An Excerpt From: K&L Gates Global Government Solutions ® 2012: Annual Outlook January 2012 Betting and Gaming and Entertainment Online Gambling in the European Union: Was 2011 a Landmark Year? 2011 may prove to have been a turning point in the regulation of online gambling in Europe. Until now, the European Union’s institutions (with the exception of the Court of Justice of the European Union (CJEU)) have been reluctant to intervene in an online gambling market which has become increasingly divided along national boundaries. The 27 EU member states have differing cultural, legal, and fiscal approaches to the online gambling industry—some support a state-sponsored gambling monopoly operator, while others have opened their markets to licensed operators within a regulated framework. However, even these national regulated frameworks vary enormously, and the principle of mutual recognition of licensed operators from other member states is rarely applied. As a result, online gambling operators providing cross-border services in Europe must navigate an inconsistent patchwork of regulated, gray, and restricted markets. Further, the CJEU has had to deal with a stream of cases concerning the conflict between the restrictive online gambling laws of many member states on the one hand, and the freedom to provide services enshrined in the Treaty on the Functioning of the European Union (EU Treaty) on the other. However, 2011 has seen the European Commission publish a green paper on online gambling, and the European Parliament issue an own-initiative report on the topic. European Commission Green Paper In 2011, the European Commission’s green paper on online gambling launched a public consultation covering the regulation of gambling and related services (including advertising and sponsorship) in Europe, enforcement, and public policy issues. That consultation closed in July 2011, and the commission is now considering the responses. It is unclear what the next steps will be: it may be that the consultation is followed by a white paper setting out policy options influenced by the information gathered, and, perhaps, a legislative proposal thereafter. However, it seems extremely unlikely that the market will be harmonized, or even that member states will be prepared to adopt a policy of mutual recognition toward gambling operators established in other member states. Any such developments would require the support of member states who, until now, have rarely reached agreement on the topic. However, as described below, the commission has now been given some clear guidance by the European Parliament. European Parliament Report On November 15, 2011, the European Parliament adopted its own report on online gambling in the internal market (the Creutzmann Report). Given that the member States differ greatly on this issue, it is no surprise that the Creutzmann Report rejected legislative uniformity within the internal market and supported the discretion of individual member states to make their own gambling policy, so long as it is proportionate and non-discriminatory. Nevertheless, the report still represents a change of direction from the European Parliament in favor of the regulated online gambling industry and demonstrates a new emphasis on cooperation between member states and upholding EU Treaty principles in the sector. Importantly, the report urges the commission to take a more active role to pursue infringement proceedings, to uphold EU Treaty principles in favor of EU-licensed operators, and to consider introducing common standards and a framework directive. The report represents a change of direction in favor of the regulated online gambling industry. 70 K&L Gates Global Government Solutions ® 2012 Annual Outlook Betting and Gaming and Entertainment It is also particularly interesting that the Creutzmann Report recommends that a controversial property right for sports event organizers, along the lines of the “fair return” mentioned in the commission’s green paper, should be recognized. While that is merely a recommendation, if implemented it could mean that sports organizations would be able to charge gambling operators for the privilege of taking bets on their events. Conclusions It is welcome that both the European Parliament and the European Commission have decided that this issue could benefit from some central policy guidance. What happens next is less certain: the Creutzmann Report is non-legislative, and the timing and the nature of the next steps from both the European Parliament and the commission are unclear. With such divergent attitudes towards the regulation of gambling among member states, it will be difficult to forge any real progress in the short to medium term. discriminatory, or disproportionate. We may also see a greater degree of legal certainty for the industry in the future, and increased cooperation between regulators in different member states. The events of the next few years promise to be just as significant as the one just past. Warren L. Phelops (London) [email protected] Andrew R. Danson (London) [email protected] At the same time, the tide may be turning against the state-sponsored gambling monopoly model in the European Union— at least where member states’ gambling policies can be shown to be inconsistent, K&L Gates Global Government Solutions ® 2012 Annual Outlook 71 Anchorage Austin Beijing Berlin Boston Brussels Charleston Charlotte Chicago Dallas Doha Dubai Fort Worth Frankfurt Harrisburg Hong Kong London Los Angeles Miami Moscow Newark New York Orange County Palo Alto Paris Pittsburgh Portland Raleigh Research Triangle Park San Diego San Francisco São Paulo Seattle Shanghai Singapore Spokane Taipei Tokyo Warsaw Washington, D.C. K&L Gates includes lawyers practicing out of 40 offices located in North America, Europe, Asia, South America, and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information about K&L Gates or its locations and registrations, visit www.klgates.com. This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. ©2012 K&L Gates LLP. All Rights Reserved.