Sovereignity hassles - This time a Maltese licensed company collides with the French
13.09.2005"Malta Today" carried an interesting report this week that revealed a confrontation between the Maltese online gambling operator Zeturf and the French authorities.
The clash resulted in Zeturf being fined by a French court for offering horseracing betting services to French nationals and the company was issued with a cease and desist order preventing it from offering gaming services via the Internet to the French market. Zeturf has appealed the case.
Malta Today says there was no announcement by the local regulator on the subject. The newspaper reported that the Maltese licensing authorities seemed more focused on the acquisition of Betfair as a licensee in the Mediterranean island jurisdiction, and the launch of a new instant keno game!
The case concerned the horse betting bookmaker recently licensed in Malta under the Lotteries and Gaming Act .Zeturf is a subsidiary of a French company and provides French internet users with the possibility of betting on horse races, whereas this activity is apparently objectionable as it falls under the exclusive right of the (French) state monopoly.
Malta's minister of foreign affairs is Michael Frendo, a member of a lawyer consortium involved with the Maltese licensing authority.
Dr Frendo is no stranger to the law relating to cross-border gambling and has up to recently been a frequent speaker in international conferences relating to online gambling.
Naturally as minister of foreign affairs the Zeturf case has prompted his intervention to find a solution. But this is no simple court case. As quoted in The Malta Financial and Business Times, Dr Axisa, the legal and enforcement director remarked that this case may have serious repercussions on the future of cross-border services provided by the 100 odd operators currently licensed by Malta.
And the jurisdictional profits for Malta could be substantial as it develops and (hopefully) attracts more Internet gaming operators.
Malta Today says that its sources speak of a burgeoning turnover "....reaching a billion euro mark."
The newspaper goes on to give an overview of the legal background regarding EU states offering cross-border services to other EU states - a highly litigous issue.
As a rule EU member states (except Britain) tend to prohibit foreign operators from invading their markets using the EU agreements on freedom of services.
It all hinges on the individual member state's desire to protect its local monopoly from unbridled competition. In France the Pari Mutuel Urbain (PMU ) is the French monopoly permitted to organise betting activities on horse races. It is also the holder of the exclusive right to take French bets on horse races that take place outside France.
P.M.U. has taken Zeturf to court on account that it was providing its French members odds on a range of French sporting events including horse races on the strength of the legality of its Malta license.
The Parisian Court in its decision of July 8, ruled against Zeturf and ordered that it should stop accepting bets on French horse racing against a penalty of Euro 15 000 per day following 48 hours from notification of the decision.
Zeturf has made clear its intention to appeal the decision, taking a similar course to other international betting companies like Ladbrokes barred from other EU countries.
The case is complicated by the nature of the French court's ruling, which apparently observed that the whole issue is linked to aspects of intellectual property and rights enjoyed by PMU rather than the prohibition by a state monopoly to inhibit cross-border gambling services. In its decision, the Court took cognisance of the plea by PMU that Zeturf by accepting online bets without its proper authorisation has inflicted an "illicit disturbance" to the PMU.
It looks like another interesting legal tussle on the EU sovereignty issue could be shaping up.
Malta is not the first country to be challenged. In fact PMU has hit out at Britain and Austria by launching legal proceedings against Sportingbet, BetandWin, Stanleybet and MrBookmaker for breaking its monopoly.
According to German newspaper Handelsblatt, the European Commission has accused Germany of blocking foreign companies from the sports betting market and thereby infringing EU rules on freedom of access for the services industry. The newspaper said, citing reliable sources that Brussels intends to lift Germany's ban on cross-border services or to prove that the ban does indeed comply with EU law.
In the meantime, amidst the perplexity the EU has taken a step forward when the Commission has recently ordered a special study of the 25 states on how gambling services are administered. It goes without saying that if the Commission will not be satisfied with Germany's response, then it plans to start proceedings in front of the European Court of Justice.
