Denmark: The Next Battlefield for Gambling Lobbyists?

11 September 2007

Danes like to gamble, and their numbers are increasing as the Danish gambling market has experienced rapid growth during the latest decade. In fact, a recent survey conducted by one of the leading daily newspapers in Denmark found that the average Dane spends DKK 175.00 ($30) on gambling every week.

Since 2003, when the European Court of Justice (ECJ) decided in favor of the Italian bookmaker, Gambelli, in case C-243/01, "Gambelli," the political pressure against the European Union Member State’s gambling monopolies has increased.

Following the ECJ ruling in the Gambelli case, Ladbrokes Worldwide Betting challenged the Danish act on certain games, lotteries and bets’ conformity with the EU Treaty in litigation proceedings before the Eastern Division of the Danish High Court. Ladbrokes claimed that the Danish act, which establishes a gambling monopoly in Denmark and prohibits advertising for any other gambling operator than Danske Spil A/S, is violating the EU Treaty. In its ruling on Nov. 15, 2006, the High Court decided that the Danish legislation, and thereby the Danish state monopoly, are in conformity with the EU legislation and ECJ case law.

However, even though the High Court refers to the relevant ECJ case law, the High Court fails to conduct a proper test of the proportionality of the Danish legislation. The High Court completely disregarded Danske Spil’s shrinking market share in spite of rapid growth in both its advertising expenditures and the Danish gambling market in general. In other words, the Danish act on certain games, lotteries and bets completely fails to achieve its objectives as defined by the Danish government. Therefore, the act’s restrictions on the free movement of services governed by Article 49 of the EU Treaty does not fulfil the requirements of the principle of proportionality. Consequently, Denmark is in violation of its obligations under the EU Treaty.

The decision of the High Court has been appealed to the Danish Supreme Court.

Parallel to the Ladbrokes case, the European Commission issued two letters of formal notice on March 30, 2004 and April 10, 2006. The commission followed up the letters of formal notice with a reasoned opinion in March 2007.

The Danish government replied to the commission’s reasoned opinion by restating the arguments and analysis in its earlier response to the commission’s letters of formal notice. The Danish government emphasised that the various purposes of the Danish legislation, such as player protection and limiting gambling activity in Denmark, cannot be analysed and evaluated individually but must be seen as a whole. The Danish government thus contends that the commission’s analysis of the Danish legislation is incorrect.

Since the Danish government again repudiated the commission’s claims, proceedings against Denmark are anticipated within the next year.

In another example of the current pressure that the Danish gambling legislation is under, the district court in Lyngby, Copenhagen, recently held that a poker tournament is not a game of chance pursuant to the Danish penal code. As such, this places poker tournaments outside the prohibitions of the Danish gambling legislation.

Additionally, the political debate regarding Danske Spil A/S’s future existence has intensified during the last six months due to journalists discovering that approximately 80 percent of Danske Spil’s outlets sold lottery tickets and scratch card games to, and took bets from, children between the ages of 11 and 16.

The public affairs company Gunbak PA and the law firm Danders & More have conducted an unofficial preliminary survey of the Danish parliamentarians’ opinion regarding reform of the Danish gambling legislation, including abolishing the monopoly. Based on this survey it can be concluded that there is sufficient will power amongst the Danish politicians to make lobby efforts against the Danish monopoly successful.

This is further supported by a market survey conducted on behalf of Danske Spil, which showed that the majority of Danish players play with the foreign-operated gambling, betting and poker sites on the Internet. This indicates, along with Danske Spil’s shrinking market share, that Danes are not satisfied with Danske Spil’s range of games offered or even the conditions under which these games must be played.

Through the lobby efforts of the Danish Poker Association and its attorney, the Danish Minister of Justice, Lene Espersen, has decided to establish a committee which shall be looking into reforming the Danish gambling legislation regarding skill games such as poker, backgammon and bridge.

This supports the conclusion that successful lobby efforts against the Danish monopoly are presently possible.

The past year has been very eventful regarding a potential reform of the Danish gambling legislation. With concentrated lobbying efforts from a united group of private gambling and betting operators that are active on the Danish market, there is now hope that Denmark will soon get the modern gambling legislation that it needs to accommodate the demand of the Danes in a legislative environment based on free competition--that is, a gambling legislation which is fit to handle gambling on the Internet, mobile phones and other modern media as well as promoting gambling product quality and player protection.

The external pressure on the Danish gambling legislation has never been greater than now, and the political climate needed for a reform is available. Let the battle begin!

Henrik Norsk Hoffmann is a Danish attorney and an associate with the law firm Danders & More, which specializes in corporate and financial transactions, litigation and arbitration. Hoffman specializes in gaming law, international commercial law and international commercial arbitration law and is a leading gaming law specialist in Denmark. Hoffman holds degrees from the University of Copenhagen, Denmark, and the University of Queensland, Australia.