Advertising for remote gaming There is no such thing as bad publicity… There is only « illegal » publicity Thibault Ve

1. Advertising for remote gaming There is no such thing as bad publicity… There is only « illegal » publicity Thibault Verbiest Attorney at the Bars of Paris and Brussels European Gambling Briefing 25 -26 April 2005 Thibault.verbiest@ulys.net Law of : • New Technologies•Intellectual Property•Media and Entertainment•Commercial Law•

2. E-commerce Directive All online activities Notion of “commercial communication” General obligations Safe harbours & liability Directive privacy & electronic communications Part of Telecom package Cookies & Spyware Imposes OPT-IN regime EU Regulatory Frameworkfor commercial communications

3. Two basic principles What is illegal offline, should be illegal online In most Member states it is only allowed to advertise IF the gaming activity is legal Schindler case Bacardi case (TV) Consumer protection legislation 1. Am I allowed to advertise ?

4. National law: (see annexes) General principle: “the organization of games is illegal unless authorized”. Exceptions : restrictive application of criminal law find the loophole: P2P, betting exchange & Dutch Betfair cases Remote gaming is a de facto cross-border service Consider international aspects 2. Is the gaming activity legal ?

5. Malta • 2004 Remote Gaming Regulations 4 licence classes for casino, lotteries, betting, poker and ‘hosting’ • LGA: Three-step application process (5-8 weeks) • Favourable tax regime under ITC structure • ITC must provide (gaming) services on cross-border basis • Advertising (art. 60): allowed within the following limits • (a) remote gaming promotes or is required for social acceptance, personal or financial success or the resolution of any economic, social or personal problems; • (b) endorsements by well-known personalities that suggest remote gaming contributed to their success; • (c) is specifically directed at -18y; • (d) exceeds the limits of decency.

6. 3.Does European law allow the cross-border provision and promotion of gaming services? no : EC Law not applicable art.49: freedom to provide services 1)economic activity ? Restrictions may be imposed, provided that 3) art.49 not discriminatory ? 4) art. 46 justifiedby the Treaty ?  Yes : 2) goods or service ? 5) necessary and proportionate ? art.30 E C J U S C O M M I S S I O N • The Internal Market Strategy for Services  • Remove all remaining barriers in the Internal Market • Directive 98/48 : e-gaming is an information society service • E-gaming regulation must be notified (Belgium, Denmark?) • Electronic commerce  Directive : Internal Market clause • Member States may not impose additional obligations • Proposal for a Directive on Services in the Internal Market • Create a real Internal Market – Home Country control EUROPEAN MARKET?

7. Gambelli & Lindman Decisions of 6 and 13 November 2003 confirm the standing jurisprudence, but concrete conditions are imposed: Presence of a de facto consistent gaming policy; Public grounds may not be used to protect market from competition; Country of Origin Principle should be considered; Clear and present risks; Statistical or other evidence. ECJ (1): From Gambelli to Placanica and...

8. Post-Gambelli case-law is very diverging, sometimes conflicting Decisions of Supreme and Constitutional courts in Finland, the Netherlands, Sweden, Belgium, Germany and Italy Netherlands: Summary proceedings vs main proceedings Germany: BGH: 1 April 2004: questions the legality of German gaming policy in light of Gambelli BVerG: 26 August 2004 – 15 December 2004: Gambelli did change something Constitutional Court: art. 12 case: July 2005? Norway: EFTA case Italy: -“Bruno Corsi” case –> Placanica case - Consiglio di Stato 22 February 2005 - EC competition law: Sisal & Lottomatica Need for EU clarification?!: New jurisprudence of the European Court of Justice: Placanica and.... European Commission ECJ (1): Post-Gambelli case-law

9. To promote the development of e-commerce in the Internal Market: Free provision of information society services and the internal market clause (Internal market clause – art. 49) Article 1.5 excludes “gambling activities which involve wagering a stake with monetary value in games of chance, including lotteries and betting transactions.” EU Commission(2) Electronic Commerce Directive • Remarks & considerations: • Scope of the exclusion: Spain? • Free games? Promotion of « play for fun » landing pages • Remote gaming = information society service Notification: Denmark: article 10 of March 2003 Act? • Review every two year First Report on the application of the electronic commerce Directive July 2005?

10. First report e-commerce (21 November 2003) “Online gambling, which is currently outside the scope of the Directive, is a new area in which action may be required because of significant Internal Market problems - see for example Case C-243/01s of the European Court of Justice (ECJ press release CJE/03/98), concerning criminal proceedings in Italy against persons collecting Internet bets on behalf of a bookmaker legally licensed in the UK. The Commission will examine the need for and scope of a possible new EU initiative. In addition, the Commission is examining a number of complaints it has received concerning cross-border gambling activities. “ EU Commission (2) - e-commerce Directive • Scope of the exclusion: forum shopping & distortions • Regulation in new Member States (Malta) • Complaints: Denmark, Sweden, the Netherlands, Belgium, Germany, Greece, Finland, France, ?

11. Proposal for a Directive on Service in the Internal Market (Jan 2004) Create a real Internal Market for services, including gambling services Provision/promotion of Services Application of the country of origin principle (Internal Market Clause) Exceptionfor “sensitive areas”, including gambling services President Barroso March 2005 statements on carve out for health and services of public interest EP Report of April 2005 EU Commission (2) – Service Directive

12. General principle : In most member states it is not illegal to participate in ‘illegal’ games >< Poland, Germany The Netherlands:website Department of Justice Proposal for a new Service Directive ECJ Lindman case (13.11.2003) 4. What about the rights of the consumer-gambler?

13. National authorities easily grant competence and apply national law Under national law, most advertising will be illegal unless license was granted (?) Skill your creativity – find the loopholes? Guerilla advertising: Beckham ball Sponsorship? Press coverage? Freedom of speech? media and blogs Conclusion?

15. Sponsorship

16. Press coverage • No commercial communication • Freedom of press (ECHR) • “Schöne Wetten” case(Ger. Die Welt)

18. Freedom of Speech - Blog

19. Guaranteed by International public law and national constitutions Linked to freedom of press (internet?) USA: Tropical Paradise v. Discovery Communications Casino City case – Ruling 15.02.2005 Article 10: EU Convention for Human Rights Limitation by formal Act: precise restriction - Malta Protect general interest Necessary in a democratic society Freedom of Speech • “commercial” speech & access to information?

20. MEMBER STATE Regulation (annexes)

21. The 1964 Act on games of chance : Promotion of games of chance in the Netherlands without a license is forbidden. Stichting Reclame Code: Code of Conduct for casino games and gaming machines (RKC) Purposes may not be other than a responsible participation and to incite one’s interest May not stress the possibility of winnings May not give the impression that gaming is without risk May not be directed at vulnerable groups or minors May not be displayed at events of venues frequently visited by minors or other vulnerable groups New advertising code for State monopolies 31 March 2005? The Netherlands

22. Main proceedings: Arnhem: interlocutory judgment of 2.6.2004 Proof of a consistent gaming policy Foreign operators must adopt online verification systems to block access to their website from the Dutch territory? Lindman? The Netherlands - Jurisprudence: • Summary proceedings • Exclusive rights De Lotto and Holland Casino confirmed • Supreme Court decision of 18 Feb. 2005

23. Casino Games , 1999 Casino Act Promotion of non-authorized games of chance is an offence, even when the operation is established outside Belgium(§ 64, 1999 Casino Act) Lotteries National Lottery Act of 19 April 2002: Monopoly to the National Lottery Modification of 24 December 2002: notification Directive 98/48 Act of 31 December 1851 on lotteries: charity and welfare Article 23, 10° of the 1991 Consumer Protection Act Publicity that incites the hope to win a product, service or other advantage by chance is forbidden: Exclusion:legally authorized lotteries No publicity for authorized games of chance and casino games Belgium: Decision of the Constitutional Court (March 2004).

24. The regulatory framework Games of chance: Act of 12 July 1983 Casino operations: Act of 15 July 1907 Lotteries: Act of 21 May 1836 Application in an online environment ? Casino and notion of “fixed establishment” Online gaming activities are subject to this legislation, thus a license is required Yahoo-case: universal competence France - Old regulatory framework

25. Lotteries: article 4: Publicity for unauthorized lotteries is forbidden, irrespectiveof the media used Casino games and games of chance: No specific dispositions for publicity General Regime of the French Criminal Code (§ 121-6,§ 121-7) “He who knowingly contributes to a criminal offence shall be punished as if he was the author of the offence” Enforcement on cross-border provision/promotion Dellner case (Cass. 22.05.1997) Trucy Report on the French gaming policy! France – Publicity:

26. Federal Criminal Code, StGB: § 284,285 and 287 Organization of” and “participation in” is considered as a criminal offence Advertising: § 284, 4 Lotteries: § 287 (no participation) Länder (16) : Competence to derogate from the general prohibition and adopt their proper gaming policy & issue license Staatsvertrag (State Treaty) of July 2004: article 7: public offer < demand Private operators with a former DDR (GDR) Licence Germany

27. A lot of case law and ongoing litigation: World Cup 2006? BGH: 1 april 2004: questions the legality of German gaming policy in light of Gambelli (Schöne Wetten) BVerG: 26 August 2004 – 15 December 2004: Gambelli did change something Constitutional Court: art. 12 case: “landmark decision” by July 2005? Urge authorities not to be too restrictive Germany

28. Italian Criminal Code: articles 718-722 : The “organization of” and “participation in” games of chance are criminal offences Publicity for casino games or games of chance is not allowed Act n° 401 of 13 December 1989 : Monopoly for CONI and UNIRE (sports competitions) If you have a license, you can promote your activities Final decision in the Gambelli case still pending Case-law Bruno Corsi -> Placanica case Stanleybet DTC: Consiglio di Stato 22 February 2005 Competition law: Sisal & Lottomatica Italy

29. Untill 1975: the Gaming sector was centralized Spanish Constitution of 1978: The decentralized Comunidades Autónomas (CCAA 19) have an almost exclusive competence in the field of gaming activities Comunidad Autónoma de Aragón: Article 12 of the Act of 28 June 2000 Publicity for games is forbidden, irrespective of the media used Government has the competence to adopt a Decree derogating from this prohibition Decree n° 159/2002 of 30 April 2002: commercial lotteries and games Andalucia: VCBet – Equiniela Loterias y Apuestas del Estado (LAE) Exclusive competence for games that exceed the scope of one CA LAE claims the monopoly for remote gaming Spain

30. Decree-Law 422 of 2 December 1989 on casino games License is required, 6 requirements Advertising for gambling or casino games is forbidden Advertising for venues on which casino games are organized together with other services (restaurant, shows, etc.) is allowed Advertising Code Approved by Decree-law No. 330of the 23 October 1990 Prohibits advertising of games of chance (§ 21) Anomar case Portugal

31. § 42 of the Gaming Act 1968 and Guidelines Gaming Board Advertising is possible but restricted Classified advertisement: directed at a certain public Factual information: name, address, logo and limited details about gaming facilities Newspapers and magazines: A4 size Online: passive website is not covered by the Guidelines, others OPT IN Television: Independent Television Commission (ITC): Advertising Code Advertising Standards Authority: CAP Code Lotteries Lotteries and Amusements Act 1976 and Lotteries Regulations 1993 National Lottery Act 1993 Schindler - Millions2000 case United Kingdom –Current framework

32. The UK an E-gaming Hub? What is the status? Secondary legislation, Tax & Codes of Conduct Advertising is broadly defined, including sponsorship Advertising for licensed gaming activities is allowed, particular rules Offence to promote or advertise illegal gambling Territorial application: remote gambling & remote advertising Cross-border advertising? From and towards UK? EEA? Delegation towards the Secretary of State and Gambling Commission (Advertising Code of Practice - article 23) United Kingdom –Gambling Act 2005

33. National Internet Gaming Strategy, 18 June 2001 Maintain control over the gaming market and protect the monopoly ISP’s block access to foreign sites Blocking credit card payments, PSP Regulate internet gaming Rigid monitoring and certification process for licensed operators International cooperation Ideas or reality? New Gaming Act (Law no 204 of 25 March 2003) Article 10: provision and promotion of foreign games Ladbrokes article 49 procedure Notification? Formal complaint: Commission inquires into Danish restrictions on sports betting (30 March 2004) Commission decides to take further action Denmark

34. 1999 Casinos Act 1994 Lotteries Act, as modified: August 2002: online gaming regulated Lotteries communicated by means of electromagnetic waves (§21) Publicity, §38: “It is not permitted, in commercial operations or otherwise, for the purpose of profit to promote participation in unlawful lotteries arranged within the country or in lotteries arranged outside the country” “License is required and advertising is subject to the 1995 Marketing Act and Code of Conducts” Non-profit associations Administrative Supreme Court (Regeringsrättens) 26 October 2004 Sweden

35. Malta • 2004 Remote Gaming Regulations 4 licence classes for casino, lotteries, betting, poker and ‘hosting’ • LGA: Three-step application process (5-8 weeks) • Favourable corporate tax regime under ITC structure (4.17%) • ITC must provide (gaming) services on cross-border basis • Advertising (art. 60): allowed within the following limits • (a) remote gaming promotes or is required for social acceptance, personal or financial success or the resolution of any economic, social or personal problems; • (b) endorsements by well-known personalities that suggest remote gaming contributed to their success; • c) is specifically directed at -18y; • (d) exceeds the limits of decency.

36. Greece • Blanket prohibition under Act 3037/2002 encompasses electromechanical and electronic games (<-> EU complaint) • Article 4 of Law 2206/1994 forbids the exploitation of a casino without a license (12 licenses after public tender) • OPAP mainly opposes internet betting on grounds of Law 2433/1996 which prohibits their operation as well as their advertising