Given the global nature of the Internet, the case law of most significance has been that which deals with the inevitable questions of jurisdiction. For example, the laws of which state should govern a transaction where the gaming site is based in a different state to that of the gambler? In the US there have been several cases relating to the Internet (both gaming and non-gaming) where the exercise of jurisdiction by one state over a web site in another has been considered.
In comparison, there has been much less case law in the rest of the world. However, in Europe, there is not only the question of the competing laws of nation states but also the interaction between the law of individual states and European Union Law.
When considering this interaction, the main starting point is the judgment of the ECJ in the case of Schindler [Case C - 275/92]. In that case the defendants were agents for a public body that organised lotteries in Germany looking to sell lottery tickets in the UK. At the time UK law prohibited large scale lotteries and their promotion in the UK. This was held to be an obstacle to the freedom to provide services as enshrined by Article 59 of the Treaty of Rome (Now Article 49 of the European Union Treaty).
However, the ECJ ruled that as the prohibition was non-discriminatory, applying equally to operators based in the UK and operators based in other Member States, there were grounds for it being objectively justified. These grounds were the moral, religious and cultural aspects of lotteries, protection from the high risk of potential crime or fraud associated with lotteries and the possibility of an incitement to spend which could have damaging individual and social consequences.
The logical extension is for prohibitions on cross-EU-border Internet gaming not to infringe EU law. A view that has gained support from the recent English High Court decision in R v The Secretary of State for the Home Department ex parte The International Lottery in Liechtenstein Foundation and the Electronic Funding Company plc.
The Liechtenstein based organisation, sought judicial review of UK legislation prohibiting the promotion of large-scale lotteries in the UK. Liechtenstein is a Member State in the European Economic Area for which, for the relevant purposes, the provisions of Article 59 apply. The Court found that the legislation was an infringement of Article 59 but was objectively justifiable because of concerns of social policy and the prevention of fraud.
In his judgment Mr. Justice Moses determined that the advent of the UK National Lottery subsequent to Schindler did not make the UK's restrictions on other large scale lotteries discriminatory. He ruled that Member States retained a wide discretion as to what was necessary to protect players and society at large and therefore Member States were not restricted to a determination of whether to prohibit activities absolutely. The UK "was free to determine whether it was necessary to restrict large lotteries to a National Lottery for the purposes of protecting players and maintaining order in society".
Although this disposed of the case, Mr. Justice Moses considered the question of whether, if his decision was erroneous, a restriction against Millions2000 was necessary and proportionate. He found that as a question of fact that "the controls in relation to Millions2000 are not equivalent to the regulation of the National Lottery within the UK and thus are inadequate to maintain the level of risk to which the United Kingdom thinks it right to expose its nationals." Thus it can be seen that Internet gambling sites operating as legally in one Member State may well need to have strict controls, equivalent to existing gambling facilities in order to be allowed to provide services in other Member States.
So how have European states dealt with gaming sites based in other states? Last year, in the UK case of Victor Chandler International Limited v The Commissioners of Customs and Excise and Another [The Times 17 August 1999] the question arose as to whether a bookmaker based outside the UK could lawfully broadcast advertisements on teletext within the UK.
Mr. Justice Lightman found that Section 9 of the Betting and Gaming Duties Act 1981, by using the words "any advertisement or other document", had been drafted so as only to preclude transmission of a document. As that Act did not define "document" and as he could find no assistance in other statutory definitions, Mr Justice Lightman looked to the common law. He summarised a document as "a material object which contains information capable of extraction from it" and concluded that the broadcast of a Teletext page does not have the necessary documentary character.
The Internet is not quite the same as a computer can store the transmitted information whilst Teletext is normally read through a television. Indeed the Commissioners of Customs & Excise submitted that there should be no distinction between Teletext and a fax or e-mail and that all such methods of advertising should fall under the Act. However, Mr Justice Lightman was not convinced by this argument and held that the Act did not cover the dissemination of information in non-documentary form which on receipt is reduced to written form.
Thus it can be seen that whilst there have been attempts by national authorities to assert jurisdiction over the activities of gaming enterprises based abroad, the current legislation has been shown to contain gaps where it has been drafted without consideration of new and fast growing technologies. The Commissioners of Customs & Excise have lodged an appeal that is due to be heard this month and the government has announced its intention to take steps to close the loophole.
Steven Philippsohn attained Honours in the Law Society qualifying examinations prior to being admitted as a solicitor in 1972. He soon became the litigation partner of a substantial Central London practice prior to starting his own firm in 1979. He has spoken at many conferences, both in the UK and overseas and recently gave papers at the International Bar Association on the subject of the regulation of internet gaming in Europe and developments in cyber crime in Europe.
Over the last 20 years, he has specialised in matters relating to the gaming industry. Throughout this period his firm has been retained on subjects ranging from advising gaming laws to be adopted by countries to recovery of gaming debts incurred both nationally and internationally.