“The new French legislation on online gambling in European perspective”Fabienne Péraldi LeneufProfessor, University of Lille North of France

The organisation of gaming and betting in France

General principle of prohibition since XIXth century linked to the dangers games represented (two laws: 21 may 1836 and 2 june 1891)

Derogations:- For small-range gaming (local events)- For appropriation of funds to « noble » causes (culture - tourism - veterans)

Derogations for a monopolistic organisation

Horse race betting (1st authorisation in 1930)• Pari-mutuel• Exclusion of fixed-odds betting / with the pari-mutuel, the participants bet mutually one against the other whereas with the “à la cote” betting each participant stakes separately against the operator who takes a risk according to a quotation previously fixed with the gambler.

Lotteries and sport betting (1st authorisation in 1933)• Promotional lotteries and gambling realised on the occasion of promotional sales are forbidden.

Casino gaming (1st authorisation in 1907), slot machines, table games, roulette

Exclusion of other games

The monopolistic operators:

PMU (GIE): horse betting outside the hippodromes. The CE decided in 1979 that this was not a public service.

FDJ (française des jeux): SEM (1978 decree) constituted as a limited company (SA). The State holds 72% of the shares. Lottery and sport betting. Not a public service (CE Rolin 27 October  1999)

Casinos (private companies). Concessions of public service (CE ville de Royan 25 march 1966) as they contribute to the cultural activities of French municipalities.

The regime of the authorised monopolies

1. The FDJ: A 30 years convention since January 1979 between the FDJ and the Ministry of Budget provides the way to accomplish the mission given to the company• Half of the Board of directors consists of

State’s representatives. • The chairman, who establishes the rules of the

games, is nominated by a presidential decree on proposal of the Board of directors.

Art. 17 2006 decree: FDJ SA the articles of association are approved by the Minister of Budget. An order of Feb. 22nd 2006 provides new conditions for FDJ’s mission concerning its new games, actions dealing with the information of gamblers, addiction, minors’ (16 years old) information. Creation of an advisory committee for the implementation of a gaming supervision policy and responsible gaming.

The regime of the authorised monopolies 2. The PMU

Special authorisation to organise pari-mutuel betting granted by the Ministry of Agriculture for a year (law of April 16th 1930)

3. Casinos: The duration of the concession is freely

fixed by the terms of reference according to a law (Loi Sapin). An order of May 9, 1997 fixed it to 18 years. The Ministère de l’Intérieur (Home Office) decides bit by bit, of each authorisation's duration.

Organisation of monopolies: conclusion

Each time: specifications and rules published in the JORF (French government publication giving information to the public about new laws).

A fixed duration except for FDJ Deductions (but not tax) credited to the State’s budget but without any parliamentary control.

Some obligations: • An economical and financial control by the State and by the Finances General Inspection and by the Cour des Comptes (Audit Office).

Justifications of monopolies

A late writing down of the justifications linked to public order. Case law: CE 15 may 2000 - confédération

des professionnels en jeux automatiques: recognised that it was a “reason of general interest” linked to the protection of public order that justified the lottery monopoly because it was a way to limit and to control public order.

Two decrees n°2006-174 and n°2006-175 of 17 Feb 2006 dealing with the organisation and operation of lotteries and sports betting, they precise the pursued objectives : “to guarantee the integrity, the security and the realibility of gambling operations and to watch over the transparency of their operation;

To direct the gambling demand into a system controlled by the public authority in order to prevent the risks of a fraudulent and criminal exploitation of gambling and to fight against money laundering;

To supervise gambling consumption in order to prevent the development of addiction;

To watch over not to encourage the under 16 years old to play”.

Justifications due to Community law

Article 46: derogations to the Freedom to Provide Services (FPS) admitted for restrictions founded on nationality or residence.

Justifications established by the ECJ for non discriminatory restrictions :• The reasons of general interest

• Public order and public security: fight against crime and money laundering

• Social order: preventing citizens from fraud and from encouragement to spend excessive sums on gambling services or necessity to prevent disturbances to social order.

• Gamblers’ direction, genuinely reducing gambling occasions,

• Impossibility to justify a public service.

Uncertainty in Community law Lack of harmonised legislation (impossibility) Exclusion of gambling by Services Directive

Exclusion by the Information Society Directive

Soft law: a code of conduct for sports forecasts?

The ECJ: the sole regulator

The foundation of its intervention: art. 49

A careful control :•Proportionality principle:

• Justifications must be suitable to attain the alleged public interest

• Proportionate to the objective• Non-discriminatory

The doubts of French judges in numerous conflicts

The Zeturf case

Cour de cassation: ruling of 10 July 2007

CE: ruling of 9 May 2008

An uncertain Community context

Position of the European Commission : deregulation and reasoned opinion against France: Invites French authorities to take into account when

evaluating the application for a licence the requirements to which the operators are already submitted in their own country (nothing in the law for the moment…)

Also insists on the fact that the fixation of the return rate to the gamblers, art. 8 of the bill, is likely to constitute an infringement of the freedom to provide services.

The contrary position of the ECJ : Opinion of advocate general Yves Bot delivered on 14 oct. 2008

Santa Casa Case delivered on 8 sept. 2009

13 october 2009: The French bill

The opening to competition and to regulation of online gambling: «a restrained liberalization »

Liberalization (opening to competition):

Three domains concerned in France Sports betting Horse race betting - pari-mutuel and fixed-odds

Online poker Exclusions :

• Instant lotteries (“jeux de tirage et de grattage”): FDJ’s monopoly is unchanged.

• Slot machines are not authorised online

Regulation « structuring principles »(1) 

• Justifications of general interest• 1st Article. The State policy concerning gambling aims to limit

and delimit the offer and consumption of games and to control their operation so as to :• 1 ｰ  Prevent addiction and protect minors• 2 ｰ  Guarantee the integrity, the reliability and the transparency of gambling operations;

• 3 ｰ  Prevent fraudulent and criminal activities and money laundering ;

• 4 ｰ  (new) Watch over a balanced and fair development of the different types of games in order to avoid any economical destabilization of the concerned sectors.

“Structuring principles” (2)

The authorisation of operators of online gambling, the ARJEL Terms of reference are defined by the regulatory power

Given for 5 years Exclusion of non-European operators or those who have not ratified a tax convention with a provision of administrative assistance in order to fight against fraud and tax evasion

Organisation of auditing procedure Advertising is controlled Traceability of the operators, of the

operations and preservation of the gambling data

Supervision of the stakes paid back Banning of sponsorship and conflicts of

interest Taxation of the operators for the needs of

general interest.

“Structuring principles” (3)

A regulatory body the Arjel: an independent government agency with regulatory powers (AAI)

Composition A board (“Collège”) of seven members A sanction committee An advisory committee

ARJEL’s missions To guard the respect of the missions in the general

interest Could propose provisions for the terms of reference

(cahier des charges) Opinions, legislative and regulatory propositions on the

gambling sector Authorises the operators Fixes the technical characteristics of the platform and

software and homologates them Controls the rules of the games drafted by the operators Supervision of online gambling and cooperation with other

regulators Controls free competition

• Investigation concerning abuse of dominant position• Refers to the competition Counsel (conseil de la concurrence)

Sanctions• Inquiry, audition.• Penalties

Remaining juridical problems

Legitimacy of the limitation of the licences

Interpretation of the consistency principle: Which hierarchy of priorities between:

• Exclusive rights and expansion