Gambling companies pin hopes on EU liberalisation

By Anna McLauchlin

Date: 16/03/06

The European Commission is on the brink of taking legal action and is considering laws that could eventually lead to the liberalisation of strict state control of the gambling sector in many member states.

Private sports betting companies are hoping that either jurisprudence or regulation will let them take advantage of a single EU market.

Pro-liberalisation lobbyists such as the UK's StanleyBet and Germany's Bet and Win are awaiting the next round of EU infringement procedures on 29 March.

They want Internal Market Commissioner Charlie McCreevy to persuade his sceptical colleagues to begin legal action against seven member states for banning private gambling firms from their markets.

And on 28 March a German constitutional court will judge whether provisions in the country's penal code restricting betting companies infringes EU law on freedom of services. If the court rules in the companies' favour, it will limit the power of state monopolies, which observers say could have a significant influence on the development of cross-border gambling.

"If the German market blows open, it will have a huge impact on the EU market as these operators will certainly then try to go into Austria and other member states," said one industry observer.

Under the EC Treaty, member states are obliged to allow the free movement of services and several court cases have upheld this right.

While governments claim that gambling restrictions are put in place to protect people from addiction, private companies argue that they are more worried that competition will lead to huge losses in fiscal revenue as people turn from national lotteries towards commercial gambling.

In the 2003 Gambelli case, the European Court of Justice ruled that member states could not use social reasons to justify restricting gambling when the real reason was to keep out foreign competition. But this has not lead to much change on the ground.

Private sports betting companies are still prevented from setting up in other member states and face restrictions on advertising and sponsorship.

When the European Parliament voted to exclude gambling from the EU services directive, as its inclusion would have strengthened the right of gambling companies to operate freely throughout the bloc, several liberal and centre-right MEPs criticised the move. They said it would condemn companies to seek their rights through the courts.

But the private betting lobby is still seeking regulatory action. It could find a sympathetic ear in commissioner McCreevy. On 10 April, the Commission will publish preliminary findings from a study commissioned from the Swiss Institute of Comparative Law into the impact of liberalising the gambling industry.

A public hearing will be held in Geneva on 8 May and a final report will be published by mid-June which according to one official will "contribute to the Commission's reflection on the issue".

"We would like to see a competitive market where gambling services can be offered like any other services, but at the same time with harmonised rules to cover the social issues," said Torbjorn Ihre, head of public affairs at the European Betting Association.

"We strongly believe that this can only be done on a pan-EU basis because co-operation is needed between all operators if it is to work."

Article reports that the European Commission was on the brink of taking legal action against seven Member States for banning private gambling firms from their markets and that it was also considering to initiate legislation that could eventually lead to the liberalisation of strict state control of the gambling sector in many Member States.