Talking Cross-Border Issues at GIGSE

29 June 2005

Whether some nations in the European Union can continue to ban cross-border remote gambling remains a hot-button issue in the I-gaming industry. A panel of attorneys discussed the issue at the Global Interactive Gaming Summit (GIGSE) and Expo in Montreal, and most agreed there's a strong possibility that a free market will emerge.

"I don't see anything changing firmly in one direction or the other for at least another three to five years."

- Wulf Hambach
Hambach & Hambach

At the center of the argument is whether member states have the right to prohibit businesses from operating in their country even if those businesses are licensed in other E.U. member states.

A group of operators, led by British bookmakers Ladbrokes and William Hill, continue to argue that any government that blocks foreign operators to protect state monopolies is doing so in violation of E.U. trade law.

The issue has been a central part of four cases heard by the European Court of Justice since July of 2004. Cases at the state level in Finland, the Netherlands, Sweden, Belgium, Germany and Italy, meanwhile, have been brought before local courts, and many of them are expected to go to the ECJ regardless of their initial ruling.

The legal battle heated up with the Gambelli ruling in 2003, a case brought before the ECJ after Italian courts ruled that a local betting agent for a U.K.-based online operator was breaking the law.

In handing out his ruling on the case for the ECJ, Advocate-General Alber said that the Italian legislation cited by Italian courts was "a discriminatory measure and--in view of the facts of the case--failed the required justification on grounds of general interest."

Operators have subsequently built their cases against E.U. jurisdictions around the Gambelli verdict, but Thibault Verbiest, an attorney with ULYS in Belgium and France and the moderator of the GIGSE panel, said these companies may have jumped the gun. The decision is a complex one, Verbiest explained, and not all of its implications have been considered.

"The court doesn't formally conclude that the Italian legislation is infringing on one of the ground principles of European Community law," Verbiest said. "There has to be a consistent gaming policy, and the decision doesn't say one way or another if that was the case in Italy."

Adding to the debate, he said, is that no European Commission laws apply to the interactive gaming industry. There are laws dealing with economic activity throughout the European Union and laws pertaining to goods and services exchanged between member states, but none of them are specific to remote gambling.

Wulf Hambach of the Hambach & Hambach law firm in Germany said the German courts have tried to determine case law for the industry, but until the ECJ or the European Commission addresses the issue head on, there will continue to be a huge legal gray area.

Quirino Mancini, an attorney with Sinisi Ceschini Mancini in Italy, said that the European Commission has a couple of options for settling the issue. The commission could opt to remove all remaining barriers in the Internal Market clause of the Internal Market Strategy for Services directive, he said, which would pave the way for a free market for the remote gambling industry. But if policymakers opt to curtail the industry, a slough of directives could be amended to tighten restrictions. Among them are the electronic commerce directive and a special directive on information society services (under which e-gaming could easily be classified).

Those routes seem unlikely, however, as European companies would lobby hard to keep the market as open as possible.

The panelists agreed that the development of specific rules pertaining to the remote gambling industry is the most likely course of action, but cautioned that this will take time.

"I don't see anything changing firmly in one direction or the other for at least another three to five years," Hambach said.

Until then, case law will dictate business practices for operators.

Last month Finland's Supreme Administrative Court overturned a government decision preventing Ladbrokes from operating there. Similar cases are pending throughout the Nordic region and other parts of Europe.

In terms of the big picture though, Verbiest feels that as the European market opens up to all segments of commerce, which he sees as inevitable, fewer and fewer restrictions will be in place for the remote gambling industry.

"It will be a slow process indeed," he said, "but long-term the E.U. will be a very attractive market for operators to be in."

Nobody knows where Kevin Smith came from. He simply showed up one day and started writing articles for IGN. We liked him, so we decided to keep him. We think you'll like him too. Kevin can be reached at