Academic Study Could Shape EC Gambling Policy

8 December 2005

The Swiss Institute of Comparative Law (SICL) is currently undertaking a study of gambling services in Europe that could soon become an important factor in shaping how the European Commission (EC) approaches cross border gambling. The study entails an in-depth analysis of the economics of gambling in the European internal market as well as an analysis of all the existing laws and regulations that govern gambling. A draft report is tentatively scheduled for release in the Spring of 2006.

The SICL’s study is composed of two major parts - one that examines the economics of gambling in the whole European internal market on a sector-by-sector basis and another that analyzes the laws and jurisprudence that govern gambling in each of the 25 Member States.

The economic section will provide a snapshot of how the European internal market for gambling services looks in terms of size, employment, taxes, growth rates, etc. The industry will be broken down into eight formally distinct sectors: lotteries, casinos, gambling machines (outside of casinos), bingo, sports betting, charity gambling, media gambling services, and sales promotions.

As for the regulatory side of the study, Martin Sychold, an attorney with SICL explains, "We're gathering together all the existing laws and regulations and jurisprudence and everything that has a normative effect on gambling in each of the 25 Member States. We're then going to analyze that in order to state what are the existing barriers to free trade in gambling services across the Member States' borders. Finally, we're going to take the existing principles of European law, in particular the jurisprudence of the European Court of Justice, and see what that jurisprudence says about those barriers."

Sychold says the study will provide the EC with the means to evaluate the benefits of protectionist regulations that aim at social protection and support charitable causes and then to weigh those benefits against the loss in potential economic growth that results from the restraint on cross-border trade that comes with such policies.

"The aim of the exercise in the Commission's imagination is that, at the end of the day, there will be a report giving a legal view of all the barriers that prevent free trade in gambling services, an economic view of the European Union market for gambling services as it currently looks, and a estimation of economic growth potential if you get rid of all of the unjustifiable barriers," says Sychold.

"The Commission can then come and say ... Look, the barriers that the Member States are imposing are costing us so much in terms of lost growth. We now have to compare that cost with the benefits in terms of social protection, public health protection and support for good causes that the Member States are advancing as justifications for those barriers. Only then can we make a clear decision about whether the benefits exceed the costs."

The EC, which in January 2005 awarded the SICL a contract to undertake this study, could possibly use the results of the study's report to influence key decisions it makes about cross border gambling in the future. The Commission has so far received nine formal complaints against eight Member States (Spain, France, Germany, the Netherlands, Sweden, Hungary, Greece, Finland, and Denmark) that uphold state-owned gambling monopolies for alleged violation of EU trade laws.

The prospect of filing infringement proceedings against these Member States was on the Commission's agenda during late summer and early autumn of 2005 but has since lost steam because ten of the 25 commissioners are said to oppose such action.

When pressed to speculate about possible developments, Sychold says the EC isn't necessarily waiting for the completion of the SICL's report before making any decisions on cross border gambling issues. "I suppose you could say they're waiting for something, but they're not specifically waiting for our report”, Sychold stated. “They're sort of waiting for the situation to evolve.”

He continued, "What our report is intended to do is to provide an objective baseline or an objective source of information on which the debate can then be based, instead of people coming up with contradictory claims as to what the current situation really is."

Although the timeline for the publication of the SICL's report has not been formally defined, Sychold estimates that the SICL will release a draft report for public commentary at the beginning of April 2006.

The SICL is a part of Switzerland's Federal Department of Justice, and its statutory duty is to provide legal advice and legal information about all matters of foreign law and international law. In that regard, the SICL regularly provides legal studies for the Swiss federal government on a wide variety of subjects. In addition, the SICL provides legal opinions to courts and private individuals in connection with legal disputes.

The SICL also has a research arm that performs studies when time permits, and the last major project it undertook resulted in the publication of a book that dealt in depth with Internet gambling, making SICL an excellent candidate for the tender of the EC's report.

As SICL's person with the most connections and most experience in gambling, Marting Sychold is the man in charge of the EC's gambling report.

Bradley Vallerius

Articles by Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials. Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

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