Foreign Operators Brace for 'Real War' in Holland

24 November 2003

Primary proceedings on the Ladbrokes/De Lotto case will begin today. Ladbrokes is contesting the rulings of two lower courts that found that the company violates Dutch law by offering sports betting services in the Netherlands. The case is expected to last between one and two years.

Ladbrokes has argued that the Dutch law that prohibits it from offering its services is a violation of the free movement of services within the European Union. The courts have disagreed, ruling that the laws are valid because they are based on social interests, such as preventing gambling addiction and fraud.

To prevent compulsive gambling and fraud, the Netherlands has constructed a licensing system that limits both the number of companies that may offer games and the number of games that may be offered. As a result of the licensing system, certain conditions are imposed on De Lotto and the other license holders.

And though Ladbrokes is licensed in the United Kingdom, the licensing regime there is relatively looser than in the Netherlands and Ladbrokes does not adhere to the same restrictions. The courts in the Netherlands have therefore ruled that Ladbrokes does not have the right to accept Dutch bets even though it operates from United Kingdom. The Court of Appeals in its decision on Sept. 9, 2003 ordered Ladbrokes to cease offering sports bets to consumers in the Netherlands and also refused Ladbrokes' request to submit the matter to the European Court of Justice.

Ladbrokes, however, was not ordered to cease offering bets on casino games or horse-racing to Dutch consumers. De Lotto did not contest Ladbrokes' offering of such games because De Lotto does not have a license to operate them. Holland Casino, the licensed fixed-odds operator in the Netherlands, would have to succeed in having a similar judgment rendered by the courts before Ladbrokes would be ordered to cease offering bets on games of chance. Likewise, Scientific Games Corp., which is licensed to take horse-racing bets, would have to succeed in similar action before Ladbrokes would be ordered to cease accepting horseracing bets.

Together, De Lotto and Holland Casino, have so far begun lawsuits against several foreign operators that offer bets to Dutch residents, but the Ladbrokes decision is the first to reach such a high court. All other courts have found in favor of De Lotto and Holland Casinos, ruling that foreign operators must block access to players in the Netherlands.

The ruling by the Court of Appeals in September was considered by many to spell defeat for Ladbrokes and other foreign operators. At that time De Lotto's director Tjeerd Veenstra said, "This is the fatal blow to the illegal provision of gambling sites in the Netherlands."

The attorney for De Lotto, Joris Van Manen, spoke similarly.

"We, of course, are very pleased with the judgment, which is quite important because we had settlements with a lot of parties offering Internet gaming," he said. "The agreement was that they would shut the site down for Dutch users until the decision was rendered in the Ladbrokes case. And it will be a long time before any other decision will be rendered because if Ladbrokes goes to the Supreme Court it will take three to four years, and if they go further into full-scale court proceedings it will take some years, especially since they want the case to be referred to the European Court of Justice in Luxembourg."

Justin Franssen, an I-gaming lawyer from the Netherlands, disagrees. "Essentially, the proceedings so far are just quarrels, and the real war starts now with the guidelines set out by European Court of Justice in the Gambelli Case earlier this month," he said. "These guidelines need to be tested in the Netherlands, and the first chance is Monday."

Ladbrokes said in September that it was considering all of its options, but was determined to take the case to the European Court of Justice, either through litigation before the Supreme Court of the Netherlands or through the continuing full-scale court proceedings.

Click here to view a copy of the Ladbrokes appeal (translated from Dutch to English).

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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