Gambling Law Update: FRANCE
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1 2nd annual Legal Gaming In Europe Summit Gambling Law Update: FRANCE Royal Garden Hotel, London January 21, 2008 Fabien Gaucher Attorney at the Paris Bar Ulys Law Firm (Paris and Brussels)
2 1st Part General overview of the French gambling system
3 French gambling system Two principles: - Prohibition of all games of chance - Express and specific derogation is required to operate
4 French gambling system Main operators: Française des Jeux (FDJ) Semi-public corporation Lotteries and sports betting Distribution: offline and online Pari Mutuel Urbain (PMU) Economic Interest Group Horserace betting organized outside racecourses Distribution: offline and online Casinos Lisensed operators Slot machines, traditional casino games and poker Distribution: only offline
5 French gambling system Other operators: Pari Mutuel Hippodrome (PMH) Horserace betting organized inside racescourses Distribution: offline Gaming and betting clubs Authorized non-profit organization Card games(poker), greyhound racing and Basque pelota bettting Distribution: offline Local lotteries organized within fun fairs or for charitable purposes Distribution: offline
6 EC law Article 49 EC A Member State may impose restrictions on freedom to provide services only if such restrictions comply with the general interest and are both : Necessary proportionate Non-dicriminatory Member States must have a systematic and coherent gambling policy
7 EC law Article 49 EC This is not the case in France: Monopoly system Money-driven policy - FDJ was the 16th largest French media advertiser in Constant diversification of distribution channels (ex: mobile) Lack of concerns towards protection of minors - Products that may target minors (ex: Dédé ) - Products may be available in the street Severe criminal sanctions
8 2nd Part What happened in 2007?
9 1st Quarter 5 March Law on deliquency Lotteries and sports betting operators: 60, years Horserace betting operators: 90, years Advertisers: 30,000 / x4 the amount invested ISPs: 75, year if they don t warn customers of blacklisted sites Banks required to stop transferring funds relating to online gambling 15 March Decisions of the criminal court of Nanterre Cases involving casino group Partouche and Poker 770 Severe criminal penalties were applied The case in on appeal
10 2nd Quarter 27 June EC reasoned opinion sent to France 2nd stage of the infringement procedure against France (Article 226 EC) According to the European Commission, French restrictions on sports betting services are not necessary, not proportionate and discriminatory France was formally requested to amend sports betting law following consideration of their replies to letters of formal notice sent in October 2006 If there was no satisfactory reply within three months, the European Commission could have referred the matter to ECJ
11 3rd Quarter 1 July Law prohibiting gaming to minors Only targets FDJ (not PMU and casinos) Irresponsibility of retailers 10 July Landmark outcome in the Zeturf case The Supreme Court overruled the Court of appeal s decision to sanction the Malta-based company Zeturf: the lower court did not question the PMU s horserace monopoly in the light of ECJ case-law: is the barrier to free provision of services justified and necessary?
12 4th Quarter In October Petter Nylander s arrest (Unibet s CEO) Following a European arrest warrant issued by the French jurisdiction, Petter Nylander was arrested in Amsterdam on 22 October and released on bail He was extradited to France on 25 October He was released on bail on 31 October and promised to meet the judge when requested to 30 November FDJ s CEO questioned by a judge of Nanterre Suspicion of rigged scratch games FDJ s CEO was heard under the assisted witeness regime
13 4th Quarter 6 November Meeting between the French Government and the European Commission Discuss the opening of the French market Opening of the French online sports betting market : - A license system for national operators - A conditional recognition system for EU operators based on a suitability test (fit and proper requirements) - Compliance with tax obligations The opening process is irreversible
14 4th Quarter In November A task force was created by the French Governement Purpose: work on the gambling law reform Mr Durieux (Ministry of Finances) leads the group The group has started its work by auditioning people
15 4th Quarter 30 November Notification of the draft decree on the blocking of funds to the European Commission France notified the provisions of the law on deliquency which require from credit institutions to block the transfer of funds coming from online private gambling operators It is expected that the Commission will issue a negative opinion on the consistency of this draft decree with EC law France must respect a status quo period until 29 February December Agreement on the creation of a center for fighting compulsory gambling - Initiative from the medical sector and the State monopolies - Expected in location in Nantes - Research and training objectives
16 3rd Part What will happen next?
17 Opening of the French market - Scope: online sports betting, casino and poker - Framework: License system for national operators Conditional recognition system for EU operators (suitability test) Prohibition of unauthorized operators - Creation of a gaming authority - Sensitive issues: Participation in the Financing of the equine sector Taxation
18 Timetable European Commission moratorium ends in March 2008 Task force timetable: a draft gambling law to be ready in March 2008 Realistic and optimistic timetable: a draft gambling law in the end of 2008 A law to be ready in 2 years What about the transitional regime? Still unknown but a coregulation system could be set up
19 In the meanwhile... No new prosecution Clear instructions from the French Ministry of Justice to the Gaming and betting police not to launch new prosecusions What about pending proceedings? Judges are independent ( public prosecutor) The few pending cases will follow their normal course but there is little chance that any of them will lead to convictions (after appeals)
20 Ex: judicial proceedings involving Mr Dewyn (MrBookmaker/Unibet) The Court of Appeals of Versailles ruled on 18 January 2008 that there were not sufficient elements in this case to decide whether the French gambling law was or not compliant with EC law The investigating judge is required to undertake additional in-depth investigation (ex: auditioning the French government) Consequences: Delay the outcome of the case EC law can no longer be ignored
21 Thank you for your attention Fabien Gaucher
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