Wednesday, 2 May 2012

Interview - Sigrid Ligné, Secretary General of the EGBA

Sigrid Ligné
The European gambling and gaming market is experiencing dynamic times. In many of the major markets gambling and gaming laws have been - or are being - amended, and at European level a number of recent developments have taken place. Michiel Willems spoke to Sigrid Ligné, Secretary General of the European Gaming and Betting Association in Brussels, about new EU initiatives as well as recent legislative developments in Germany, Hungary, Greece, France and Italy. Ligné also discusses match fixing, website blocking and a number of recent rulings by the European Court of Justice.

The European gambling and gaming market is experiencing dynamic times. Many of the major markets are experiencing significant changes and at European level several developments have taken place. The close of 2011 saw the European Parliament change its attitude towards gambling regulation. The EP voted on 15 November in favour of the Creutzmann Report, which called for a European Directive providing minimum standards to regulate online gambling services across Europe. What is the value of this report?
Ligné: The Creutzmann report, supported by a large majority within the European Parliament is a turning point in the EU policy discussions on gambling. The report acknowledged for the first time that national standalone solutions are not efficient to tackle the cross border dimension of the sector and called for the adoption of an EU framework for online gambling. The Parliament also urged the European Commission as ‘guardian of the Treaties’  to pursue those infringement proceedings that have been pending since 2008 and to act swiftly upon receipt of complaints about violations of the freedoms enshrined in the Treaties.

The European Union’s Green Paper – published on 24 March 2011 - set the objective 'to contribute [...] to the emergence in the Member States of a legal framework for online gambling providing for greater legal certainty for all stakeholders' - an objective which seems to demonstrate the European Commission's will to play a more active role in European regulation of online gambling. What do you expect from this bold statement?
Ligné: Commissioner Barnier has played a key role in refueling the EU debate on online gambling. It was his personal initiative to launch the Green Paper consultation and to organise in parallel expert workshops on a number of key issues. Following the adoption of the Creutzmann report Commissioner Barnier confirmed 6 priority areas of action at EU level. The adoption of a Communication and a concrete action plan for online gambling is now scheduled for July or September 2012. 

We have high expectations of this process and are calling for the introduction of EU-level rules to safeguard adequate protection for consumers and at the same time ensure fair and transparent licensing conditions for EU operators. With the European Court drawing ever-clearer ‘red lines’ for national regulation, the European Commission has strong legal arguments to bring Member States in to cooperate.

Germany is potentially one of the largest and most lucrative markets in Europe. Through Schleswig-Holstein’s recently adopted gambling legislation – a liberal law that has legalised most forms of gambling – many operators believe they have found an opening into the massive German market. Do you think this will hold? What changes would you like to see in Germany?
Ligné: Germany has a turbulent history regarding its gambling legislation. It is a disappointment after so many years of non-compliance with EU law that 15 Länder may consider to ratify a new Interstate gambling Treaty which is not economically viable nor legally sustainable as confirmed by the critics expressed by the European Commission in a letter sent on the 21st March to the German authorities. This law is unsustainable and should be either dropped or substantially amended.
In contrast, the German Land of Schleswig-Holstein recently passed its own online gambling, which did not raise any objections from the European Commission. It should serve as a model.

Ever since the French market was opened to French and foreign operators, in 2011, the liberalisation has led to disappointment and complaints, resulting in operators pulling out of the market and the country’s regulator, ARJEL, announcing in March 2011 the need for reforms. Why is the ‘French model’ not working?
Ligné: A study published in 2011 estimated at € 8,7 millions the costs for an operator already regulated within the EU to obtain the license and comply with its very French technical and administrative requirements. But the so-called ‘French model’ is also based on a prohibitive tax rate, on a capped payback ratio, and on the very controversial Sport betting right.

Finally, it must be noted that online casino games are still prohibited in France. The French regulator confirmed that the economic model for the French online sports betting market was weak and ‘with the exception of the two incumbents FDJ and PMU, French licensed operators are not making profit’. The French model does not work because it is not competitive and does not meet consumer demand.
We have filed a complaint on several protectionist requirements of the law that the European Commission is currently looking into. Other complaints have been filed by local operators, notably with the French Competition authority.

Regarding the blocking of unregulated websites, courts in Germany have ruled that illegal, unlicensed websites cannot be blocked, France is doing the opposite. What is the EGBA’s stance on this? 
Ligné: Such blockings are highly questionable legally. Moreover, blockings are costly, easy to circumvent and drive consumers towards the black market as evidenced in all markets where such measures have been introduced. Despite website and financial blockings being introduced by the French gambling law of 2010, 57% of French consumers continued in 2011 to play on websites not licensed in France. The only way to channel consumers towards the regulated market is to provide them with an attractive and competitive legal offer.

The Hungarian Parliament has adopted - at the end of 2011 - a series of bills that comprehensively amends the country's gambling act. The radical changes, which have now come into force, are widely expected to have grave effects on the Hungarian gambling market. Is Hungary showing Europe the way forward?
Ligné: No, we still have strong concerns. The new Hungarian law still contains provisions which clearly violate EU law. Accordingly, we lodged a formal complaint to the European Commission a couple of weeks ago.

Match fixing and suspicious betting patterns have turned out to be significant issues in recent years. How do you think match fixing should be tackled? What should be the role of operators in this process?
Sporting heroes or criminals?
Ligné: Corruption in sport is a broad phenomenon that knows many motives. Studies have shown that doping is today the biggest threat accounting for nearly 96% of corruption cases and that match fixing is accounting for 3%, of which 1,5 % are betting related. Experts participating in a workshop organised by the European Commission in May 2011 confirmed that sports betting is not a threat in principle and that risks emanate from new technologies facilitating consumers’ access to unregulated online gambling offers mainly coming from the Asian markets. Regulated operators have a responsibility first to guarantee that their systems cannot be abused by fraudsters. Furthermore, through platforms such as the one successfully developed by the European Sport Security Association (ESSA), operators also play an important role in detecting suspicious betting patterns and in passing this information on to sports governing bodies and regulators for them to act on. 

Since it usually is a cross-border issue, do you think national regulators can combat match fixing, is there a role for the EC at European level?
Ligné: Yes we believe the EU has an important role to play. A uniform definition of sports fraud should be adopted at EU level and included in the criminal law of all Member States. It is also crucial that campaigns such as the one we have started a couple of years ago with EU Athletes, ESSA and the RGA to educate sportspeople about the risks, get the support of the EU and National Authorities.

Do you expect these problems will increase during the London Olympics, which is only months away?
Ligné: With regards to the upcoming Olympics, European regulated operators are already working hand in hand with the IOC and the competent Authorities. This collaboration aims at optimising the monitoring, detection and reporting of suspicious betting patterns and should minimise the risks.  

The cosy relationship between sports federations and operators is often fiercely criticised (cooperation, sponsorship, exchange of information). What is your take on this? How close can these relationships be?
Ligné: The very purpose of such partnerships is to create a positive association between the operator and sports organisers. This creates incentive to ensure the integrity of the relevant sporting event, as both the operator’s brand and the sport event’s reputation are on the line. It is essential that such partnerships remain closed to unregulated operators but it serves no-one to prevent highly responsible and licensed EU operators to sign sports partnerships as is currently the case in Poland and several other jurisdictions.

The Greek Gambling law has been fiercely criticised in recent months, especially its tax stipulations. Should the Greek Government press ahead with this law?
Ligné: The law blatantly runs counter to key provisions of EU law and has already triggered several complaints at EU and national level. The law is not sustainable.  If the Greek government decided to press ahead it would not only deliver a poor and uncompetitive offer to consumers but it would also expose itself ultimately to sanctions.

The Court of Justice of the European Union has ruled it is against European Union laws for Member States to 'discriminate against new operators under the aegis of consumer protection'. The CJEU decided in its long-awaited ruling in the joint Costa and Cifone cases that Member States 'cannot protect vested economic interests' by restricting access to individual markets for new operators'. What will be the impact of this decision? 
Ligné: Italy has proved to be fertile grounds for the development of gambling jurisprudence by the Court of Justice of the European Union (CJEU).  The CJEU already ruled in previous case law that economic interests cannot be a justification for restricting the market, although in this recent ruling the conclusions are particularly clear.
The Costa and Cifone ruling might be even more significant for setting for the first time a detailed set of requirements that licensing authorities need to comply with. Not only should the licensing rules be clear and predictable for the operator, but according to the CJEU the award of licenses should “be based on objective, non-discriminatory criteria which are known in advance, in such a way as to circumscribe the exercise of the national authorities’ discretion.” The Court further explains that “the purpose underlying the principle of transparency … is essentially to … preclude any risk of favouritism or arbitrariness on the part of the licensing authority.”
This provides useful confirmation that the EU Treaties rules not only apply to national gambling legislation but also to the actions of licensing authorities.  With this ruling, the Court has also given its views on the allegation that the broad discretionary power of Member States would stand in the way of an EU framework for gambling. 

Thank you for your time. 

Michiel Willems © 2012 CP Publishing Ltd. London, UK. Pictures: EGBA / Luxuryeyesite / /