Down, but not out

2 May 2008

While rumor has that Denmark will be the next European jurisdiction to liberalize sectors of its online gambling market, Henrik Norsk Hoffman, an attorney with Lett, a Copenhagen-based firm, said it's a little too soon to get excited.

On Danish National Radio last week, Kristian Jensen, the country's tax minister, said he was examining the possibility of breaking Denmark's monopoly on sports betting.

Denmark is currently in the reasoned-opinion stage of an April 2006 European Commission infringement proceeding targeting the country's sports betting legislation. The commission is expected to bring the proceeding to the next stage in the coming weeks.

Mr. Hoffmann told Interactive Gaming News the tax minister's statements appear to be laying the groundwork for a backup plan if the commission goes ahead with its lawsuit.

"There have been a lot of efforts made to keep the EC from suing," he said. "I would say that the statements from the minister of taxation at this point are so vague that it wouldn't make sense to take off pressure right now."

Mr. Hoffmann has long been a proponent of foreign operators joining forces to lobby the Danish government. He said it looks as if there is a good chance now of that happening.

"If they (foreign operators) would enter into a dialogue with the Danish government and keep pressure on, I think what has been proposed by the tax minister is the only solution that I see now for an abolishment of the monopoly," he said.

Should the monopoly break, Mr. Hoffmann said Danske Spil's products are likely to fare poorly against those of its competitors.

The state-owned operator's core products comprise scratch card games, the National Lottery and slot machines -- products in which its competitors, whose specialties lay with online poker and casino games, simply aren't interested.

In addition to increased pressure from Brussels, a 2006 lawsuit brought by Ladbrokes against the tax ministry has been taken up by the Danish Supreme Court, which Mr. Hoffmann said could put "tremendous pressure" on the Danish government to open its market.

Against the government, Ladbrokes argued the Danish Gaming Act violated the European Community Treaty because it established a monopoly. The High Court in November 2006 ruled against Ladbrokes, saying Danish gaming law was in compliance with EU law.

But Mr. Hoffmann believes the High Court was mistaken.

"The reasoning of the court is inconsistent," he said. "It's contradictory and I don't think it complies with the interpretation laws of the European Union.

"So," he continued, "there is a fairly high risk that Ladbrokes will win that case (at the Supreme Court) and there's a good chance that that will be decided within the next year.

"It makes political sense (for the Danish government) to have that backup plan in case Ladbrokes wins that Supreme Court case or the commission sues the government."

Stay tuned.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.