EU ready to be firm over gambling restrictions

September 19, 2006

BRUSSELS -- The European Commission said Monday that it is prepared to target more member states deemed to be stifling free competition in the sports gambling sector.

The move came on the same day as news that a French magistrate formally launched an investigation into contravention of French gambling monopolies by the two heads of the Austrian-German Bwin Internet gambling group arrested last week.

Manfred Bodner and Norbert Teufelberger were freed on conditional release on bail of €300,000 ($380,000) each, one of the men\'s lawyers said.

"We will perhaps add to the number of countries involved in infringement procedures" during a meeting of the European Commission October 18 on the topic, said the EU executive arm\'s internal markets spokesman Oliver Drewes.

An activity that is illegal for a private operator cannot be legal for a state monopoly, Drewes added.

In April the commission named seven member states whose practices it was examining in the sports gambling sector; Denmark, Finland, Germany, Hungary, Italy, the Netherlands, and Sweden.

At the October meeting the commission, which is currently examining those countries\' responses to the infringement charges, will decide whether to take the matter further, Drewes said.

So far France has not been cited in this regard by the commission.

EU Internal Market Commissioner Charlie McCreevy wants to ensure that laws in member states banning gambling services are "necessary and not discriminatory."

McCreevy has said that he is not seeking the unfettered liberalization of the market but "to be assured that the measures put in place by the member states are fully compatible with community law" on the freedom of services.

Since April the commission, which is also the EU\'s top competition regulator, has received several fresh complaints, some 50 in total plus 50 more potential cases, according to Drewes.

In France, the two Bwin executives were being investigated for alleged violation of the sports gambling and lottery monopolies, one of the men\'s lawyers said, held by Francaise des jeux (FDJ) and Pari mutual urbain (PMU).

The Austro-German gambling group, whose parent company is listed on the Vienna stock exchange, has accused France of taking an illegal and disproportionate stance.

Bwin UPDATE from eGaming Review

A source at the Paris-based unit responsible for ordering the detention of Bwin’s co-chief executives has said it is part of moves to prevent online gaming companies from operating in France.

Manfred Bodner and Norbert Teufelberger were detained by the French authorities in Monaco this afternoon. It is thought they will be charged tomorrow.

Commenting on the arrests, the source at the legal section of the betting and gaming unit of the French ‘Renseignements Généraux’ (Section judiciaire de la sous-direction des courses et des jeux des renseignements généraux), said the French authorities would ”do their utmost to prevent any other private operators from operating in the French market.“

He added: ”It (online betting) has always been illegal and as the stakes are getting more and more important the decision to take action was implemented. But this was made possible by the fact that both individuals were on French soil. If they had been there a year ago they would have been arrested.“

The source added that ”online betting, lottery and casino games“ are ”illegal“ and that ”operating the site is the main offence“.

He added that it was purely coincidence that the arrests happened on the same day that the German state of Bavaria also banned Bwin.

When questioned whether the French authorities would be worried over European Commission moves regarding the running of national gambling monopolies, he said ”each state is currently within its rights to set in place a repressive system in order to regulate its games policy“.

Sources also suggested the French authorities may have been pressured by the two biggest land-based casino groups in France, Partouche and Barrière.

The two companies had recently wanted to launch online versions of their casino products but had not been allowed to do so by French gaming and gambling authorities. Partouche subsequently set up an office in London to operate its online gaming business.

The two executives were arrested at the end of Friday morning at Monaco’s training ground, where they were due to attend a press conference highlighting Bwin's sponsorship of Monaco football club.

Bwin is also a betting partner with other French teams, Bordeaux and Auxerre among them. They were held at the training ground for 30 minutes and then taken to Nice police headquarters to be heard.

German crackdown raises the stakes for internet gambling

By Eric Culp In Frankfurt And Pierre Tran In Paris

24 September 2006

BRITISH executives of online gambling companies could be arrested on criminal charges in Germany if they set foot in the country.

Officials from the interior ministries of the German states of Hesse and Bavaria told The Business that executives of foreign companies who let German residents place sports bets online are committing ”criminal“ acts that could lead to prosecution in Germany.

Germany’s threat to foreign managers follows the recent arrests in the US and France of executives from offshore gambling firms.

French state gambling officials also plan to adopt a tougher stand: officials told The Business that they will continue to report offences by foreign betting operators to the government, raising the possibility of more arrests of executives at offshore gambling firms.

Attempting to enforce their monopoly on sports gambling, Hesse, Bavaria and Saxony ordered Austrian online betting company Bwin to stop advertising and offering betting services in their states. The ban ”goes for everyone else, too,“ a spokesman for the Hesse interior ministry in Wiesbaden told The Business.

Bwin has become the highest profile target in the German crackdown on gambling which has also seen the forced closure of privately run betting shops around the country.

But executives from any company offering online sports betting in Germany should be concerned about prosecution.

”I would take these threats seriously,“ says Michael Adams from Hamburg University, an expert on gambling in Germany. He advised such managers to steer clear of the country. ”I wouldn’t take a layover in Frankfurt.“

In France, Bwin’s co-chief executives were released on bonds of E300,000 ($370,000, £205,000) apiece last week after their arrests as part of an investigation into the company’s French operations. The executives are expected to return to France for more questioning in November.

The arrests stemmed from complaints filed last year by French state-run betting agencies Francaise des Jeux (FdJ) and and Pari Mutuel Urbain (PMU). Under French law, FdJ holds the monopoly for lotteries; PMU controls off-track gambling and casinos for slot machines.

FdJ says that as a public operator working under a state mandate, it is obligated to report illegal activities to the authorities. It contends that the debate is not over monopolies, but about public policy and the future of gambling.

Paris shows little willingness to engage in a policy debate and is pushing forward with a crackdown on internet gambling. French Budget Minister Jean-Francois Coppé says the government will hand out hefty fines against illegal bookmakers.

A number of UK-based online betting companies allow German residents to make wagers.

The Business opened an account and placed a bet from a German address last Thursday with BetFred.com in Warrington. A BetFred spokesman said he was unaware of the situation, but if German authorities were planning to prosecute British online sports betting companies, ”then we’d have to stop“.

Sportingbet, whose chairman Peter Dicks was arrested in the US earlier this month, takes bets from Germany and even offers clients there a toll-free service line. When asked if the company had many German customers, a worker said: ”We sure do.“

Ladbrokes says it has not accepted wagers from Germany since 2003 due to legal concerns, and the website of bookie William Hill also refuses to serve German-based punters.

Ladbrokes spokesman Robin Hutchison said the German stance on online betting is against European Union free trade provisions, and the current row could help clarify the legality of state-run monopolies. ”The Bwin situation will force the EU’s hand,“ he said.

One Ladbrokes customer told The Business that Ladbrokes was well aware that his bets originated from Germany. ”They know where I’m calling from,“ said the punter, adding that all his betting transactions are done via a British-based bank.

Gambling is excluded from the Bolkestein directive on free circulation of services in the EU and is also absent from the e-commerce directive drafted in 2000.

French and German government officials claim they need oversight for all forms of gaming to minimise gambling addiction and money laundering as well collect taxes on betting profits.

Germany, Europe’s most populous country, has a gambling market estimated at E29bn, well below the E78bn in betting turnover in the UK last year. German state-run betting companies took wagers of E8.1bn last year, and just over E500m were sports wagers. The impact of Bwin and others in the market has been felt by German state governments. Turnover at Oddset, Germany’s official sports betting office, has fallen 20% since 2002.

Francaise des Jeux Pushing its Monopoly

Bwin's co-chief executives were arrested on Friday for allegedly violating French gaming laws. Manfred Bodner and Norbert Teufelberger were detained as they were due to hold a news conference at the training centre of first division football club AS Monaco, which the company sponsors, and held in Nice.

According to Bwin spokeswoman Karin Klein, the Austrian company had contacted lawyers and human rights experts and would take "vehement action against these human rights violations."

She told the Austria Press Agency that "the arrest was initiated by the French monopolist 'Francaise des Jeux' with the goal of causing fear," and added that Bwin would initiate breach of treaty proceedings against France at the European Commission.

Frederic Manin, the French lawyer of Bwin's two CEOs, said: "If FdJ had a low profile, it might be acceptable, but it has launched a full-fledge diversification campaign, boasts a two-digit annual growth rate and, through its Euro Million game, is reaching out to countries other than France."

He continued "The interest of FdJ is solely financial. If you let FdJ grow, then other gaming companies should also be allowed into France."

The lawyer went on to say that France was acting in a "disproportionate and illegitimate manner," and that the "French State must apply a consistent gaming policy".

A spokesperson for the state-owned Française des Jeux - which runs the national lottery, the football pools and scratch-card games in France - warned that other executives were at risk of arrest, saying: "It is reasonable to assume that any other executive from an online bookmaker who came to France would also be arrested. We are doing exactly the same as the authorities in the US who arrested the British executives."