Gambling Excluded from EU 'Country of Origin' principle?

29 November 2005

The European Parliament last week voted for the exclusion of gambling activities--lotteries, casinos and all betting transactions--from the Directive on Services in the Internal Market of the 25 EU countries.

It is an important victory for the European State Lottery and Toto Association (EL), which represents 74 organizations across Europe and parts of Asia.

The "country of origin" principle is one of the most controversial parts of the Services Directive, a draft law aiming to clear obstacles preventing European businesses from offering their services throughout Europe.

The reasons for exclusion are:

  • the idea that gambling should be the competence of the member states;
  • concern about the spread of gambling;
  • concern about gambling's social risks; and
  • concern about the reduction of monopolies contribution to the state coffers.

The basis of the European Economic Community, however, is the establishment of a single market so that (as stated on the EU's Web site) "goods and services move around Europe as freely as within one country, and in 1993, the single market was the EU's greatest achievement; it was also its toughest challenge."

But, the challenge is far from over.

Dutch De Lotto's Tjeerd Veenstra, who has fought successfully in the courts to keep foreign sports betting businesses out of the Netherlands, applauds last week's vote, but acknowledges that it does not mean certain victory.

"First of all," Veenstra explained, "the vote in the IMCO Committee (The European Parliament's Internal Market and Consumer Protection Committee, RvdG) is not the end of the so-called EU co-decision procedure. We await the plenary vote of the European Parliament in January and the Competitiveness Council in December this year. We are confident about the outcome but we have to be alert until the end. The voting will mark the end of the first reading, and there might be a second reading.

"But despite the fact that a political attempt to deregulate gambling services seems to be blocked, there is still the ongoing . . . debate. The cases at the different national courts and the European Court of Justice will not stop.

Veenstra also pointed out that secondary European law is in review. Two examples, he said, are the possible review of the e-commerce directive and the upcoming debate over the TV without frontiers directive.

With this in mind, Veenstra emphasized the importance of having a presence in Brussels.

"In general, we can say that Brussels, for the state-licensed lotteries and toto companies, has become the political center of Europe," he said. "Decisions and debates (can) have an impact on our daily business, and therefore we (European lotteries) decided at our general assembly this year in Rome to be permanently present in Brussels. It is important to exchange information continuously about who we are, what we represent and what our opinion is with regard to all upcoming political issues that might have an impact on the activities we are responsible for."

Torbjörn Ihre, who is responsible for the external affairs at the European Betting Association (EBA), said last week's decision was expected.

"As you know, this outcome didn't come as a surprise, but still we are concerned that the MEP (European Parliament) missed this chance to get EU-wide legislation. We will now try to lobby for the vote on the Service Directive in plenary, which will take place in week 3, 2006. We are also waiting for the commission report on gambling to be released in the beginning of 2006 (with no date confirmed yet)."

(Click here to view a press release outlining the EBA's views.)

The EU Competitiveness Council, under the chairmanship of Alan Johnson (the U.K. Secretary of State for Trade and Industry), met in Brussels on Monday to discuss the matter and will meet again today. The European Commission is represented by Vice President Günter Verheugen, responsible for Enterprise and Industry; Charlie McCreevy, commissioner for the internal market and services; Stravos Dimas, commissioner for environment; and Janez Potocnik, commissioner for science and research.

Commissioner McCreevy will discuss the proposed services directive with ministers today over lunch. The meeting will be against the background of a progress report on the proposed directive prepared by the presidency. To steer the discussion, the presidency has put forward three questions in the progress report dealing with the scope of the proposal; the posting of workers and worker protection; and the provisions on free movement of services.

So, it seems, there is more to come. . . .

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.