Eye on Europe - Nov. 2, 2006

2 November 2006

bwin Saves for Liberalization -- bwin is reconsidering its marketing and sponsoring strategy due to the mounting politically motivated resistance. According to Parisa Gillespie of the company's corporate communications department, it also includes the most important market, Germany, where the group has been especially active. "What is more," adds Parisa, "marketing restrictions in selected parts of Germany do not allow (us) to advertise for our products, resulting in reduced marketing efficiency. As a consequence, our focus is on profitable consolidation to prepare for possible liberalization."

Violating EU Law -- Shares of lottery operator OPAP were 0.5 percent lower to 28.64 euro on news that the European Court of Justice ruled that Greece should lift a legal ban on all electronic games, including arcade games, because it violates EU laws.

Déjà Vu -- Shares of the Moscow Olympic Lottery were temporarily suspended on Oct. 14, and two weeks later its major shareholders have reported nothing on the development. The turmoil is nothing new for Intralot SA and Tanjong PLC, which jointly hold a 49 percent stake in the business. Problems with an earlier version of the lottery resulted in a vast amount of court cases for both companies. Tanjong has been beset by a string of negative news, including the weaker-than-expected performance of its Tropical Islands project and exceptionally high-prize payouts.

Prize-less -- Mifal Hapayis, the Israel national lottery and proud member of the European Lotteries, seems to have a slight problem. As reported by Haaretz, Mifal Hapayis has been hit by two cases of players who remarked that lottery machines did not match the printed-version prize lists. Mifal Hapayis, of course, says that this is impossible because, according to Chairman and CEO Shimon Katznelson, "we will maintain the highest level of security, in order to preserve our credibility, upon which our reputation is based." Mifal Hapayis is looking into interactive selling and distribution channels, over the Internet, cellular networks and television.

Traders and Gamblers -- Russia's derivatives market may fall victim of a new tough gambling law because courts treat futures and forward contracts as risky bets that should come under gaming rules. According to Reuters, the practice is a legacy of the 1998 financial meltdown, when business courts ruled that trading in currency derivatives amounts to gambling. The courts, therefore, gave no legal protection to the contracts, allowing banks to default. This month, President Vladimir Putin sent the State Duma a bill that would force casinos and other gambling institutions to move outside large cities into four gaming zones in remote areas, including one in Siberia. Traders say there is a risk some judge may rule that trading floors at Moscow bourses that trade $500 million worth of derivative contracts per day will have to follow.

Lottery without Board -- The Totalizator Sportowy Spólka z o.o. (TS), (the Polish State Lottery) is in the news again. The procedure of the selection of the authorities and appointments of new board members has come under legal scrutiny. There have been appeals and over-rulings, and the chaos remains complete. The entire supervisory board seems to be illegally in place.

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.