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The march of the gamblers

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GIGSE 2007 The Tuesday morning session at the Global Interactive Gaming Summit and Expo (GIGSE) brought the focus back to the most important and dynamic gaming market in the world right now: the EU, where a series of decisions by the European Court of Justice (ECJ) and liberalizing efforts by some member states have catalyzed a rapidly growing gambling sector.

The inevitable growth of the gaming market in an increasingly interconnected world has been most apparent in the EU, where certain member states have fought tooth and nail to protect local gambling monopolies. Unlike the US, where publicly controlled gaming consists basically of lotteries, the patchwork of gambling law in the EU monopoly states has been a mixture of lotteries, horse racing, sportsbooking, and even casino games.

This eclectic mix has made for a history of back and forth rulings by the ECJ on the extent to which EU member states can claim public health and welfare as rationales for restricting gaming licenses to public monopolies. It has also shone a bright light on some rather uncomfortable facts about how and why those monopolies operate.

Although the Gambelli and Placanica cases brought some welcome clarity to the position of the ECJ itself, some member states - notably Denmark, France, Finland and Hungary - continue to insist that public welfare requires that they maintain a government monopoly on gambling services. If public welfare means feathering the nest of the government or government-favored groups, that might even be true.

Of course, the reality is rather darker.

The ongoing suit by Ladbrokes against the Danish Ministry of Taxation encapsulates this problem nicely. Ostensibly created to reduce problem gambling, as well as provide a tightly regulated outlet for limited gambling and money for charitable organizations, the Danish monopoly, Danske Spil, markets its products aggressively. According to Henrik Hoffman, a gaming attorney from Danders and More, recent surveys show that Danske Spil is responsible for 65 per cent of a gambling marketing in the country, and that 85 per cent of Danske Spil outlets sell lottery games to kids, some as young as eleven.

Ladbrokes sued to be allowed to market its lotteries there and lost, of course; the case is now before the European Commission, which has issued a reasoned opinion to Denmark on the matter. Unfortunately, Denmark has refused to make public either the reasoned opinion or any other official documents exchanged on the matter for reasons of - ahem - national security.

Such a Bush-like response will probably meet with disfavor at the EC, and a lawsuit at the ECJ against Denmark seems inevitable.

The last of the Norwegians

Denmark's neighbor to the north, Norway, has been involved in litigation with Ladbrokes as well, over similar issues - and last week it lost.

Although Norway - which is not a member of the EU - lost in the European Free Trade Association (EFTA) court, the EFTA Court ruled against Norway on the same grounds as in Placanica - namely that public welfare schemes are acceptable as long they are genuinely designed to reduce gambling and proportional. In fact, the court cited both Gambelli and Placanica in rendering its decision.

Although the EFTA only encompasses Norway, Iceland, Switzerland and Luxembourg, the spread of ECJ thinking on this matter is impossible to ignore. It will take time, but Europe is tentatively finding its way through the moral complexities of the online gambling industry.®

Burke Hansen, attorney at large, heads a San Francisco law office

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