Danish draft law on internet gambling runs into EC trouble

Danish draft law on internet gambling runs into EC trouble

October 8, 2009.

Denmark's draft law designed to appease the European Commission and create a more open but still limited online gambling market in the Scandinavian country ran into difficulties with the Commission this week.

In compliance with EU requirements, the draft law was submitted to the Commission earlier this year, triggering a three month standstill priod wherein no implementation may be effected by the member nation concerned.

On October 6th the Commission issued a detailed opinion against the Danish proposal, requiring the Danes to respond and imposing an automatic further standstill on any implementation until November 9th 2009.

In EU procedures, a 'detailed opinion' signifies that the draft text submitted for consideration would, if implemented, create barriers to trade, services or establishment within the EU.

The European Gambling and Betting Association, which is supported by leading companies in the European betting industry, issued a statement on the latest development. In the statement, secretary general Sigrid Ligné said: "We support the Danish government's intention to move towards a regulated opening of the online gaming market, but this has to be done in compliance with EC law requirements.

"We welcome the European Commission´s continued resolve to ensure that all gaming and betting legislation in the EU complies with the core principles of the EC Treaty."

The EGBA statement details its objections to the Danish draft proposal:

* The licensing regime fails to take into account securities and controls already offered by other EU jurisdictions, in conflict with jurisprudence of the European Court of Justice;

* Continued Danish state monopoly on inter alia pool betting for horse racing;

* The introduction of ISP and financial transactions blocking and a marketing ban;

* Prohibition for non-Danish residents to participate in Danish licensed games.

Ligné added: "EU consumers demand a diverse, safe and secure online gaming and betting offer. More and more Member States are responding to these demands by moving away from their existing system of a gambling monopoly to a licensing system adapted to the Internet.

"We support the Danish government´s intentions but emphasise the need to ensure that any new legal framework is compliant with the EC Treaty.

"We would welcome an opportunity to share our expertise and knowledge of other licensing regimes in the EU to ensure an effective regime can be introduced at the earliest opportunity."

The extended standstill means that the draft law cannot be implemented, and the Danes must respond to the Commission's comments. If the Danish government fails to comply with these requirements, or implements the dfraft without taking the Commission's objections into account, it can be made the subject of legal proceedings by the Commission.

Once a detailed opinion had been issued, the standstill period, during which the draft text must not be adopted, is extended by one month. If, after this time, the draft text is adopted without modification, the Commission can immediately commence an infringement procedure against the Member State's newly adopted legislation.

Germany is an example of this process in action; on 31 January 2008, the Commission launched an infringement procedure against Germany after it failed to respect the detailed opinion issued against it in March 2007.

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