worldonline
gamblinglawreport
FEATURED ARTICLE
04/09
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SPONSORSHIP
The regulation of gambling
sponsorship in Europe
The Council of Europe’s Informal
Conference of Ministers
Responsible for Sport Adopted
September 2010 Resolution reads:
‘Betting operators should be
banned from...sponsoring teams or
individual competitors if they
manage bets placed on
competitions in which they are
participating’. Gambling operators
are amongst the most enthusiastic
sponsors of EU sports but
sponsorship activities can be
restricted by challenging regulatory
landscapes. With the EU institutions
finally focusing on the regulation of
online gambling, Andrew Danson, a
Senior Associate at K&L Gates LLP,
examines the existing landscape
and the potential for change.
Sponsorship by gambling
operators covers a wide variety of
sports teams, participants,
competitions and governing
bodies, with a particularly
significant presence in sports like
football, horseracing and snooker.
In 2010, gambling sponsors were
ranked 8th of all business sectors
for reported deals (one of the
fastest risers up the list) according
to The World Sponsorship Monitor1.
In football, the number of
gambling operators becoming
leading shirt sponsors in the top 5
markets in Europe has grown from
one in 2002/3 to 26 in 2010/112.
This forthcoming season, seven of
the 18 English Premier League
teams who had, at the time of
writing, announced their shirt
sponsors, will have gambling
industry shirt sponsors.
The recent growth of the
gambling sponsorship market in
the last few years has been fuelled
by factors including the expansion
of the online gambling market,
08
access to global exposure amongst
the right demographic, and the
reduction in sponsorship spend
from traditional sponsor sectors
like banking and financial services.
However, the key inhibition facing
the EU gambling sponsorship
industry is the inconsistent EU
regulatory landscape.
Regulation at national-level
In Europe, different legal and
regulatory regimes govern the
promotion of gambling services
through sponsorship. There is
currently an inconsistent
patchwork of differing laws and
approaches to legality and
enforcement in this area across the
27 EU Member States. The trend
seems to be towards a requirement
for 27 different licences,
representing 27 differing sets of
legal requirements, to advertise in
all of the Member States.
Whilst a number of countries,
including France, Poland, Spain,
Germany and the Netherlands have
recently introduced, or are due to
introduce, new legislation
regulating online gambling, the
result has generally been that
advertising and sponsorship within
those countries requires, or will
require, the operator to obtain a
new licence specific to the
applicable Member State regardless of whether they are
already licensed and regulated in
other Member States. Even in the
UK, which only four years ago
implemented new legislation
permitting sponsorship by
gambling operators licensed
anywhere in the EEA or other
‘white list’ jurisdictions, proposals
are afoot3 to require those overseas
operators either to obtain a
separate UK licence (and,
presumably, pay UK tax), or
withdraw from their UK
sponsorship arrangements.
This state-by-state approach
creates acute problems where the
sponsored party (whether a club,
individual participant or
competition owner) plays or
organises matches in different
Member States. In such
circumstances, the sponsor and
sponsored party must comply with
different regulatory approaches in
every Member State in which a
match take place. As a result, we
have witnessed:
the 2006 arrest of the Chief
Executives of Austrian gambling
operator Bwin by French police in
connection with Bwin’s
sponsorship of AS Monaco;
French football club Olympique
Lyonnais being ordered to remove
their gambling sponsor’s logo for
their 2010 UEFA Champions
League match at Real Madrid,
whilst Madrid were permitted to
wear shirts bearing the name of
their own gambling sponsor in the
same match; and
Spanish football club Real
Madrid being able to wear their
gambling sponsor’s logo in Spain,
but not in Germany - although
Spanish football is broadcast on
German television.
In addition, even where such
sponsorship by gambling operators
is permitted in a Member State, it
must still comply with that state’s
advertising rules. The UK
advertising rules, for example,
prohibit gambling sponsors’ logos
appearing on children’s replica
football shirts, and advertisements
for gambling sponsors featuring
any players under the age of 25.
Further, the content of any
advertisements must also comply
with the Advertising Standards
Authority’s advertising codes.
These advertising rules are,
likewise, not harmonised across
Europe, exacerbating the problems
of cross-border sponsorship
activity by gambling operators.
Developments at EU-level
The inconsistency across the EU
world online gambling august 2011
SPONSORSHIP
stems from the unusual treatment
of gambling services under EU law.
Gambling services fall under
Article 56 of the Treaty on the
Functioning of the EU, and are
thus covered by the rules on
freedom to provide services.
However, gambling has been
specifically excluded from a
number of EU Directives,
including the Services Directive4
which was implemented to remove
legal and administrative barriers to
trade. As a result of this, and
judgments by the Court of Justice
of the European Union (CJEU),
individual Member States have
wide discretion to set their own
gambling policies. Often, those
national policies seem to be driven
as much by a desire to protect
state-sponsored gambling
monopolies and/or to raise tax
revenues as by consumer
protection concerns. The EU
Parliament and the EU
Commission have traditionally
been reluctant to address the
divisive and highly politicised issue
of how (if at all) online gambling
should be regulated in Europe,
leaving the CJEU with a host of
online gambling cases to deal with.
However, that has begun to change.
In March 2011, the EU
Commission’s Green Paper on
online gambling in the Internal
Market opened a consultation on
the issue5. It included specific
questions relating to the regulation
of sponsorship and advertising,
and was responded to by a number
of gambling operators and
industry bodies such as the
European Gaming & Betting
Association, as well as the
European Sponsorship Association.
However, it is unclear what the
next steps will be as they are not set
out in the Green Paper. It may be
that the consultation is followed by
a White Paper setting out policy
options influenced by the
information gathered, and,
world online gambling august 2011
This state-bystate
approach
creates acute
problems
where the
sponsored
party...plays
or organises
matches in
different
Member
States...
Spanish
football club
Real Madrid
[were] able to
wear their
gambling
sponsor’s
logo in Spain,
but not in
Germany although
Spanish
football is
broadcast on
German TV
perhaps, a legislative proposal
thereafter. However, any such
developments may be a long way
off, and would have to gain the
support of member states who,
until now, have rarely reached
agreement on the topic.
At the same time as the
European Commission’s
consultation, the European
Parliament has been working on an
own-initiative report on the same
subject. That report is still at draft
stage, but is expected to call for
pragmatic solutions for sports
sponsorship by gambling
operators. Whilst that may not be
specific enough to inspire a great
deal of confidence in sponsors and
rights holders, it seems to be a step
forward. The draft report is
expected to be finalised and voted
on in October this year. In
addition, the Enlarged Partial
Agreement on Sport (EPAS), a
sub-committee of the Council of
Europe, has also been debating the
issue. Its September 2010 Adopted
Resolution6 suggested that
sponsorship by gambling operators
taking bets on the sponsored
party’s events should be banned,
the concern being the possibility of
gambling sponsors engaging in
match-fixing or abusing sensitive
information. This repeated a
concern set out in the controversial
Santa Casa judgment7, and was also
a point on which views were
sought in the European
Commission’s Green Paper.
However, I understand that the
forthcoming EPAS
Recommendation, which follows
the Adopted Resolution, will take
on board industry comments and
suggest penalties for such conduct
by gambling sponsors, rather than
any kind of sponsorship ban.
Conclusion
It appears that EU institutions now
wish to start tackling the
inconsistent regulation of the
online gambling industry
throughout the EU, including the
difficulties faced by sponsors.
However, with such divergent
attitudes towards the regulation of
gambling amongst Member States,
they seem to have a job on their
hands to forge any real progress in
the short to medium term. Many
in the gambling industry are also
concerned that any EU-level
initiatives may create additional
restrictions, rather than remove
them - ‘be careful what you wish
for’ is an often-used adage. In the
meantime, it seems that potential
sponsors from the gambling
industry will continue to be faced
with a highly complex regulatory
framework when considering
which properties to sponsor, and
how and where that sponsorship
can be activated. However, the
obvious synergies between sport
and gambling will continue to
mean that the benefits of doing so
will continue to be extremely
attractive.
Andrew Danson Senior Associate
K&L Gates (London, UK)
andrew.danson@klgates.com
1. The World Sponsorship Monitor
Annual Review, 2010.
2. Sport + Markt ‘Sport, Gambling &
Sponsorship: The Financial Relationship’
presentation, September 2010.
3. See ‘Consultation on the Regulatory
Future of Remote Gambling in Great
Britain’, Department of Culture, Media
and Sport, 2010; Written Ministerial
Statement on Remote Gambling
Proposals, 14 July 2011; HM Treasury
press release, 18 July 2011.
4. Directive 2006/123/EC of 12
December 2006.
5. EU Commission Green Paper on
online gambling in the Internal Market,
Brussels, 24 March 2011.
6. See Council of Europe Informal
Conference of Ministers Responsible for
Sport, Adopted Resolution Nr1, Baku,
September 2010 (which is in the process
of being amended).
7. Liga Portuguesa de Futebol
Profissional, Bwin International Ltd v
Departamento do Jogos da Santa Casa
da Misericordia de Lisboa (CJEU - Case
C-42/07).
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