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20th Annual Sport and Recreation Law Association Conference Chapel Hill, North Carolina – February 28 - March 3, 2007 Dr. Anastasios Kaburakis Southern.

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Presentation on theme: "20th Annual Sport and Recreation Law Association Conference Chapel Hill, North Carolina – February 28 - March 3, 2007 Dr. Anastasios Kaburakis Southern."— Presentation transcript:

1 20th Annual Sport and Recreation Law Association Conference Chapel Hill, North Carolina – February 28 - March 3, 2007 Dr. Anastasios Kaburakis Southern Illinois University Edwardsville Dr. Heather Lawrence Ohio University

2 International Comparative Sport Law US and EU sports gambling and betting regulations, policies, and case law

3 Changing role of legal scholarship In the beginning there was only law. Then came law and society, law and history, law and economics and so on. These developments have transformed the vocation of the legal scholar from that of a priest to that of a theologian. Kathleen Sullivan - Dean of Stanford Law School In the beginning there was only law. Then came law and society, law and history, law and economics and so on. These developments have transformed the vocation of the legal scholar from that of a priest to that of a theologian. Kathleen Sullivan - Dean of Stanford Law School

4 The battlefield National Governments National Governments National Courts National Courts European Union (EU) European Union (EU) European Commission (EC), Parliament (EP) and Council European Commission (EC), Parliament (EP) and Council European Court of Justice (ECJ) European Court of Justice (ECJ) Communication Communication Conferences, Press Conferences, Press State Governments State Courts U.S. Congress U.S. Supreme Court Media ESPN WSOP Sportsbook.com Veenstra (2005)

5 The Legislative Process: Consultation Procedure Commission Proposal European Parliament Committee of the RegionsEconomic and Social Committee Opinion Adoption of decision by the Council after consultation with Coreper Verhulst (2003)

6 The Legislative Process: Co-Decision Procedure Commission Proposal Parliament (1 st reading) Opinion Council No amendments by Parliament or approval of all amendments by Council Instrument adopted or COR ESC COMMON POSITION Parliament (2 nd reading) Amendment by absolute majority Commission Council Amendments rejected Conciliation Committee convened by Council and Parliament Rejection by absolute majorityapproval/no action CouncilEnd of legislative process Adoption of common position by qualified majority Parliaments amendments accepted Adoption by qualified majority agreement (3 rd reading) Parliaments amendments not accepted Adoption only by unanimity No agreement Instrument rejected Verhulst (2003)

7 Subsidiarity The EC must act where the objectives to be pursued can be better attained at Community level, enhancing its powers The EC must not act where objectives can be satisfactorily attained by the Member States acting individually, constraining its powers Edinburgh European Council 1992: due to the subsidiarity principle, gambling is unsuitable for Community legislation and is better dealt with at a national level Veenstra (2005)

8 EU Law EC Treaty [The Treaty establishing the European Community (as amended by the Treaty of Amsterdam)] EC Treaty [The Treaty establishing the European Community (as amended by the Treaty of Amsterdam)] C 325/35, 12/24/02 EC Treaty promotes competitive market economy and prevents barriers to integration of the single European market EC Treaty promotes competitive market economy and prevents barriers to integration of the single European market Article 3 (c, g): Abolition of obstacles for free flow of services, no competition distortion Article 3 (c, g): Abolition of obstacles for free flow of services, no competition distortion Article 49: …restrictions on freedom to provide services within the Community shall be prohibited… Article 49: …restrictions on freedom to provide services within the Community shall be prohibited…

9 EC Art. 49 exemptions Veenstra (2005) Discretionary power of Member States to decide about the number and type of operators & type and volume of games Discretionary power of Member States to decide about the number and type of operators & type and volume of games National restrictions are compatible with EC Treaty if (Gambelli, paragraph 67; EC Art. 54): National restrictions are compatible with EC Treaty if (Gambelli, paragraph 67; EC Art. 54): Non discriminatory and proportionate; Non discriminatory and proportionate; Justifiable by imperative requirements: Consumer protection, prevention of fraud and crime, maintenance of order in society (Public Order); Justifiable by imperative requirements: Consumer protection, prevention of fraud and crime, maintenance of order in society (Public Order); Restrictions must reflect a concern to bring about a genuine diminution of gambling opportunities; Restrictions must reflect a concern to bring about a genuine diminution of gambling opportunities; Financing of good cause/state is no imperative requirement. Financing of good cause/state is no imperative requirement.

10 European Court of Justice Case Law (on EC Treaty Articles 49; 81 and 82 – Restrictions on provision of services; Competition rules, restraint of trade and abuse of dominant position) Case Law (on EC Treaty Articles 49; 81 and 82 – Restrictions on provision of services; Competition rules, restraint of trade and abuse of dominant position) C-275/92; Schindler (Import of lottery ads; Netherlands-UK) C-275/92; Schindler (Import of lottery ads; Netherlands-UK) C-368/95; Familiapress (Distribution of pub+prize; Austria-BRD) C-368/95; Familiapress (Distribution of pub+prize; Austria-BRD) C-124/97; Läärä (Exclusive right to operate slot machines; FIN) C-124/97; Läärä (Exclusive right to operate slot machines; FIN) C-67/98; Zenatti (Operation of sports betting agency/book; ITA) C-67/98; Zenatti (Operation of sports betting agency/book; ITA) C-6/01; Anomar (Operation of gaming machines; POR) C-6/01; Anomar (Operation of gaming machines; POR) C-243/01; Gambelli (Monopoly of collecting bets; ITA-UK) C-243/01; Gambelli (Monopoly of collecting bets; ITA-UK) C-42/02; Lindman (Taxation of winnings; FIN-SWE) C-42/02; Lindman (Taxation of winnings; FIN-SWE)

11 ECJ developments Advocate General R. J. Colomer on C-338/04; Placanica: Advocate General R. J. Colomer on C-338/04; Placanica: Prohibit national restrictions that criminally prosecute sports betting orgs w/o a national license, but authorized by another Member State (MS) Prohibit national restrictions that criminally prosecute sports betting orgs w/o a national license, but authorized by another Member State (MS) (as contrary to EC Treaty Art. 49) In Gambelli the ECJ sinned in showing an excess of prudence, referring matters to national courts; time to take the next step and refine the Gambelli answer, in order to eradicate uncertainties In Gambelli the ECJ sinned in showing an excess of prudence, referring matters to national courts; time to take the next step and refine the Gambelli answer, in order to eradicate uncertainties Country-of-origin principle: License by one MS should suffice (triggering competition b/t MS regulating gambling orgs.) Country-of-origin principle: License by one MS should suffice (triggering competition b/t MS regulating gambling orgs.) The databases protection directive (96/9/EC) twist; use by national sports betting monopolies (Fixtures – 02 ECJ cases) The databases protection directive (96/9/EC) twist; use by national sports betting monopolies (Fixtures – 02 ECJ cases)

12 The European Ombudsman Investigates complaints about maladministration in EU institutions Investigates complaints about maladministration in EU institutions Since 1995 only 14 special reports Since 1995 only 14 special reports Special report #13 to EP after recommendation to EC Special report #13 to EP after recommendation to EC Subject: BDR sports betting provider preempted by German authorities; infringement complaint (Art. 49) Subject: BDR sports betting provider preempted by German authorities; infringement complaint (Art. 49) Rec: Important issue of principle = EC indefinite delay due to lack of political consensus; deal with it… diligently and w/o undue delay Rec: Important issue of principle = EC indefinite delay due to lack of political consensus; deal with it… diligently and w/o undue delay Remarkable EC opinion…; …due to procedural deadlines… a position can probably not be expected in the near future… Remarkable EC opinion…; …due to procedural deadlines… a position can probably not be expected in the near future… 2/2004 – 7/2005 saga 2/2004 – 7/2005 saga

13 Recent EC initiatives Denmark, Finland, Germany, Hungary, Italy, the Netherlands and Sweden EC Treaty Art. 49 infringement procedures (Spring-Summer 2006) Denmark, Finland, Germany, Hungary, Italy, the Netherlands and Sweden EC Treaty Art. 49 infringement procedures (Spring-Summer 2006) …not seeking to liberalise the market in any way… …not seeking to liberalise the market in any way… EP and Council excluding gambling from services directive (2/2006) + Controversy EP and Council excluding gambling from services directive (2/2006) + Controversy

14 EU Law in sum No uniformity in national courts case law No uniformity in national courts case law Uncertainty as to the extent of national restrictions on sports gambling tolerated by the courts Uncertainty as to the extent of national restrictions on sports gambling tolerated by the courts When and how is a MS stimulating gambling in its territory? When and how is a MS stimulating gambling in its territory? Excellent example in De Lotto vs. Ladbrokes (perverse conclusion: insufficiently restrictive Dutch policy v. drastic consequences for the Dutch gaming market; last decision 10/2006: Dutch Gaming Act is valid, regardless of amount of advertising promoting state-licensed De Lotto) Excellent example in De Lotto vs. Ladbrokes (perverse conclusion: insufficiently restrictive Dutch policy v. drastic consequences for the Dutch gaming market; last decision 10/2006: Dutch Gaming Act is valid, regardless of amount of advertising promoting state-licensed De Lotto) Veenstra (2005)

15 Pressure on EU Lottery Model POLITICAL UNCERTAINTY POLITICAL UNCERTAINTY EC focus = Economic approach of gambling services EC focus = Economic approach of gambling services LEGAL UNCERTAINTY LEGAL UNCERTAINTY National Court Cases National Court Cases ECJ Jurisprudence – Uncertainty and confusion ECJ Jurisprudence – Uncertainty and confusion EC commencing infringement procedures against MS EC commencing infringement procedures against MS COMPETITORS COMPETITORS Better organization via collective lobbying efforts Better organization via collective lobbying efforts NATIONAL DEVELOPMENTS NATIONAL DEVELOPMENTS UK (Gambling Act 2005), Malta (Remote Gaming Regulations 2004) UK (Gambling Act 2005), Malta (Remote Gaming Regulations 2004) EU Enlargement EU Enlargement STATE LOTTERIES STATE LOTTERIES Normal economic operators Normal economic operators Veenstra (2005)

16 Policy guidelines Gambling not a normal economic activity Gambling not a normal economic activity Social responsibility (protecting vulnerable population) Social responsibility (protecting vulnerable population) Economic impact analysis (fundraising, sports infrastructure, government relief) Economic impact analysis (fundraising, sports infrastructure, government relief) Balance in lottery management Balance in lottery management Cooperation and coordination on global level (Public order, bone fide operators using geo-location software) Cooperation and coordination on global level (Public order, bone fide operators using geo-location software)

17 Balance in Lottery Management A. Governmental policy Liberalization Canalization Repression B. Identification Aggressive private enterprise Administrative organization C. Profit Orientation Sole object Pure Accessory D. Competition AggressiveDenial SAFECORRIDORSAFECORRIDOR Veenstra (2005)

18 State lotteries stand for we care society We care about public order We care about the consumer We care about Government We care about good causes Pirates: We dont care society Infringement of i.e. data protection rules etc. Inadequate consumer protection No respect of territoriality and national rules Profit stays in the pocket of the private industry Complaisance licenses & tax evasion Veenstra (2005)

19 US Law and Policy DE, MT, NV, OR allowing sports betting (effective in NV & OR) – NJ would be the 5 th … … after the Professional and Amateur Sports Protection Act (1992) aka Bradley Act (28 U.S.C. § 3701, et seq.)… to no avail CA, LA, NV prohibit (+online) betting beyond state borders Wire Wager Act (18 U.S.C. § 1084) + Internet Unlawful Internet Gambling Enforcement Act (Title VII of SAFE Port Act 31 U.S.C. § 5361) Interstate Horse Racing Act (15 U.S.C. § 3001) + Internet horse race bets in CA, NV, OR, SD Other applicable statutes: RICO Act, Travel Act, Illegal Gambling Business Act, Interstate transportation of wagering paraphernalia Act…

20 US Law and Policy In re MasterCard Int'l, et al., 132 F. Supp. 2d 468, (E.D. La. 2001), No (5 th Cir. 2002): Gambling losses are enforceable because "the Wire Act does not prohibit non-sports Internet gambling." (DOJ disagreed) Federal gambling law does not address games of skill… (Poker, Fantasy Sports…?) IL, IN, LA, MI, NV, OR, SD, WA prohibiting unauthorized internet gambling HI, UT prohibiting any form of public gambling ND legislative efforts to legalize and regulate online poker operations Student Athlete Protection Act (2000 bill) Amateur Sports Integrity Act (2003 bill) NCAA DI & DII Bylaw Pro leagues policy

21 Common themes Subsidiarity//FederalismSubsidiarity//Federalism Skill v. Chance argumentsSkill v. Chance arguments Political influence and lobbying efforts from industry//conservative cycles (excluding gambling from services directive – IGPA)Political influence and lobbying efforts from industry//conservative cycles (excluding gambling from services directive – IGPA) Challenges in state lotteries/sports betting monopoliesChallenges in state lotteries/sports betting monopolies Attempts to funnel revenue from lotteries and betting toward education and infrastructureAttempts to funnel revenue from lotteries and betting toward education and infrastructure

22 Common themes Attempts to curb gambling addiction (actually promoting it via state)Attempts to curb gambling addiction (actually promoting it via state) EC and DOJ may disagree with courts decisionsEC and DOJ may disagree with courts decisions Netherlands and other national regulations simulate CA, LA, NV beyond-borders (+ online) betting restrictionsNetherlands and other national regulations simulate CA, LA, NV beyond-borders (+ online) betting restrictions Sports bribery scandalsSports bribery scandals –U.S. v Burke et al., 700 F. 2d 70; U.S. v Mazzei, 700 F. 2d 85 (2 nd Cir. 1983) –Arizona State, Maine, Northwestern 2003 NCAA National Study on Collegiate Sports Wagering and Associated Behaviors2003 NCAA National Study on Collegiate Sports Wagering and Associated Behaviors –Anderlecht, Fiorentina, Juventus, Lazio, Marseilles, Milan

23 Differentiation US Congress more active than EC EC Treaty Art. 49 & Gambelli (balanced) v. PASPA & UIGEA (strict in principle) + Safe harbor provision of Wire Act EU liberalization – Nascent competition for sport betting services (+new MS) EU in favor of regulating global sports gamblingEU in favor of regulating global sports gambling Country-of-origin sufficient principle v. States sovereignty selecting own rulesCountry-of-origin sufficient principle v. States sovereignty selecting own rules Is this the pitfall of the EU? Compromising state? Your thoughts?

24 Work in progress… … so do jump in.… so do jump in. The foundation is established.The foundation is established. A lot of work to be done on national policy and state-level researchA lot of work to be done on national policy and state-level research For the US audience, areas worth investigating:For the US audience, areas worth investigating: –http://curia.europa.eu/ –http://www.sportandeu.com/


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