Mobile gambling and European law: what is the outlook for operating in Europe? Thibault Verbiest Member of the Paris and Brussels Bars Senior Partner ULYS

(1) How is mobile gambling regulated in Europe? (1) The EC Treaty Article 49 ECT: freedom to provide services within the Community Article 50 ECT: services are provided for remuneration Discriminatory restrictions ok if public policy, public security, public health (art.46) or overriding reasons of general interest + proportionality and necessity (Schindler, Läära, Zenatti)

(1) How is mobile gambling regulated in Europe? (2) Gambelli : limitation of admissible restrictions Consistent gaming policy Clear guidelines to national courts on how they should use their discretional power to interpret the facts of the case Country of origin principle Proof of clear and present risks for consumers Proof of proportionality by submission of statistical or other evidence

(1) How is mobile gambling regulated in Europe? (3)Secondary EU law and initiatives of the Commission E-commerce directive: exclusion of gambling services Study on gambling services in the internal market To evaluate how the differing laws regulating online and offline gambling services impact on functioning of the Internal Market To evaluate whether those laws restrict the economic and employment growth associated with gambling services Publication of report June 2006 sector specific Act? Directive 98/48 EC: notification obligation for inf soc.serv. Proposal for a Directive on Services in the Internal Market (Jan 2004): gambling excluded from COP

(1) How is mobile gambling regulated in Europe? (3) Secondary EU law and initiatives of the Commission Gebhardt report on the services directive (April 2005) Complete exclusion of gambling Mutual recognition & Country of Destination: Country of origin rules do not apply in fields of consumer protection, environmental protection, labour law MS may invoke Country of Destination principle if : Reasons of public interest (social policy) This interest is not yet protected by provisions applicable to the service provider in his Country of Origin (equivalence) These rules are proportionate, generally applicable, business- related in nature

(1) How is mobile gambling regulated in Europe? (3)Secondary EU law and initiatives of the Commission Inconsistency of the Gebhardt report with ECJ case-law The right of MS to impose restrictions is not absolute: see Gambelli and Lindman (consistent gaming policy) Restrictions of cross-border gambling to secure public revenues is not a justified ground to override the freedom to provide/receive services (Schindler, Zenatti, Gambelli) EPs plenary will probably vote in January 2006 Gambling services very likely to be excluded

(2) How is mobile gambling regulated in Member States? (1)Germany: case-law gambling Supreme Court, April 2004 Questions the consistency of German gaming policy with Gambelli. Federal Constitutional Court, April 2005 Expresses doubts on the consistency of the German cross-border gaming restrictions with EC law requirements

(2) How is mobile gambling regulated in Member States? (1)Germany: case-law gambling German Federal Constitutional Court, oral hearing 8 November 2005 Case relating to the consistency of a provision of the German criminal code (art.284) with the freedom to exercise a profession (art.12 German constitution) Court asked local authorities to act prudently and refrain from too restrictive actions against local intermediaries while decision pending Decision delayed until February 2006: future liberalization of the gaming market very likely Conclusion: no risks involved for (mobile) gaming operators

(2) How is mobile gambling regulated in Member States? (2) The Netherlands: case-law gambling Administrative Court of Breda, 2 December 2005 Questions the consistency of Dutch gaming restrictions with EC law (Gambelli) European Commission: critical comments to legislative proposal extending national casino monopoly to information society services Market deregulation not excluded in mid-term But earlier case-law diverging (main proceedings vs summary proceedings ) Conclusion: prospects looking brighter but caution

(2) How is mobile gambling regulated in Member States ? (3) France: 4 Acts 1983 and 1907 Act: games of chance unlawful if Gaming house Open to the public Games of chance take place ok if skill prevails over chance 1836 Act: lotteries unlawful if Offer made to public Profit Stake involved Random outcome Exception for FDJ and charitable lottery 1891 Act horse betting: monopoly (PMU)

(2) How is mobile gambling regulated in Member States ? (3) France: case-law gambling TGI Paris, 8 July 2005 PMU wins case against Malta established bookmaker Zeturf Debate focused on intellectual property aspects and PMUs exclusive rights Court did not assess the compliance of French gaming policy with European law Confirmed by Court of appeal, 7 January 2006 French gaming restrictions consistent with EC law No referral to the ECJ Conclusion: high risks for (mobile) gaming operators in field of sports betting

(2) How is mobile gambling regulated in Member States? (3) France: mobile services regulation Law transposing the 2002 E-commerce directive (LCEN): Service provider liability, e-commerce rules, designation of a director of publication, service identification etc.. Consumer law transposing the 1997 Consumer Directive: no withdrawal right for authorized gaming services, liability of the professional party, consumer pre-contractual obligation of information 1991 mail privacy law (eg, winning numbers)

(2) How is mobile gambling regulated in Member States? (3) France: mobile services regulation Postal and telecommunications Code (CPCE): Broadcasting regulation (not content reg.) Regulatory authority (ARCEP) Recommendations (CST & CTA): eg, availability of games rules Operators civil (art.1382 Civil code; summary proceedings) and criminal liability (specific gaming offences: Perben Act 2004, art criminal code, ie, complicity, art crim code, ie, recel) French courts competent

(2) How is mobile gambling regulated in Member States? (4) Belgium 1999 Games of chance Act: licence required if i)stake ii)chance Televised SMS games ok under art.3.4 (but not implemented) Fixed odd betting not regulated Sports betting such as pool betting: light sanctions and little risk of public action Future Games of chance Act might regulate information society services

(2) How is mobile gambling regulated in Member States? (4) Belgium Constitutional Court, March 2004 Partial application of Gambelli Case-law promotional game via SMS: SMS message nothing more than a technical carrier used to participate in the game (no stake involved) But SMS price must = normal market price, otherwise stakeforbidden under 1999 Act Conclusion: low risk environment for mobile gaming operators

(3) Conclusions and forecasts Likelihood of a Community Act: Swiss Institutes report Increase in number of complaints to the Commission on national gambling restrictions: Commission waiting for the report before it takes any actions against MS Tendency clearly shifting towards deregulation: UK, Germany, Belgium + some new MS (Tcheck Rep, Latvia)+ Mc Greevys statements in October Grey zones: The Netherlands (unsettled case-law), Italy (ECJ referrals still pending), Nordic MS (Norway referred to EFTA court) Some black zones: France (sports betting), Sweden Conclusion: prospects look rather positive in the mid-term for the mobile gambling industry