French gaming law: latest developments Anouk Hattab-Abrahams Avocate – ULYS

Petter Nylander’s arrest: key facts 2002: PMU lodges a complaint against Mr Bookmaker 2004: FDJ lodges a complaint against Mr Bookmaker 2005: Unibet buys Mr. Bookmaker April 2007: French gaming police requests interviews with Didier Dewyn and Petter Nylander Dewyn is interviewed by the police, heard by a judge, and released on bail (€ 150,000)

Petter Nylander’s arrest: key facts Petter Nylander did not attend (claims EU defence) 22 October 2007: European arrest warrant against Petter Nylander. Arrested in Amsterdam and released on bail. 25 October 2007: extradited to France. 31 October: released on bail + promise to meet the judge when requested to.

E.U law principles: reminder Regulations restricting free circulation of services must be: 1.justified by imperative overriding general interest (consumer protection, prevention of fraud etc.) 2.proportionate and necessary Member States must have a systematic and coherent gaming policy.

Situation in France 2 State controlled monopolies (FDJ and PMU) Blanket prohibition of online gaming and betting with an exception for the two monopolies. The monopolies operate an aggressive strategy with marketing which even targets children.

Situation in France Recent law (March 2007) reinforcing criminal sanctions against private gaming operators.  Fines against “illegal” online gaming operators to be doubled from €30,000 to €60,000 for sports betting and lotteries operators; from €45,000 and €100,000 to €90,000 and €200,000 for horse betting operators.  Fines against “advertisers”: €30,000 + possibility for courts to multiply this fine by four times the amount invested in the advertising expenses.  ISPs must clearly inform subscribers of the gambling sites which are considered by Home Affairs Ministry as “inappropriate” (“blacklisted”) under sanction of up to a year imprisonment + €75,000 fine.  Banks must stop the flow of funds from individuals or “blacklisted” companies which organise betting or gaming activities.

Situation in France In light of the EU case law (Gambelli, Placanica etc.) French gaming policy is:  Neither coherent  Nor systematic  Nor proportionate

At the same time at the European Commission… Complaint of French casinos union before DG Competition (ongoing). October 2006: DG Internal Market Infringement procedure on the basis of article 49 of EC Treaty.  Concerns the online horse-race and sport betting regime.  June 2007: reasoned opinion.  September/October 2007: beginning of “negotiations”.  March 2008: unofficial “moratorium” due to end.

At the same time in France… July 2007: Groundbreaking decision from the French supreme court. PMU had sued Zeturf - condemned by Paris Court of Appeal. Cour de Cassation overturns Court of Appeal’s decision (EU arguments):  Questions the “raison d’être” of the Horse-Race monopoly in the light of ECJ case-law: is the barrier to free provision of services justified and necessary?  Questions proportionality of the blanket prohibition – need to check if the MS of origin protects consumers.

So why was Nylander arrested? France is a democracy (!):  Disconnect between the legal situation and political agenda.  Judges are independent.  Proceedings were started before France’s negotiations with EU Commission.  Difference between the “Parquet” (public prosecutor) = part of the Justice Ministry and Judges = independent

What next? No new prosecutions.  Clear instructions from the French Ministry of Justice to the Gaming Police. The few ongoing cases will follow their normal course…BUT  Little chance that any of them will lead to convictions (after appeals).

The future of the French gaming regime Ongoing talks with European Commission. Firm presidential intention to reform the current regime:  Creation of a special task force which moves very quickly.  Current meetings with stakeholders.

Timetable Commission “moratorium” ends: March 2008 Task force timetable: a draft Gaming Act ready in February/March Realistic and optimistic timetable: a draft Gaming Act by the end of 2008.

Content of the reform Short term Objective: Respond to the European Commission criticisms on the online sport betting market. Action: Open the online gaming market: casino poker and betting.

Content of the reform Long term Objective: Avoid new infringement procedures. Action:  Harmonise all the different gaming regimes  Create a Gaming Authority  Create a system of licences  Recognition of E.U. operators under certain conditions

French “nons!” Unconditional mutual recognition of E.U operators. Dismantlement of the horse breeding sector and mutual betting which finances it. Fix odds betting.

Questions Is France going to open the “offline” market?  i.e. Lotteries Transitional regime? Complete reform or “bit by bit”?

Thank you for your attention! Time for Q&A