1
The new French legislation on online gambling in
European perspective
Fabienne Péraldi Leneuf Professor, University of
Lille North of France
2
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)

3
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

4
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.

5
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
  States 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 FDJs 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.

6
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 lIntérieur (Home Office)
  decides bit by bit, of each authorisation's
  duration.

7
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 States
  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).

8
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.

9
Two decrees n2006-174 and n2006-175 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.

10
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.

11
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?

12
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

13
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

14
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

15
13 october 2009 The French bill

• The opening to competition and to regulation of
  online gambling
• a restrained liberalization 

16
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) FDJs monopoly is unchanged.
• Slot machines are not authorised online

17
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? Prevent addiction and protect minors
• 2? Guarantee the integrity, the reliability and
  the transparency of gambling operations
• 3? Prevent fraudulent and criminal activities and
  money laundering 
• 4? (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.

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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.

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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

20
ARJELs 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

21
Remaining juridical problems

• Legitimacy of the limitation of the licences
• Interpretation of the consistency principle
• Which hierarchy of priorities between
• Exclusive rights and expansion