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Dr. Anastasios Kaburakis Southern Illinois University Edwardsville Dr. Heather Lawrence

20th Annual Sport and Recreation Law Association Conference Chapel Hill, North Carolina – February 28 - March 3, 2007. Dr. Anastasios Kaburakis Southern Illinois University Edwardsville Dr. Heather Lawrence Ohio University. International Comparative Sport Law.

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Dr. Anastasios Kaburakis Southern Illinois University Edwardsville Dr. Heather Lawrence

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  1. 20th Annual Sport and Recreation Law Association Conference Chapel Hill, North Carolina – February 28 - March 3, 2007 Dr. Anastasios Kaburakis Southern Illinois University Edwardsville Dr. Heather Lawrence Ohio University

  2. International Comparative Sport Law US and EU sports gambling and betting regulations, policies, and case law

  3. Changing role of legal scholarship • “In the beginning there was only law. Then came law and society, law and history, law and economics and so on. These developments have transformed the vocation of the legal scholar from that of a priest to that of a theologian.”Kathleen Sullivan - Dean of Stanford Law School

  4. National Governments National Courts European Union (EU) European Commission (EC), Parliament (EP) and Council European Court of Justice (ECJ) Communication Conferences, Press State Governments State Courts U.S. Congress U.S. Supreme Court Media ESPN WSOP Sportsbook.com The battlefield Veenstra (2005)

  5. Verhulst (2003) The Legislative Process:Consultation Procedure Commission Proposal European Parliament Opinion Committee of the Regions Economic and Social Committee Adoption of decision by the Council after consultation with Coreper

  6. Commission Verhulst (2003) The Legislative Process:Co-Decision Procedure Proposal Parliament (1st reading) ESC COR Opinion Council No amendments by Parliament or approval of all amendments by Council Instrument adopted or approval/no action Rejection by absolute majority COMMON POSITION Council Parliament (2nd reading) End of legislative process Adoption of common position by qualified majority Amendment by absolute majority Parliament’s amendments accepted Parliament’s amendments not accepted Commission Adoption by qualified majority Adoption only by unanimity Council No agreement agreement Amendments rejected Conciliation Committee convened by Council and Parliament (3rd reading) Instrument rejected

  7. Subsidiarity The EC must act where the objectives to be pursued can be better attained at Community level, enhancing its powers The EC must not act where objectives can be satisfactorily attained by the Member States acting individually, constraining its powers Edinburgh European Council 1992: due to the subsidiarity principle, gambling is unsuitable for Community legislation and is better dealt with at a national level Veenstra (2005)

  8. EU Law • EC Treaty [The Treaty establishing the European Community (as amended by the Treaty of Amsterdam)] C 325/35, 12/24/02 • EC Treaty promotes competitive market economy and prevents barriers to integration of the single European market • Article 3 (c, g): Abolition of obstacles for free flow of services, no competition distortion • Article 49: “…restrictions on freedom to provide services within the Community shall be prohibited…”

  9. EC Art. 49 exemptions • Discretionary power of Member States to decide about the number and type of operators & type and volume of games • National restrictions are compatible with EC Treaty if (Gambelli, paragraph 67; EC Art. 54): • Non discriminatory and proportionate; • Justifiable by imperative requirements: Consumer protection, prevention of fraud and crime, maintenance of order in society (Public Order); • Restrictions must reflect a concern to bring about a genuine diminution of gambling opportunities; • Financing of good cause/state is no imperative requirement. Veenstra (2005)

  10. European Court of Justice • Case Law (on EC Treaty Articles 49; 81 and 82 – Restrictions on provision of services; Competition rules, restraint of trade and abuse of dominant position) • C-275/92; Schindler (Import of lottery ads; Netherlands-UK) • C-368/95; Familiapress (Distribution of pub+prize; Austria-BRD) • C-124/97; Läärä (Exclusive right to operate slot machines; FIN) • C-67/98; Zenatti (Operation of sports betting agency/book; ITA) • C-6/01; Anomar (Operation of gaming machines; POR) • C-243/01; Gambelli (Monopoly of collecting bets; ITA-UK) • C-42/02; Lindman (Taxation of winnings; FIN-SWE)

  11. ECJ developments • Advocate General R. J. Colomer on C-338/04; Placanica: • Prohibit national restrictions that criminally prosecute sports betting orgs w/o a national license, but authorized by another Member State (MS) (as contrary to EC Treaty Art. 49) • In Gambelli the ECJ“sinned in showing an excess of prudence”, referring matters to national courts; time to take the next step and refine the Gambelli answer, in order to eradicate uncertainties • Country-of-origin principle: License by one MS should suffice (triggering competition b/t MS regulating gambling orgs.) • The databases’ protection directive (96/9/EC) twist; use by national sports betting monopolies (Fixtures – ‘02 ECJ cases)

  12. The European Ombudsman • Investigates complaints about maladministration in EU institutions • Since 1995 only 14 special reports • Special report #13 to EP after recommendation to EC • Subject: BDR sports betting provider preempted by German authorities; infringement complaint (Art. 49) • Rec: Important issue of principle = EC indefinite delay due to lack of political consensus; “deal with it… diligently and w/o undue delay” • Remarkable EC opinion…; “…due to procedural deadlines… a position can probably not be expected in the near future…” • 2/2004 – 7/2005 saga

  13. Recent EC initiatives • Denmark, Finland, Germany, Hungary, Italy, the Netherlands and Sweden EC Treaty Art. 49 infringement procedures (Spring-Summer 2006) • “…not seeking to liberalise the market in any way…” • EP and Council excluding gambling from services directive (2/2006) + Controversy

  14. EU Law in sum • No uniformity in national courts’ case law • Uncertainty as to the extent of national restrictions on sports gambling tolerated by the courts • When and how is a MS stimulating gambling in its territory? • Excellent example in De Lotto vs. Ladbrokes(perverse conclusion: “insufficiently restrictive” Dutch policy v. “drastic consequences” for the Dutch gaming market; last decision 10/2006: Dutch Gaming Act is valid, regardless of amount of advertising promoting state-licensed De Lotto) Veenstra (2005)

  15. Pressure on EU Lottery Model Veenstra (2005) • POLITICAL UNCERTAINTY • EC focus = Economic approach of gambling services • LEGAL UNCERTAINTY • National Court Cases • ECJ Jurisprudence – Uncertainty and confusion • EC commencing infringement procedures against MS • COMPETITORS • Better organization via collective lobbying efforts • NATIONAL DEVELOPMENTS • UK (Gambling Act 2005), Malta (Remote Gaming Regulations 2004) • EU Enlargement • STATE LOTTERIES • Normal economic operators

  16. Policy guidelines • Gambling not a normal economic activity • Social responsibility (protecting vulnerable population) • Economic impact analysis (fundraising, sports infrastructure, government relief) • Balance in lottery management • Cooperation and coordination on global level (Public order, bone fide operators using geo-location software)

  17. Balance in Lottery Management Veenstra (2005) A. Governmental policy Liberalization Repression Canalization B. Identification S A F E C O R R I D O R Administrative organization Aggressive private enterprise C. Profit Orientation Pure Accessory Sole object D. Competition Aggressive Denial

  18. State lotteries stand for “we care society” We care about public order We care about the consumer We care about Government We care about good causes Pirates: “We don’t care society” Infringement of i.e. data protection rules etc. Inadequate consumer protection No respect of territoriality and national rules Profit stays in the pocket of the private industry Complaisance licenses & tax evasion Veenstra (2005)

  19. US Law and Policy • DE, MT, NV, OR allowing sports betting (effective in NV & OR) – NJ would be the 5th… • … after the Professional and Amateur Sports Protection Act (1992) aka “Bradley Act” (28 U.S.C. § 3701, et seq.)… to no avail • CA, LA, NV prohibit (+online) betting beyond state borders • Wire Wager Act (18 U.S.C. § 1084) + Internet • Unlawful Internet Gambling Enforcement Act (Title VII of SAFE Port Act 31 U.S.C. § 5361) • Interstate Horse Racing Act (15 U.S.C. § 3001) + Internet horse race bets in CA, NV, OR, SD • Other applicable statutes: RICO Act, Travel Act, Illegal Gambling Business Act, Interstate transportation of wagering paraphernalia Act…

  20. US Law and Policy • In re MasterCard Int'l, et al., 132 F. Supp. 2d 468, (E.D. La. 2001), No. 01-30389 (5th Cir. 2002): Gambling losses are enforceable because "the Wire Act does not prohibit non-sports Internet gambling." (DOJ disagreed) • Federal gambling law does not address games of skill… (Poker, Fantasy Sports…?) • IL, IN, LA, MI, NV, OR, SD, WA prohibiting unauthorized internet gambling • HI, UT prohibiting any form of public gambling • ND legislative efforts to legalize and regulate online poker operations • Student Athlete Protection Act (2000 bill) • Amateur Sports Integrity Act (2003 bill) • NCAA DI & DII Bylaw 10.3 + Pro leagues policy

  21. Common themes • Subsidiarity//Federalism • Skill v. Chance arguments • Political influence and lobbying efforts from industry//conservative cycles (excluding gambling from services directive – IGPA) • Challenges in state lotteries/sports betting monopolies • Attempts to funnel revenue from lotteries and betting toward education and infrastructure

  22. Common themes • Attempts to curb gambling addiction (actually promoting it via state) • EC and DOJ may disagree with courts’ decisions • Netherlands and other national regulations simulate CA, LA, NV beyond-borders (+ online) betting restrictions • Sports bribery scandals • U.S. v Burke et al., 700 F. 2d 70; U.S. v Mazzei, 700 F. 2d 85 (2nd Cir. 1983) • Arizona State, Maine, Northwestern • 2003 NCAA National Study on Collegiate Sports Wagering and Associated Behaviors • Anderlecht, Fiorentina, Juventus, Lazio, Marseilles, Milan

  23. Differentiation • US Congress more active than EC • EC Treaty Art. 49 & Gambelli (balanced) v. PASPA & UIGEA (strict in principle) + Safe harbor provision of Wire Act • EU liberalization – Nascent competition for sport betting services (+new MS) • EU in favor of regulating global sports gambling • Country-of-origin sufficient principle v. States sovereignty selecting own rules Is this the pitfall of the EU? Compromising state? Your thoughts?

  24. Work in progress… • … so do jump in. • The foundation is established. • A lot of work to be done on national policy and state-level research • For the US audience, areas worth investigating: • http://curia.europa.eu/ • http://www.sportandeu.com/

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