The European Commission's I-Gaming Initiative

5 February 2004

The European Commission plans to review the need for a new set of laws to govern remote gambling services across all of its states by at least 2010. The process of forming the legislation will begin soon with a 12- to 18-month study gambling in all of the member states, and several betting organizations are ready to provide input for the Commission's review.

Upon publishing a November 2003 report on the status of its e-Commerce, the European Commission stated, "Internal market objectives of the directive have been met and that it has provided a sound legal framework for information society services in the internal market." The governing body noted, however, that more improvements could be made to insure that e-commerce companies truly have the freedom to provide services and the freedom of establishment.

According to the European Commission, "Online gambling, which is currently outside the scope of the Directive, is a new area in which action may be required because of significant internal market problems - see for example Case C-243/01s of the European Court of Justice . . . concerning criminal proceedings in Italy against persons collecting Internet bets on behalf of a bookmaker legally licensed in the U.K. The Commission will examine the need for and scope of a possible new E.U. initiative. In addition, the Commission is examining a number of complaints it has received concerning cross-border gambling activities."

The Commission also proposed on Jan. 13 a services directive to create a real internal market within the European Union by eliminating excessive national restrictions that prevents companies from offering services across borders. Businesses, governed by their own country of origin, would be able to more freely provide services across borders.

Again, rules for remote gaming were not established in the directive, but the Commission has declared that a set of laws that achieves the intentions of the services directive must be in place for both remote and traditional gambling by 2010.

The process of establishing a new gaming code will soon begin with a 12 to 18 month study. The Commission is likely to tender the review to a large, independent consultancy expert that has some sort of operation in every member state. The consultancy will evaluate the current situation in each jurisdiction and perform impact assessments. The Commission will examine a final report and decide which course of action to take.

A large part of the study will entail soliciting information from operators and other key businesses in the industry. The Interactive Gaming, Gambling, and Betting Association (iGGBA), an organization that represents over 45 companies and individuals from the remote gambling industry, has already met with Commission, and will offer its expertise in regularly scheduled meetings.

"Part of iGGBA's mission is to represent the industry before the E.U., and we came away from the meetings with the knowledge that E.U. officials are intent upon investigating the recent set of complaints about countries taking action against the cross-border provision of remote gambling services." iGGBA Chairman Andrew Tottenham explained.

The European Betting Association (EBA), a newly formed organization of sports betting companies, also intends to lend its voice. The EBA's primary objective is to work toward obtaining a free competitive betting market in Europe that is devoid of cross-border restrictions and government monopolies. The EBA hopes to obtain its goal by lobbying the European Commission, Parliament and Council.

Representing 14 countries and 360 casinos, the European Casino Forum (ECF) wants to advise the Commission as well. "The ECF has been in discussion with the European Commission on the issue of E.U. gaming regulation throughout 2003," ECF Secretary General Heliodoro Giner said. "We are confident that the result of the consultations in 2004 should result in a satisfactory solution."

The ECF is greatly concerned with offshore online operators. "It is time that consumers and licensed casinos are protected against these uncontrolled service providers," Giner added.

The Commission will take one of three approaches when the study is complete. The first would be to maintain the status quo by choosing to keep I-gaming exempt from E.U. law. Another approach would be to grant the freedom to provide online gaming services across the European Union, but member states would be permitted to further restrict gambling if done on the grounds of consumer protection. The last approach would create a specific directive that attempts to harmonize the law across all of Europe and allows very few if any exceptions.

iGBAA's director, Wes Himes, prefers the latter two options.

"Obviously for us, the bottom line would be to try to make it as easy as possible to establish in a country in the EU which offers a remote gambling license and then be able to broadcast and send that signal out across the EU without any restrictions," Himes said.

Himes noted that this is the first time the Commission has attempted to remedy the problem of regulating I-gaming, and he thinks it is taking the appropriate measures.

"I believe that the approach they are taking in investigating this with eye on the country of origin a freedom to distribute services principal is a very positive step in the remote gambling industry's direction because it will allow us to provide services without having to be denied by the member state regulations, that are in some cases measure to protect their own national gambling monopolies or their tax revenue from gambling services," he said.

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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