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June 2010

News from the US - Unlawful Internet Gambling Enforcement Act finally comes into force
With a target date of 2008 for implementation, the Unlawful Internet Gambling Enforcement Act (UIGEA) finally came into effect in the USA on 1 June. UIGEA was originally approved back in 2006 but implementation was delayed because of protests from civil liberties groups and the vague nature of the legislative text. The UIGEA requires financial institutions to block transactions to and from online gambling websites and effectively enforces a ban on online gambling.

European News - Challenging times ahead for EU gambling operators?
In the articles below, we summarise some of the legal developments affecting the gambling sectors in other territories throughout Europe. Some countries are taking steps to implement legislation which will open their gambling markets to some commercial competition (Italy has been slowly opening its gambling markets over recent years while France is just beginning this process). Meanwhile other countries continue to debate how the gambling sector should be regulated in the future (including the Netherlands, Germany, Poland, the Czech Republic and Finland).

European Court of Justice decides that Dutch gambling rules comply with EU Treaty
Today the European Court has published two judgments which conclude that EU Member States can restrict nationals from accessing the websites of gambling operators established and licensed outside of their territory in other Member States. Closely following the Bwin/Liga v Santa Casa judgment of last year, the European Court has again ruled that the EU principle of free movement of services does not apply automatically to the gambling sector and Member States are able to enforce rules which prevent licensed operators from offering their gambling services if such restrictions are objectively justified, non-discriminatory and proportionate.

May 2010

M&A: Consolidation movement in the EU's e-gambling sector
Widespread industry consolidation has been a burning issue in the European online gambling sector for some time now, with many industry participants and commentators predicting that 2010 will see the start of large scale mergers and acquisitions amongst key players on the market. Robert Willis, an Associate at Olswang, discusses the latest developments in Europe and the US.

April 2010

Betting on Europe: Tax regimes for gambling operators in the EU and beyond
The laws of the European Union (EU) go some way to ensure that companies established in one of the 27 EU countries (Member States) can trade freely in (and offer their services to consumers based in) other Member States. There is however little by way of harmonisation of tax laws throughout the EU, with the exception of certain EU-imposed taxes such as value added tax (VAT). The imposition of taxes (including direct taxes, such as corporation tax and income tax, and gambling duties) remains a competency of each Member State. Indeed the preservation of Member State sovereignty over taxation constitutes one of the major hurdles to a fully harmonised EU.

March 2010

Government consults on the Regulatory Future of Remote Gambling
In January we reported that the Department for Culture, Media and Sport had announced that it wanted to create a "more level playing field [for British gambling operators] to compete with overseas rivals". On 22 March DCMS published a Consultation on the Regulatory Future of Remote Gambling in Great Britain which sets out DCMS' justifications for changing the current regulatory system, the options it considered and its proposals for extending the current framework to include overseas operators offering their services to British consumers. In this article, we summarise the key points contained in the Consultation and consider the likely impact of these proposals if implemented.

Round Up of Other Regulatory News


The OFT Takes Action Over Misleading Scratch-Cards and Lottery Scams
In January 2010, the Office of Fair Trading ("OFT") announced that it had issued legal proceedings against five companies and a number of individuals behind various prize-draw scratch-cards. The OFT considers that the promotions in question are misleading and unfair to consumers. This action follows a lottery scams campaign which was launched by the watchdog in November 2009. The OFT is clearly monitoring consumer products closely and therefore gambling operators should be careful to ensure that their commercial practices are in accordance with both gambling and consumer laws.

Gambling Product Placement To Be Outlawed
In our last update, we reported on the DCMS consultation about permitting product placement on television, and the possibility that gambling product placement might be permitted after the 9pm watershed. However, the Government has now announced an outright ban on gambling product placement, putting it in the same category as alcohol, tobacco products, medicines, foods and drinks which are high in fat, salt or sugar (HFSS) and infant formula.

It's Raining Sports Betting Integrity Reports
It's the same old story: you wait years for a sports betting integrity report, then two come along in the space of a week. The Government's Sports Betting Integrity Panel, chaired by Rick Parry, delivered its report on 1 February 2010, just five days after the release of the Remote Gambling Association (RGA) report entitled "Sports Betting: Legal, Commercial and Integrity Issues". The RGA consultation was launched in July 2009, just a week after Parry's panel was appointed. So: what's going on?

Irish Proposals to Introduce Secondary Licensing Regime for Online Operators
In January, we reported on UK Government proposals to introduce secondary licences for offshore operators which would permit them to continue advertising and promoting gambling services to British citizens. Just weeks later, the Irish Labour Party also outlined proposals in its Raising the Stakes report which, if implemented, would require gambling operators based outside of Ireland to become licensed in Ireland and to pay local betting taxes. The impetus behind this proposal is that the burden of funding the Irish horseracing and greyhound industries should move from Irish taxpayers to all operators accepting bets on Irish races whether on-course, in betting offices or remotely by telephone and online. The Raising the Stakes report notes that "The Labour Party believes it is fair that remote gambling operations pay their fair share the same as high street bookmakers. Every bet placed in the Irish state should contribute to the betting levy, regardless of the method of placement".

Key Developments in Other Territories
Since our last update, there have been some interesting developments in major non-European territories. This article looks at recent events in the US and China.

News From Around Europe
The European institutions continue to debate how Member States should regulate remote gambling within their national territories. Whether new EU Commissioner for the Internal Market Michel Barnier will continue the work commenced by Charlie McCreevy ensuring Member States comply with EU laws when regulating the gambling sector within their countries is still unknown. The most recent European Court Advocate General Opinions closely follow the views outlined in the BWin/Liga v Santa Casa judgment and make clear that Member States have a wide discretion to impose restrictive rules (often seeking to prevent remote operators from gaining access to national markets) where adequately justified. We report on these Opinions and the potential impact they will have if adopted by the European Court in the coming months.

Olswang advises At The Races on the establishment of GBI Racing
GBI Racing will distribute British and Irish horseracing internationally and joint venture marks the first time that these two long-standing competitors have worked together

February 2010

Olswang advises Ladbrokes plc on joint venture targetting South African betting market
Olswang has advised long-standing client, Ladbrokes plc, on its establishment of a joint venture with KaiRo International Group to target the South African betting market through the launch of an online Sportsbook.

Betting their shirts
The 2009/2010 European football season has seen an explosion in the number of predominantly Asiafacing gambling operators signing sponsorship deals with European football clubs. In England�s Premier League alone, operators with a significant Asian presence now sponsor the shirts of no less than four of the 20 teams, with 188Bet sponsoring both Wigan Athletic and Bolton Wanderers, SBOBET sponsoring West Ham United, and Mansion having sponsored Tottenham Hotspur since 2006. In addition, 118bet have also secured standalone "official gambling partner" deals with Aston Villa and Chelsea. This article considers the commercial opportunities behind this trend, and the legal and regulatory challenges facing Asian operators entering the European sponsorship market.

Virtual money presents real world challenges
The rise of a cashless society is inexorable. A number of nascent technologies are gaining traction as alternatives to cash including electronic money ("e-money") wallets, mobile telephony solutions, account based voucher systems, and more traditional credit and debt cards. The legal and regulatory response to these developing means of payment is advanced.

Betting on Europe: Gambling regulatory regimes in the EU and beyond
For gambling operators considering establishing a presence in Europe two initial questions are likely to be key: firstly, how easy is it to obtain a licence to offer gambling services and secondly, which jurisdiction will offer the most attractive tax rates? This article considers the different approaches taken by European countries to the regulation of gambling and provides a brief summary of the licensing regimes in the countries which currently permit operators to become licensed to offer gambling services. In a future article we will provide a comparison of the different approaches to taxation taken by European jurisdictions that commonly play host to gambling operators.