Far from Over

8 June 2004

After several months of delay, Ladbrokes finally received a favorable court judgment against gaming operator De Lotto in the Netherlands last week, delighting proponents of the right to distribute I-gaming services across Europe's state borders. The Dutch court in Arnhem essentially ruled that Dutch gaming laws are inconsistent with their self-defined goals of limiting fraud and preventing gambling addiction. The court also declared the laws to be inconsistent with the rules set forth by the European Court of Justice in its Gambelli decision. The judgment, however, is interlocutory and not final, and Ladbrokes still has obstacles to overcome.

"It seems that the court is not willing to render judgment, but is merely giving the politics a chance to give it viewpoint."
- Polo Van der Putt
Attorney for Ladrokes

In the words of the court (translated from the Dutch):

"The gaming policy seems to be inconsistent and mainly directed toward raising capital. Also, in recent years the licensees were granted the possibilities to extend the number of games offered and to operate as commercial market parties."

The statement continues:

"Every Dutch national can verify that the licensees are very present in Dutch society. They are the seventh largest advertisers in the Netherlands. The amount of advertising is not prudent and well-balanced, but instead pushy and exalted. The marketing strategy of Holland casino is focused and directed toward attracting new consumers. Without further explanation from the Dutch government, the court doesn't see how these marketing activities, as well as strategies from the current monopolies, fit the gaming policy that is directed towards diminishing the number of games on offer and the argument put forward by De Lotto that the marketing activities are there to fight the illegal games of chance."

So the court inevitably declared that the Dutch gaming policy, on the basis of Article 49 of the E.U. Treaty, is not restrictive enough to justify prohibiting foreign operators from offering their products.

But instead of making a final judgment, the Arnhem court requested that De Lotto solicit a reaction from the Dutch Minister of Justice, who services gaming licenses in the country.

The court said that it wishes to hear whether the minister can prove that there is a consistent and coherent restriction of the freedom to provide services because a decision that would permit a foreign operator to offer games of chance via the Internet could have far-reaching consequences. The court has also stated that the government may intervene if it wishes to justify the nation's gaming law.

It is not common for a court to seek the opinion of an entity that is not a party to the case at hand. Polo Van der Putt, one of Ladbrokes' attorneys in the case, said this kind of judgment is rare.

"It seems that the court is not willing to render judgment, but is merely giving the politics a chance to give it viewpoint," Van der Putt said. " So that's a bit strange. I think if the court thinks the Dutch legal system isn't in accordance with law, it should render judgment. It should prohibit something or allow something."

He added, "Then it would be up to the politicians to amend things if they want to change the situation."

Justin Franssen, an I-gaming lawyer in the Netherlands, agrees with Van der Putt.

"For the first time, the Gambelli arguments were used in a proper way," Franssen explained. "The only thing I regret is that once again, via the backdoor, the government and the politicians are granted a possibility to intervene, and in my view that is unjust. The court has to decide, not the politicians."

"The court has to decide, not the politicians."
- Justin Franssen
J.G.J.E. Franssen

Both Franssen and Van der Putt seem certain that the Minister of Justice will provide a response by the Sept. 15 deadline supporting the country's prohibition against cross-border prohibition.

Despite the court's ruling that Dutch gaming law is inconsistent and incoherent, Ladbrokes is still battling another issue in the case. The company would like the court to accept that operators offer bets in their country of origin, not in the country where the customer resides.

"The court still considers that Ladbrokes is offering games of chance in the Netherlands," Van der Putt said, "but we would argue that that is incorrect because we think Ladbrokes offers games of chance in England. The mere fact that the Web site is accessible in the Netherlands doesn't mean that it has operations in the Netherlands."

Ladbrokes would like to have the issue settled by the European Court of Justice, but the Dutch courts have refused all requests to forward the case.

"Ladbrokes has always argued that there have been some European decisions on betting and offering cross-border betting services," said Van der Putt, "but there has not been any case deciding whether or not (a Web site) should be treated in the same way as a case when an operator has a physical appearance in a country. We think that's different."

Last week the court again dismissed Ladbrokes' request to move the case to the E.U. Court of Justice, but Ladbrokes still has a chance to send it there. The company is engaged in interim proceedings--a completely different legal battle--with De Lotto. The proceedings are now at the Supreme Court of the Netherlands, and a decision is expected at the beginning of next year. Any order to have the case forwarded to the European Court of Justice would have to come from the Dutch Supreme Court. But decisions in the interim proceedings have so far taken a different path than those on the merits, and De Lotto has already succeeded in obtaining interim judgments against Ladbrokes whereby the British company was ordered to make its betting site inaccessible to Dutch residents.

It is important to note, however, that the case on the merits, for which last week's decision was rendered, takes precedence over the interim proceedings, meaning that if two different decisions were reached in the cases, the judgment on the merits case would become the true verdict, canceling the interim decisions.

For now, Ladbrokes has reason to be optimistic. The court did consider that foreign betting operators like Ladbrokes may offer betting games in the Netherlands, albeit with strings attached. Yet, strangely enough, De Lotto isn't disappointed with the court's decision. Tjeerd Veenstra, director of De Lotto said, "It is good that a thorough investigation is now done into the matter. We now await the response of the Ministry. These proceedings are far from over."

Expect more strange turns in this one.

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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