ECJ decides in favour of monopolies

Competition for the internet wagering market is a constant battle that companies wage everyday both in the courts and in the field. Operators with deep pockets are doing everything they can to gain a foothold in countries of the European Union where the European commission has ruled monopolies can be maintained and in some instances even subsidized.

EC ruled in favour of the state monopoly in the Santa Casa (Portuguese case)¸ alleging the protection of public interests¸ saying gambling carries a risk sector where historically it has been perceived as linked to fraud or leveraging of untaxed money. EC puts these reasons forward to support state monopolies.

The five year long legal battle waged in the (ECJ) European Court of Justice ended a few months ago with a landmark decision in another case that ruled against the online gambling giant Betfair.

Decisions by the European Court of Justice to back De Lotto in the Netherlands against “Ladbrokes” and “Betfair” and to uphold Sweden’s ban on marketing by non-licensed sites¸ has nonetheless done little to deter the companies from pursuing the online gambling market on the continent.

In the De Lotto case¸ the European Court of Justice supported the Dutch argument stating¸ “Such a restriction may be justified¸ in particular¸ by the objectives of consumer protection and the prevention of both fraud and incitement to squander money on gambling¸ as well as the need to preserve public order.” “The grant to such a State operator (thus enjoying full monopolistic rights) of exclusive rights to operate games of chance¸ or the renewal of such rights¸ without any competitive tendering procedure would not appear to be disproportionate in the light of the objectives pursued by the Netherlands legislation.”

Efforts are being made at the European Commission to harmonise regulations within the twenty seven jurisdictions represented by the Union.  Harmonization of the rules and regulations would go a long way to make the processes less time consuming and expensive for gaming operators who have complied with the general standard imposed by the commission. Betfair is one company that will re-apply for a sports betting operational license in the Netherlands.

A structured system for the licensing and regulation of online gambling websites for any qualifying gambling groups who are willing to pay the licensing fees. Interestingly¸ the new laws do not dismantle the old Dansk Spel gambling monopoly¸ instead¸ the group has been granted a six month lead on the online gambling industry¸ since other groups will not be granted licenses until January 2011. Dansk Spel has already signed with Party Poker¸ and will be offering internet gambling services using the Party Poker platform.

Other gambling groups wishing to establish online gambling sites in Denmark must meet certain requirements. Operators must have an office that is physically located in Denmark¸ and must have a reporting system in place that complies with Danish tax rules. The current tax rate is approximately 20% of gross revenues. A licensing fee has also been put into place¸ with a hefty price of € 140.000. Currently only casinos and poker rooms are allowed by the licensing scheme. Online sports betting is treated separately¸ and for now¸ no licenses will be given for online bingo games in Denmark Additionally¸ Finland and Sweden Online Gamb