Eye on Europe - Aug. 4, 2006

4 August 2006

Again Romania -- The Compania Nationala"Loteria Romana" S.A. , the Romanian Lottery, has become a household name for the readers of IGamingNews, and it wasn't a top-notch advertising company or a marketing campaign that created this spontaneous name awareness. It became so well known because of blunders, irregularities, intrigues, incompetence, waste of money, avarice, lack of control, favoritism, etc., and this week there have been yet more developments assign to the lottery's new found notoriety. The Romanian Soccer Association is suing the Romanian Lottery for damages of ROL 1 billion (US$362 million), and according the Bucharest Daily News, the Lottery Administration Council says the lottery must repay a US$20 million loan, which it allegedly received illegally from the state. In the meantime, the new administrative council is headed by Horia Dumitrescu, a councilor in the Ministry of Defense, and Roxana Batar, a director in the National Agency for Fiscal Administration, and the start of the new management is promising. The salary fund of the new manager, Liliana Chervasuc, was increased this year by 16.9 percent, while the growth of the revenues of the company is estimated at only 0.2 percent vs. 2005. Compania Nationala "Loteria Romana" S.A is a proud member of the European Lotteries (EL) family. It is about time that the EL starts to clean its own house.

Betfair -- The Dutch Soccer Association refused to come to an agreement with the management of Betfair, the trading name of the Sporting Exchange Ltd. for delivering information on suspicious betting practices in the Dutch Holland Casino soccer league. Betfair is licensed in the United Kingdom, which should, under Articles 43 and 49 of the European Commission Treaty, allow it to offer its services in other EU countries. Betfair has agreements with several soccer associations in Europe, and it has made a proposal to the Dutch association. The Dutch betting monopolist, Toto, which sees Betfair as an illegal organization, advised it not to negotiate with the Dutch Soccer Association. It is generally well known in the industry that Betfair has, by far, the best warning system for irregular gambling. The company played an important role, for example, in uncovering the famous match fixing scandal in Belgium. In the highest league during the most recent Belgium league season, Betfair scanned 17 matches with irregular wagers and submitted to the soccer association 880 names of individuals involved in match fixing. Betfair has two lobbying aims in Europe, depending on where respective governments are in the positioning of their own policies. In countries like Italy, where bans have been implemented, Betfair is focused on taking the necessary legal action to overturn the bans, which breach European law. In countries where there is no ban, but where governments appear to be considering their positions, Betfair wishes to insure that no laws are put in place that run counter to European law and explain to restrictive governments that the rationale they use to support their cases is flawed and they will be challenged.

Codere and William Hill Marriage -- Spanish gaming group Codere and British bookmaker William Hill this week announced the signing of a memorandum of understanding through which the parties plan to create a joint venture to become a leader in sports betting in Spain. Codere is dedicated to the private gaming sector and is focused on the management of slot machines, bingo, betting shops, casinos and racetracks in eight countries on two continents. The proposed joint venture would join William Hill's bookmaking expertise with Codere's leadership position in the Spanish market. Spain is one of the largest gambling markets in Europe, but to date licenses have not been available to private companies to operate sports betting businesses inside the country. Growth in the number of Internet operators targeting the country is evidence that there is strong demand for these services, and this has led to regional governments within Spain moving toward regulating the market. Several of Spain's regions are developing legislation to regulate sports betting and introduce licensing regimes allowing the establishment of land-based businesses. It is widely anticipated that the first of these regions will license sports betting within the next few months. Codere's revenue in 2005 was 553 million euro (compared to 395 million euro in 2004), and its EBITD was 90 million euro (compared to 82 million euro in 2004).

Unbalanced Press Coverage -- Dutch gambling attorney Justin Franssen from the firm Van Mens & Wisselink has taken on the Dutch government concerning the text of formal notice from the EU Commission regarding sports betting in the Netherlands. Franssen succeeded, after a lot of research, to get his hands on the written text of the "proof of default," dated April 4, 2006, and the Commission asked for a reaction before June 6, 2006. The Commission reminded the Dutch government that it is bonded to the Gambelli verdict, Commission v. Italy, the Gourmet jurisprudence, Alpine Investment and the Zenatti case. Cross-border advertising was mentioned as well. The Commission also discussed the Judgment of Necessity and Proportion and the Economic Importance of the Member State and the Protection of the Fiscal Equilibrium. Protection of the consumers of the monopoly is not in relation with the advertising and marketing costs. In 2002, De Lotto spent more than 25 million euro as one of the biggest advertisers in the Netherlands. The Commission does not agree that other operators in the Netherlands will create more criminal offenses or more money laundering; it argues that there are enough laws in place to prevent these things. The Commission concluded that the treaty of the formation of the European Community has not been fulfilled. Franssen could, after a lot of research, get formal notice from the Commission regarding sports betting in the Netherlands, and he says the authorities did not make the content public because, "they said that they did not want 'unbalanced press coverage.'"

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.