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European Court Justifies Gambling Monopoly

By: Joan Peppin, Thursday September 10th 2009
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In an order that surprised everybody, the European Court of Justice ruled that a country could restrict private players from entering Internet gambling if the purpose was to safeguard the interests of the citizens. The case that was being heard was between online casino operator bwin and the Portuguese gambling monopoly.

Actually the case was only indirectly connected with online gambling. It pertained to a dispute arising out of bwin's sponsorship of the Portuguese soccer club Liga. As a result of the sponsorship bwin advertising was placed on the players' uniforms and Liga's websites. The state charity that had monopoly rights to online betting and lottery gambling saw this as an infringement of its space. The state owned monopoly therefore fined both Liga and bwin.

The European Court of Justice cited previous rulings where it was said that free trade could be restricted by the state if it was so required to protect the public. It said that this principle was applicable in this case because in the opinion of the Court online gambling involved a high risk of criminal activity or fraud. Since the potential winnings of the players was very high there was a real likelihood of underhand dealings taking place. Therefore whereas the Court did not support the exclusion of private enterprise in online gambling for the sake of restricting competition, it was acceptable to exclude private enterprise in the interest of protecting the consumer.

Online gaming operators and their representative organizations reacted strongly against this order. The gaming operator in question, bwin, said in a press release, "It is difficult for us to understand the rationale that crime is more difficult off-line than online." The release also said that the consumer protection and fraud prevention programs run by it were the best in the industry, private or state-owned. The Secretary General of the European Gaming and Betting Association (EGBA) said, "Several jurisdictions in the EU already prove that it is possible to guarantee a high level of consumer protection and have a well regulated and competitive online gaming market at the same time," Remote Gaming Association (RGA) CEO Clive Hawkswood also said that there was no evidence to justify that online gambling is more susceptible to fraud. He added that this judgment denigrated the online gambling industry.

There was concern in the online gambling industry that this decision may force the European Commission to change its policy of striving for a unified and free online gambling market in Europe. However, Hawkswood said that this would not be the case. He added that though the court had made some "careless and inflammatory" comments the scope of the ruling was very limited and did not depart from past practice. Hawkswood said, "Thus, nothing in it should stop the European Commission from pursuing ongoing infringement proceedings against the clearly unlawful gambling regulations in multiple jurisdictions."

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