European Commission taking gaming monopoly member-states to court over restrictions on gambling operations

According to an article in Tuesday's New York Times, the European Commission is considering the prospect of legal action - perhaps as soon as at the end of this month - against six member-states for hindering access to their internal markets for gaming and lotteries by offshore operations such as online sports betting companies.
      The newspaper writes that the EU's Commissioner for Internal Market and Services Charlie McCreevy would like to proceed against Finland, Germany, The Netherlands, Hungary, Italy, and Sweden. McCreevy claims the six countries are all restricting the advertising or the promotion of such gambling services, while at the same time upholding domestic monopolies on things like national lotteries.
     
The European Union has long opposed the idea of gaming monopolies on ideological grounds: in the Union's view, the restriction of competition in this way runs counter to the principles of the free market economy. The Commission recently sought to include gaming in its vexed directive on services in Europe, but the attempt was rebuffed by the European Parliament.
      According to the New York Times, McCreevy was uncertain of the outcome of any possible legal moves in the dispute: "We should proceed against all these countries... Let's get this to court", he said. "If we are ruled against, then so be it, but let's get on with it."
     
Countries in the Nordic region have lobbied on behalf of preserving authority over lotteries and betting in the hands of individual states. In Finland, there has been a robust defence of the monopoly enjoyed by Veikkaus. One subject of dispute has been the right of the Åland-based company PAF to market its games in mainland Finland.
      A Finnish court ruled against marketing, but did not prevent individuals from taking part in gaming via the Internet. The bookmakers Ladbrokes have already been preparing themselves for some time for a push into the Finnish gaming market.
     
If the EU were not permeated with a host of exceptional decrees, rulings, and dispensations, and were gaming operations not considered as an exceptional business activity, then Finland would have had to give way to other betting companies years ago.
      The governments of countries upholding gaming monopolies have defended their actions by recourse to the "social concerns" card, attesting that restrictions permit them better to control underage gambling and abuses by money launderers, and they also point to the fact that revenues go back into society and into good causes.
      Veikkaus, for example, generated around EUR 465 million in profit last year, with just over EUR 380 million passed back to the Ministry of Education to be divided out on behalf of Finnish arts, sports, science, and youth work. RAY, a similar company, enjoys an exclusive right in Finland to operate slot machines and casino table games. RAY's profits, also in the hundreds of millions, help to support Finnish health and welfare organisations.
     
Punters, on the other hand, point to the better odds and returns often offered by offshore operators.
      Opponents of the monopolies accuse the governments of using their national lotteries as a means of raising additional revenue to cover public spending, as income from taxes no longer suffice. The reluctance to allow competition is thus linked to fears that lottery revenue would decline.
      The Court of Justice of the European Communities in Luxemburg has ruled that social concerns are a legitimate reason for countries to put a ban on gambling, but only in the event that they do not have a national lottery.
      A victory for the Commission in court could lead to large fines being imposed on the six countries.


Previously in HS International Edition:
  National lottery operator denies having demanded ban on sponsorship advertising by Åland betting firm (7.10.2004)
  Wanna bet? Finland´s gaming monopolies are under attack (16.12.2003)

Links:
  RAY, the Finnish Slot Machine Association
  European Commission: Charlie McCreevy
  Veikkaus
  PAF
  European Lotteries Association
  European Betting Association
  Euractiv: Will amateur sport lose out in the EU services directive?