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Online Casinos in Licensing Disputes

By: R. Kingsley, Thursday October 16th 2008
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Two online casinos have grappled with governments over licensing issues. The first dispute involved Ladbrokes and Norway. The second dispute took place at the other end of the world in Argentina.

The Norwegian government had refused to grant Ladbrokes a license to operate in Norway. In 2004 Ladbrokes had gone to court against this decision. Ladbrokes had based its arguments on the European Union Treaty of Rome and the European Fair Trading Agreement. But the Oslo court ruled otherwise. In its judgment the court said that the Norwegian government had not violated any European Union law in denying Ladbrokes the license. The court also awarded legal costs of €130,000 to the state. The Norwegian government's action was understandable. It owns and operates Norske Tipping, which has a monopoly over online gambling. All the policies of the government in the past have been to protect the state run Norske Tipping from competition from the private sector. Naturally Norway's Minister of Culture and Churches, under whose ministry Norske Tipping operates, was overjoyed. He said that the judgment affirmed that Norway was a welfare state. The minister, Trond Giske, added, "The verdict sends an important message that supports the European tradition that each individual country has the most effective control of its own gambling market." Ladbrokes meanwhile said that they would continue the fight.

In Argentina the situation was even more bizarre. The government, through its agency Loteria Nacional, withdrew the license issued to the online gambling firm Formoapuestas suddenly and without explanation. Formoapuestas had been issued the license for 15 years and only three years had elapsed. The online casino, which was powered by Microgaming, had no option but to close down. Incidentally Formoapuestas was the only company to have been issued a license for online gambling. It is believed that this withdrawal is a precursor to a ban on online gambling. A bill to this effect has already been presented and is being discussed. It obligates ISPs to block Internet access to gambling websites. Stiff penalties have been provided for on both the defaulting ISPs and online gambling operators. Unlike in Norway, Argentina has no state owned online gambling house to protect. The reason being cited is that online gambling is not taxed and therefore does not provide any revenue to the state. Many Argentineans have opined that a better option to overcome the hurdle cited would have been to tax online gambling. Many countries have gone this way and the good results are showing. Countries like Ireland are planning regulation and expansion of online gambling. Like Ladbrokes, Formoapuestas will go in appeal but expects the battle to be a long drawn one.

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