The EU and Gambling - Part 1

With companies constantly planning, investing, surviving, taking over and adapting to new verdicts throughout the EU internal market of 450 million people, to say that Europe's commercial gambling industry is in a state of chaos and turmoil is an understatement.

The European landscape for gambling amounts to a struggle in which three groups--EU institutions, the European lotteries and the free-market, international gambling operators--are vying for a market with turnover and gross gaming yield in excess of US$169 billion $82 billion respectively in 2004.*

The European lotteries are the well organized state lottery and/or toto companies of the EU member states as well as the lottery/toto companies of several non-EU member states. Most of their members are state monopolies.

The cross-border operating gambling companies, mostly organized in groups such as the Remote Gambling Association (RGA) and the European Betting Association (EBA), are the natural opponents of the European lotteries.

In the European Union, games of chance are regulated (in the absence of EU legislation) at the national level.

The key components of ongoing disputes are cross-border gambling, the country of origin principle, state monopolies, liberalization of the European gambling industry, television without frontiers, content services, service directives and the information society (the Internet, interactive television, mobile betting, etc.).

The European Commission has tried for a long time to implement the basic commercial values of the European Union, which stands for establishing a common single market, free movement of goods, people, services and capital and the European Union's policy of ensuring fair competition between businesses.

The Internal Market

The European Commission is responsible for ensuring that community law is correctly applied. As the guardian of the EC Treaty, the commission has the option of commencing infringement proceedings under Article 226 EC against any member state that, in the eyes of the commission, infringes community law--in particular the principle of free movement of goods. The commission can try to bring the infringement to an end and, if necessary, refer the case to the Court of Justice.

Anyone may lodge a complaint with the commission against a member state about any state measure (law, regulation or administrative action) or administrative practice which he/she considers incompatible with community law. The commission's services may decide, however, whether further action should be taken on a complaint in the light of the rules and priorities laid down by the commission for opening and pursuing procedures.

When the commission decides to pursue a complaint, it allows the member state to present its views regarding the facts stated in the complaint and the commission's initial legal assessment of them through the letter of formal notice.

Charlie McCreevy, the former Finance Minister of Ireland and the responsible European commissioner for the internal market leads the committee for gambling, is responsible for bringing the infringement cases for gambling to the College of the Commissioners, and he is squashed between the European Parliament and the 25 EU heads of national governments. Infringement cases regarding gambling, after several postponements, seem to be bound for the governments of the Netherlands, Finland, Germany and Sweden.

The Service Directive has been postponed in Parliament, and on Nov. 21 the Committee for Internal Market will vote on the amendments. The first reading will take place in January 2006 at the earliest, and the reporter, Evelyn Gebhardt, is concerned about the postponements. Meanwhile, political groups in Parliament will try to reduce the record number of amendments (at least 1,600 in all); they are still looking for agreements on the principles of "country of origin" and "providing services in one member state other than its own."

Malcolm Harbour, a member of the European Parliament for the West Midlands, U.K., summarized the problems as follows:

"There are many arguments for creating a single market for gambling services with common regulation across the EU. But political mindsets among EU governments are not capable at the moment of making this step forward. The problem lies in the continuing state-controlled monopolies which provide the exchequers with considerable revenue. Lottery operators and their beneficiaries have been lobbying strongly against competition. In that context, the gambling sector has already been excluded from the scope of the Services Directive. But the development of online gambling has made it imperative that the issue is now discussed. We understand that the European Commission is going to present a discussion paper on policy options."

* Source: GBGC, Simon Holliday