournaments.

Concluding, Mancini said that the Italian regulator is aware of the weaknesses and impracticalities in the current rules, but said it is all a question of time as to when and how it will bring about improvements.

Like Italy, France is another EU member against whom Brussels has begun proceedings for its stance on gambling. But Fabien Gaucher, an attorney with Ulys, explained that France is keen to resolve its conflict with the European Union before it assumes the presidency in July. While this is unlikely to spur the introduction of a fully-regulated online sports betting market -- a gambling law could still be at least two years away -- it could in the meantime lead to the creation of a transitional regime.

Gaucher cited the example of music downloading, an area in which France had a law that was tough but unenforceable. A meeting was held with all the relevant parties to create a new agreement. A similar situation might happen regarding sports betting, he said.

Pressure is also growing on the state monopoly in Sweden, and Ola Wiklund, an attorney with Wistrand, said there is a move to have monopoly operator Svenska Spel added to a list of state-owned companies to be privatized. He explained that most political parties in Sweden want to dismantle the monopoly, but that this might not actually take place until after the elections in 2010.

Wiklund knew of no instance of the Swedish Lottery Act being used to prosecute a private gambling company, and believed the incentive to enforce the current law in Sweden is weak because it may very well be illegal under EU rules. For example, recent cases against several Swedish newspaper editors for running gambling adverts have been dropped.

One man who has seemingly been fighting against state monopolies throughout his career is Petter Nylander -- first in the airline industry, then television, and now in gambling as the CEO of Unibet.

The closing session of Bet-Markets 2008 was a lively argument about state monopolies and private companies between Nylander and Rolf Sims, legal adviser to the Ministry of Culture and Church Affairs in Norway.

Sims argued that countries like Norway reserve the right to pursue their own domestic policy for regulating gambling. He reiterated the fact that gambling is not banned in Norway but is run through a state monopoly to prevent problem gambling, at which it has been successful.

Having seen monopolies broken down in other industries, Nylander thinks it will happen in gambling too because strong market forces are driving change. He simply could not believe it was 2008 and that, in some EU countries, he was viewed as a businessman -- others, as a criminal -- "just because of the industry he was in."

Patience would seem to be an essential virtue for the sports betting industry, based on the final day of Bet-Markets presentations. News from the various jurisdictions suggests that change is beginning to happen but that it will need time to build momentum.

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BetMarkets 2008

Lorien is a research analyst with Global Betting and Gaming Consultants, and currently resides on the Isle of Man. Prior to this, he spent three years at a leading United Kingdom gambling firm, providing regulatory and market research for its various international e-gaming ventures.