Philippe Vlaemminck Partner (Attorney-at-Law, Brussels Bar - Belgium)

1. The importance of State culture in the sphere of Gambling – comparison between EU and US environments Public Gaming Institute – SMART-Tech 2012, New York City (21 March 2012) Philippe Vlaemminck Partner (Attorney-at-Law, Brussels Bar - Belgium) EU Regulatory/Trade & Gambling department Philippe.vlaemminck@altius.com www.altius.com

2. PLAN • EU • State Culture in the case-law of the CJEU • Limited attempts to harmonize gambling legislations at EU level • Willingness to maintain national specificities • Similarities between the EU and US lottery framework Conclusion

3. I. EU

4. I. A. State culture in the case-law of the CJEU

5. I. A. State culture in the case-law of the CJEU • C.J.E.U. 1994, Schindler Recognition of the lottery/gambling sector’s particularities: “First of all, it is not possible to disregard the moral, religious or cultural aspects of lotteries, like other types of gambling, in all the Member States. The general tendency of the Member States is to restrict, or even prohibit, the practice of gambling and to prevent it from being a source of private profit …” (§60).

6. I. A. State culture in the case-law of the CJEU(2) “Those particular factors justify national authorities having a sufficient degree of latitude to determine what is required to protect the players and, more generally, in the light of the specific social and cultural features of each Member State, to maintain order in society, as regards the manner in which lotteries are operated, the size of the stakes, and the allocation of the profits they yield. In those circumstances, it is for them to assess not only whether it is necessary to restrict the activities of lotteries but also whether they should be prohibited, provided that those restrictions are not discriminatory” (§61).

7. I. A. State culture in the case-law of the CJEU(3) • C.J.E.U. 1999, LääräandZenatti Opinion of the CJEU enhanced and detailed : “However, the power to determine the extent of the protection to be afforded by a Member State on its territory with regard to lotteries and other forms of gambling forms part of the national authorities' power of assessment, recognised by the Court in paragraph 61 of the Schindler judgment. It is for those authorities to assess whether it is necessary, in the context of the aim pursued, totally or partially to prohibit activities of that kind or merely to restrict them and, to that end, to establish control mechanisms, which may be more or less strict(§35/33) In those circumstances, the mere fact that a Member State has opted for a system of protection which differs from that adopted by another Member State cannot affect the assessment of the need for, and proportionality of, the provisions enacted to that end. Those provisions must be assessed solely by reference to the objectives pursued by the national authorities of the Member State concerned and the level of protection which they are intended to provide” (§36/34).

8. I. A. State culture in the case-law of the CJEU(4) • C.J.E.U. 2003, Gambelli Usual reasoning of the C.J.E.U.: “On the other hand, as the governments which submitted observations and the Commission pointed out, the Court stated in Schindler , Läärä and Zenatti that moral, religious and cultural factors, and the morally and financially harmful consequences for the individual and society associated with gaming and betting, could serve to justify the existence on the part of the national authorities of a margin of appreciation sufficient to enable them to determine what consumer protection and the preservation of public order require” (§63).

9. I. A. State culture in the case-law of the CJEU(5) • C.J.E.U. 2009, Liga Portuguesa No principle of mutual recognition in terms of online lottery/gambling: “In that regard, it should be noted that the sector involving games of chance offered via the internet hasnot been the subject of Community harmonisation. A Member State is therefore entitled to take the view that the mere fact that an operator such as Bwin lawfully offers services in that sector via the internet in another Member State, in which it is established and where it is in principle already subject to statutory conditions and controls on the part of the competent authorities in that State, cannot be regarded as amounting to a sufficient assurance that national consumers will be protected against the risks of fraud and crime, in the light of the difficulties liable to be encountered in such a context by the authorities of the Member State of establishment in assessing the professional qualities and integrity of operators” (§69).

10. I. A. State culture in the case-law of the CJEU(6) • Usual reasoning also used in the recent case-law regarding online gambling: e.g., • C.J.E.U., Zeturf, 30 June 2011 (§ 39 to 41) • C.J.E.U., Carmen Media, 8 September 2010 (§ 46, 59 and 104) • C.J.E.U., Markus Stoss, 8 September 2010 (§ 76, 80 and 81) • C.J.E.U., Sjöberg, 8 July 2010 (§ 37 to 39 and 43) • C.J.E.U., Ladbrokes, 3 June 2010 (§ 19 and 20) • C.J.E.U., Sporting Exchange, 3 June 2010 (§ 27, 28 and 33)

11. I.B. Limited attempts to harmonize gambling legislations at EU level

12. I.B. Limited attempts to harmonize gambling legislations at EU level • EU PARLIAMENT • Resolution of 10 March 2009 on the Integrity of Online Gambling (‘Schaldemose Report’): Gambling services = economic activity of a very special nature A pure Internal Market approach is not appropriate in this highly sensitive area Cooperation between MS to take measures against aggressive advertising or marketing by gambling operators Nothing regarding a possible EU harmonization!

13. I.B. Limited attempts to harmonize gambling legislations at EU level (2) • Resolution of 15 November 2011 on Online Gambling in the Internal Market (‘Creutzmann Report’): Recall that there is no specific EU legislative act regulating online gambling according to the subsidiarity principle and adds: “ Emphasises that any regulation of the gambling sector is subject to, and must be underpinned by, the subsidiarity principle, given the different traditions and cultures in the Member States, which must be understood as ‘active subsidiarity’, entailing cooperation among the national administrations; considers, however, that this principle implies compliance with the rules of the internal market in so far as applicable in accordance with the ruling by the ECJ concerning gambling; Is of the opinion that an attractive, well regulated provision of gambling services, both on the Internet and via traditional physical gambling channels, is necessary to ensure that consumers do not use operators which do not fulfil national licensing requirements; …

14. I.B. Limited attempts to harmonize gambling legislations at EU level (3) Rejects, accordingly, any European legislative act uniformly regulating the entire gambling sector, but nonetheless takes the view that, in some areas there would be clear added value from a coordinated European approach, in addition to national regulation, given the cross-border nature of online gambling services; Recognises the Member States' discretion in determining how gambling is organised, while observing the basic EU Treaty principles of non-discrimination and proportionality; respects in this context the decision by a number of Member States to ban all or certain types of online gambling or to maintain government monopolies on that sector, in accordance with the jurisprudence of the Court of Justice, as long as they adopt a coherent approach”

15. I.B. Limited attempts to harmonize gambling legislations at EU level (4) • EU COMMISSION • Green Paper on online gambling in the Internal Market = Consultation of the different EU MS on several aspects of the online gambling sector Objective: Better understanding of the different problems generated by the offer of online games Information on the different means used by MS to deal with the said issues Assessment whether the actual EU system allows a global coexistence of the different national regimes and whether a better cooperation(=/= harmonization) at EU level would be useful

16. I.B. Limited attempts to harmonize gambling legislations at EU level (5) • EU COUNCIL • Conclusions on the framework for gambling and betting in the EU member states of 10 December 2010 Supervision of gambling at national level by way of national authorities established according to national laws Cooperation between regulatory authorities State Lotteries play an important role for society This specific role should be recognized in discussions at EU level

17. I.B. Limited attempts to harmonize gambling legislations at EU level (6) CONCLUSION • Gambling = sensitive area • Competence of the national states confirmed • Enhanced cooperation between MS is needed to struggle against illegal gambling

18. I.C. Willingness to maintain national specificities

19. I.C. Willingness to maintain national specificities • Intervention of the different MS’ governments in all the cases referred to the CJEU • Active Lobbying by EL to maintain national specificities • National Governments’/lotteries’ replies to the Green Paper, e.g.: • French government’s reply: approval of the state competence and of the non application of the mutual recognition principle in terms of gambling • French Lottery (‘FDJ’): no mutual recognition and only coordinated approaches between MS • UK government: “Given the wide variation in cultural approaches to gambling, we are not convinced that EU-wide harmonization is both workable and desirable”

20. I.C. Willingness to maintain national specificities(2) • Italian Regulator (‘AAML’): lots of advantages to grant the competence to MS in terms of gambling (e.g., better control, protection of consumers in accordance with the tradition, culture and vision of the state) • Belgium National Lottery: “no disadvantage from a policy perspective in different national regimes” - “From a technical point of view, however, one could think about coordinating the approach of the various MS…” - “From responsibility perspective, (…) more cooperation to respect the various policy choices could be useful”

21. I.C. Willingness to maintain national specificities(3) CONCLUSION • National governments/authorities adopt permanent and ongoing active behaviors aiming at the protection of their local specificities • Protecting the state/national culture, traditions and perspectives as well as gambling regimes requires active behaviors of all operators concerned

22. Similarities between the EU and US lottery environment

23. II. Similarities between EU and US lottery environment • EU • No EU law specifically targeting online lotteries • Lotteries often operated by national monopolies • No EU online lotteries prohibition – competence of MS to allow or prohibit online lottery games • US • No Fed. Law specifically targeting online lotteries • Fed. Law prohibiting interstate lotteries but exemption for lotteries conducted by states under state legislations • No. Fed. Prohibition of online lotteries – competence of the State to allow or prohibit online lottery games

24. II. Similarities between EU and US lottery environment(2) • EU • Lots of reforms of national legislations in the course of 2010-2011 (e.g. France, Spain, Greece, etc.) • No lottery organized at EU level • Operation of a lottery organized jointly by several MS (e.g. Euro Millions) • US • Progressive adaptation of state legislations on online games • No permanent US Federal Lottery • Operation of interstate lotteries (e.g. Mega Millions)

25. Differences ? • Sport betting • Casinos • Remote gambling operators • Profit allocation • Social media knowledge

26. CONCLUSION Similar landscapes for the EU and US lottery sectors Similar concerns and issues regarding the maintenance of States’ monopolies Similar actions to be undertaken in order to preserve States’ culture, traditions,……….specificities!

27. What further to enhance the position of lotteries? • World game ( cross selling ?) now that also in Europe there are two multijurisdictional games • Social media = challenge and opportunity to broaden stakeholder relations • Commercial • Regulatory & public affairs

28. The EU lotteries approach • Start up of invitation only Lottery Lawyers LinkedIn group: • Enhancing the Transatlantic dialogue • Broadening the EU dialogue among lotteries • Addressing the Eastern European markets • Using various social media in interactive way ( Twitter, You tube, LinkedIn, Facebook, slideshare)

29. Thank you for your attention ! Philippe Vlaemminck www.altius.com For any further questions or details, do not hesitate to contact us at: Philippe.vlaemminck@altius.com Beata.guzik@altius.com Or by phone at: +32 2 426 14 14