Not too long ago Cyprus banned online poker and other “table” games, including slots.  The plan to implement the ban remains on, though it is being delayed by three months to permit the EU to comment.  Curiously, Cyprus has no plans to ban sport betting.  In fact, the state has come out in favor of maintaining sports betting.  That’s right folks, Cyprus has legal sports betting while the U.S. does not.  What makes this especially interesting is that Cyprus is a COMMUNIST state.  I love irony on Christmas.

The EU has fully embraced France’s online poker stance, backing off of its more restrictive view, as a result of recent changes to French law.  The result is that gaming operators from EU states other than France may now offer their products within French borders, further increasing competition and, theoretically, improving the products/services offered (you know, capitalism).  There’s nothing quite like bluff check-raising the turn while cradling a ’94 Bordeaux in your non-mouse hand.

The EU Court of Justice has ruled that Germany’s strict gaming regulations — which permitted gaming only in its 16 federal states — was an unjustifiable monopoly and violated EU law.  Given recent developments by other European countries to control gaming, this landmark ruling has the potential to expand European gaming by loosening the various laws that created, in essence, gambling fiefdoms throughout the continent.

First the good.  British Columbia, Canada became the first North American government to launch an online gambling website.  B.C. estimates that it will receive $40 million in annual revenue from the move.  Other Canadian provinces, such as Quebec and Manitoba, are considering similar sites. 

Now the bad.  Poland is on the verge of banning online poker.  It already has draft legislation that it is considering.  However, according to the European Gaming and Betting Association, many aspects of the proposed legislation contravene EU law.  The UK and Malta also have expressed concerns.  The legislation is in a holding period until August 16.

It will be interesting to see how gambling law progresses in Switzerland, as they are unique in that they aren’t under pressure by the EU.  The country has a reputation as being pro-poker and wants to open both their online and offline gambling markets to companies outside of the country.  They have just carried out an in depth report covering their liberalization process and analyses of all market sectors.  The full report can be purchased and a free summary of the report can be seen here:  http://www.swiss-gambling.mecn.net/.

Belgium has decided to defy the EU’s order prohibiting such action, and nationalize poker.  In doing so, it will join Italy in nationalizing poker and contributing to what some consider a negative trend toward diluting the player pool.

There were high hopes for the French plans to open up its gambling market.  Independent businesses would be able to gain licenses that would allow them to offer their online gaming in a regulated, competitive environment. However, in October 2009, the regulation of online gaming in France fell into the hands of out-of-touch politicians concerned only with protecting their interests.

It seems European countries are getting away with so called ‘open’ gambling markets, but actually are causing more restriction, due to a loophole in the European Union’s Free Trade Treaty. This loophole allows member countries to impose some quite severe restrictions under the guise of them being necessary to protect the public from fraud and gambling problems. Portugal recently got away with this in the high profile Bwin case, and now France has decided that it needs to be a nanny to its citizens. As one French blogger, Benjo, wrote, “Les trompettes de l’Apocalyse”, meaning “The trumpets of the Apocalypse”.

The new French legislation dictates that they are opening up their gambling markets, and starting next year some of the big names in online gambling, such as Poker Stars, Full Tilt, Party Poker, and Betfair, should be able to apply for a French licenses. However, Party Poker and Betfair are ineligible because Party Poker is in Gibraltar, a tax haven and companies in tax havens are not allowed. Betfair, on the other hand, allows punters to lay their own bets and since they won’t have personal licenses they aren’t allowed either. Therefore, This opening seems to mean less choice.

Additionally, any company being granted a French gambling license will only be allowed to accept people that reside in France, limiting the playing competition. Politicians justify this by arguing that they could not otherwise control who gambles with French residents, and the residents must be protected. To make it even worse, all online gambling companies that want a French license must close all of their French players accounts when they apply. The application process could take 3-6 months, during which time those players will have nowhere to play. The player can then create an account through the approved French portal for the company. This would mean that the players would be starting from scratch, losing any loyalty points they may have built up with the sites that they currently play. They will also no longer have access to the big weekly, monthly and annual tournaments, such as the Sunday Million, FTOPs and ECOOP. Instead, they will have to play on their ‘safe’ government approved site with less prize money and potential limits on how much they can bet or win.

The “Les trompettes de l’Apocalyse” puts is nicely, saying, “On est en droit de se demander si le mot “ouverture” est celui qui convient quand l’un des points principaux de la loi est le rétrecissement du poker en ligne aux seules frontières françaises. En gros, pour être légal dans l’héxagone, un site ne pourra accepter comme clients que les joueurs résidant sur le territoire français. Dans cette optique, “fermeture” semble être un terme plus approprié, non ?” This loosely translates as: It is debatable whether the word ‘openness’ is appropriate when one of the main points of the law is the restriction of online poker to be played exclusively within France. Basically, to be legal in France, a site can only accept players residing in France. Perhaps ‘closure’ would be a more appropriate term?

If France gets away with this new legislation it is bound to be a huge worry for other European citizens. Germany, The Netherlands and Finland are looking to put gambling legislation in place. If the EU is letting its member states get away with these types of restrictions, other EU countries are sure to follow suit, if it means their politicians can take a piece of the action. The politicians have clearly not listened to what the people want nor have they taken the time to really understand the online gaming industry.

All EU citizens can sign a petition at www.right2bet.com. If enough signatures are gained the EU will be forced to listen.

There is another good article on the recent French legislation here. It is in French, so wipe the dust off your French dictionary.

You can see the full French blog post here by Benjo here.

The EU is, for the most part, supportive of gambling, but is not without conflicting interests. EU laws regarding the freedom of companies to offer their services within members state provide the illusion of inclusion for Internet gaming, as long as the companies have some measures in place to protect the consumer. However, when delving deeper into EU law, the situation becomes much more complex and grey.

It all begins with Article 49 of the EC Treaty, which sets out the freedoms allowed for companies and individuals to provide their goods and services to any country in the EU. Article 49 states, “restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community.” Based on only this, Internet gaming companies should be allowed to offer their services to any country in the EU, so long as they have a base within an EU country.

However, the European Court of Justice has made rulings regarding gambling that appear to go against Article 49. These exceptions generally apply to lotteries and sports betting, but could have an effect on poker. The first instance of the European Court of Justice ruling in favor of state run monopolies occurred in the 1999 Zenatti case. The court ruled that if restrictions were in place on foreign gambling companies in order to protect consumers from fraud, and limit the amount of gambling promotion to protect social policies, then the act of states creating monopolies could not be seen as violating Article 49. However, the argument that restrictions are in place to prevent crime must have its own exception. That is, that the country’s national court must have ruled that betting restrictions are being put in place because they feel foreign gambling companies are not providing consumers enough protection from fraud.

Because individual EU countries are allowed to establish their own laws regarding gambling, Article 49 is less clear. Another more recent example of a EU member state winning a case that goes against Article 49 is Bwin versus Portugal’s state gambling monopoly. On Tuesday, September 8, 2009, the European Court of Justice ruled in favor of Portugal’s state monopoly based on the exception that restrictions were in place to protect bettors from fraud. To confuse matters more, the EU has ruled against Italy’s attempts at protecting their state monopolies, which is now forcing Italy to open up its gaming market to foreign companies.

Since 2006, the European Commission has challenged the laws of a number of EU member states’ gaming restrictions, accusing them of infringements. In 2006, they made inquiries into the restrictions that Demark, Finland, Germany, Hungary, Italy, Austria, France, and the Netherlands were trying to enforce. In 2007, the Commission took action against the restrictions being enforced by Greece, Sweden, France, Hungary, Finland and Denmark. 2008 saw more action by the Commission with challenges against Greece, Sweden, Germany and the Netherlands. All of these proceedings by the Commission stem from Article 49 of the EC Treaty.

The exceptions allowed weaken the EU’s ability to enforce Article 49 of the EC Treaty, and is therefore a worry to Europeans that enjoy playing poker or participating in sports betting online. It seems that individual countries can protect their profits under the guise of preventing crime. With the European online gaming industry predicted to be worth 6.5 billion euros in 2009, their motive is clear. However, that does not make it right. While Internet gaming should be regulated with the genuine intention of protecting consumers, it does not mean that those consumers should not have the freedom to gamble with whom they choose.

After listening to some of the recent discussions in Italy, you would be forgiven for thinking online poker had been relegated to the ninth circle of hell. The Italian government has been at odds with the European Union (EU) in recent years over Internet gaming, but the situation is starting to become clear.

The EU and Italy have been trying to find a way to regulate Internet poker and other online gaming to the satisfaction of both parties: for Italy to ensure it gets its tax and for the EU to ensure its free trade laws are respected. In 2006, Italy tried to prevent any online gaming that was based outside of Italy. However, this action violated free trade laws in the EU and Italy was quickly threatened with penalties. Finally, on July 27, 2009, an agreement was reached and Italy’s new gaming laws took effect.

At first glance, Italy’s new laws look bad for poker. They appear overly restrictive and contrary to EU law, leaving people to wonder why they were approved by the EU.

As of July 27th, online poker players in Italy must play on websites that have a State Monopolies Autonomous Administration (AAMS) license. Sites that have been granted this license will have to operate under strict rules that require them to exclusively serve Italian tax residents. This means that only those living and paying tax in Italy can play. When signing up to an AAMS approved poker site, Italian players must provide their Codice Fiscale (tax identification number).

Other unfavorable conditions are also being imposed on the type of games players are allowed to play. Only approved multitable tournaments and sit n’ goes will be available at a 100 Euro limit; ring games are forbidden. As if this was not costly enough, rake will be increased. Italian players are now confined to play with other Italians, and results may vary.

So far only two major poker rooms, PokerStars and PartyPoker, have acquired licenses and established approved .it sites. PokerStars has moved all of its Italian players to their .it domain, including their sponsored professionals Dario Minieri and Luca Pagano.

The laws have caused confusion and outrage amongst players based in Italy, as well as worry for players in other countries who fear that they will be subject to similar legislation. However, when looking past the initial disappointment of Italy’s new poker legislation, it is apparent why the EU approved Italy’s laws and how these new laws can actually be good for Internet poker. It is not all doom and gloom.

Italy’s new gaming legislation is actually the first step in fully regulating the market. Today’s severe restrictions on poker will soon be opening up. Ring games have already been approved, but are not yet allowed. By the end of the year, it is highly possible they will be introduced on licensed Italian poker rooms.

The decision to restrict players in Italy to domestic competition will also be short-lived. There are plans in the works to lift this restriction and allow Italian players to play with others from around the world, which could be implemented as soon as 2010.

Italians must hope the government stays on course and does not try to prevent cash games or open borders. Meanwhile, Italian poker players will either have to abide by the country’s laws or change their country of residence. If an Italian does move abroad and provides a poker site with required proof, they will be able to play on the .com server.

Online players worldwide will miss their Italian brethren and hope they return to the interfelt as soon as possible.

On September 8, 2009, The European Court of Justice made what could be a very important ruling on the future of online gambling in the EU. The Court ruled against Bwin Liga’s case, claiming that Portugal’s state-run monopoly, Santa Casa de Misericordia, was in violation of their right to offer Internet gambling within any EU state.

When making its ruling, the European Court of Justice said, “The prohibition imposed on operators such as Bwin of offering games of chance via the Internet may be regarded as justified by the objective of combating fraud and crime.” This means that a European member state can block a foreign gambling operation from providing its services to its population if state monopolies have measures in place to prevent fraud and protect public interest, thus circumventing EU free trade laws. Holding a license and being regulated in another EU state isn’t enough evidence for a gambling company to prove they will take enough measures to protect its users from fraud. This ruling means an EU state can ban any operation from operating within its borders by claiming it is in the public’s interest for crime prevention.

The European Court of Justice’s ruling is a serious blow for online gambling in the EU. Even though EU law states that EU companies should be able to freely offer their services within any EU state, countries can protect their state run monopolies by claiming their restrictions are in place to protect punters.

The lawsuit by Bwin against the Portuguese government was made after Bwin, who are based in Gibraltar, agreed a sponsorship deal with Liga Portgeusa de Futebol. The Portuguese government imposed a 74,500 euro fine on Bwin and a 75,000 euro fine on the Liga, saying that they had broken their restrictions on Internet gambling, thus protecting their monopoly.

When making its ruling, the European Court of Justice tried to point out that if EU states tried restrict who offered gambling services, they would need to have certain measures in place and could not discriminate in how they carried out their restrictions. However, this has now paved the way for EU states to protect their state monopolies more easily.  By putting in place the specific measures required by the EU, they can claim they are protecting consumers by preventing foreign gambling companies from operating.

Instead of conforming to EU laws on free trade, allowing non-state gambling companies to be licensed in their country and requiring they carry out their particular anti-crime measures, the states will now be able to ban who they want if certain measures are in place. This can’t be good for the online gaming industry and the other cases awaiting rulings from the European Court of Justice, such as the case involving Ladbrokes and the Netherlands.