Betting firms await Italian case

By Anna McLauchlin

Date: 11/05/06

A provisional decision from the European Court of Justice (ECJ) on Thursday (18 May) could prise open the EUR 75 billion European betting market, in the most significant case since the landmark Gambelli ruling in 2004.

The so-called Placanica case was referred by an Italian court, which asked the ECJ to rule on whether or not Italian betting legislation was in line with EU law. Massimiliano Placanica is an Italian-based agent employed to transmit sports wagers online for UK-bookmaker Stanleybet International. The Italian government considered such activity to be illegal because Stanleybet did not have an Italian licence.

As the circumstances are almost identical to the Gambelli case, betting companies are hoping that the latest case will further clarify the situation.

In Gambelli, the ECJ ruled that the Italian government could not, on the one hand, restrict foreign betting companies while promoting national gambling on the other. But it sent the final judgement back to the Italian court, which ruled in favour of Italy's restrictions.

The problem with the Gambelli ruling, according to Justin Franssen, a Dutch lawyer specialised in gaming, is that courts across the EU and even in the same member state have interpreted it differently.

Many member states, including the Sweden, Denmark and the Netherlands, limit gambling licences to domestic firms.

"The hope is that the ECJ will further clarify what was said in the Gambelli case, although personally I felt that the ruling was clear so I don't have high expectations on that issue," Franssen said.

"But if there is a decision that the allocation of gaming licences should be carried out in a certain way, that could have a significant impact as it could change the mobility of operators in the EU. One could not rule out that once a licence expired it could be allocated to a foreign betting firm instead of the existing national operator."

Thursday's decision will be a provisional opinion handed down by Advocate General Dámaso Ruiz-Jarabo Colomer. The court confirms the Advocate General's opinion in its final ruling in around 80% of cases.

But Franssen, who acts on behalf of betting companies wanting to expand their services to other member states, warned that this was not simply a case of wrangling over legal terms.

"What we sense as lawyers is that we are getting tied into a political debate rather than a legal one, which is frustrating," he said.

Even under the Gambelli ruling, member states are allowed to restrict betting services in the name of social protection or to limit criminal activity associated with gambling, and many do so on this basis.

But critics argue that the real reason is that national treasuries glean millions of euros from state lotteries and that competition would threaten their budgets.

A decision in favour of a foreign betting licence in the Placanica case would also add legal weight to the infringement procedures launched last month by the European Commission against seven member states.

"Our decision was entirely consistent with Gambelli and the EC Treaty," said a spokesman for Internal Market Commissioner Charlie McCreevy.

"What we are saying is that these member states cannot speak with a double tongue, promoting their own lotteries while restricting foreign competition."

Tjeerd Veenstra from the European Lottery Association said he was confident that the current drive to open markets would not succeed.

"The Gambelli ruling confirmed the right of governments to protect their gambling markets from competition, and I am confident about future cases," he said.

"And the fact that MEPs supported the exclusion of gambling from the services directive means that we are more than safe in the political area for the years to come."

Article anticipates a provisional ruling by the European Court of Justice, scheduled for 18 May 2006, which could prise open the EUR 75 billion European betting market, in the most significant case since the landmark Gambelli ruling in 2004. The so-called Placanica case had been referred by an Italian court, which had asked the ECJ to rule on whether or not Italian betting legislation was in line with EU law. Massimiliano Placanica is an Italian-based agent employed to transmit sports wagers online for UK-bookmaker Stanleybet International. The Italian government considered such activity to be illegal because Stanleybet did not have an Italian licence.