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French high court rules in favor of online gambling industry

ZeTurf picks a winner at last

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House of Cards In a major blow to existent French gaming law, the French high court - le Cour de Cassation - ruled that the French horse racing monopolist Parimutuel Urbain (PMU) cannot prevent Malta-based ZeTurf from offering wagers over the internet on French horse races. The pdf of the decision is here.

The decision by the French High Court marks the final resting place of a case that has led a circuitous existence, to say the least. The case started in 2005 when the Frenchman who founded ZeTurf in Paris fled to Malta, and PMU instigated legal proceedings against the company. On 8 July, 2005, the Paris Court of First Instance ruled that it was illegal for ZeTurf to accept bets from French citizens over the internet, in violation of the monopoly granted to PMU by the French government.

ZeTurf appealed, and lost again at the appellate level on 6 January, 2006. That could have been the end of it, of course, but since the company had relocated to gambling-friendly Malta, collecting or enforcing any sort of judgment was another matter entirely. PMU pursued the recalcitrant company to Maltese shores, only to have the case booted on jurisdictional grounds. The Maltese court wanted nothing to do with it, noting that it had no jurisdiction over a French government monopoly, and punted the case back to the French.

France has been one of the European Union countries most adamantly opposed to online gaming, so the decision by the French High Court is a wake-up call for French authorities. The court noted that under the recently decided European court of Justice (ECJ) Placanica case, countries that operate a government monopoloy under the rationale that an extremly tightly regulated gambling industry is necessary to protect gamblers from themselves, cannot out of the other sides of their mouths promote the monopoly as a government revenue stream, which they all do.

France has arrested gaming executives, clamped down on advertising for online gambling firms, and generally harassed the industry to protect its monopolies on casino games and horse racing (there is no French sportsbook, so the Placanica case is irrelevant to online sportsbooks). Those policies will now go out the window, as the court could find no consistent or proportionate relation between the policy's stated objectives and gaming policy as enacted.

As noted French legal scholar Cedric Manara said to El Reg via email:

I think France will have to open sports betting to all EC companies, but only in the case there was already a market with only one actor, such as horse race betting. Conditions are not met to open bookmaking to all sports games, such as the Tour de France for example, since there is no market yet. As for money games in general (the monopoly of the Française des Jeux), other than sports betting, the French regulations recently changed, to restrict access to these games. For example, since July 1, people under 18 cannot buy lottery tickets anymore. It seems that France strengthened its regulations so that the Française des Jeux can avoid the fate of the PMU. These are the two only things a decent lawyer can conclude from this case. Only clairvoyants can have other foresights!

France and Germany have been two of the stalwarts holding out against the online gambling industry, and for France to fold bodes well for the EU online gaming industry in general. There is definitely momentum in the EU toward a liberalization of gaming regulations, and although the European Court of Justice has stated that there are circumstances in which a monopoly might be justified, the drift toward further harmonization is clear.

Let the games begin. ®

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

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