Monopoly upheld in E.C.J. finding

Monopoly upheld in E.C.J. finding

The long-running litigation between Austrian Online Gambling giant Bwin and the Portuguese state betting monopoly Santa Casa has entered a new and negative phase following a ruling from the European Court of Justice.

The Court has found that the Portuguese government's gambling monopoly may comply with European Union law, ruling that the prohibition which Portuguese legislation imposes on operators such as Bwin (operator of betandwin.com) of offering games of chance via the Internet may be regarded as compatible with the freedom to provide services, if it is designed to combat fraud and other crimes.

The case has its roots in an attempt by Santa Casa to halt a sponsorship deal involving the Portuguese football league that allowed Bwin to advertise website links to fans.

The ruling will be regarded with disappointment by many online gambling firms interested in challenging the monopolistic tendencies of several European Union member nations. Such challenges are based on the right to free movement of goods and services across the borders of EU member nations, but the new ECJ ruling appears to qualify and restrict this basic principle.

The ECJ was involved in the dispute when the local Portuguese court in Porto referred the matter for guidance to the ECJ. The finding by the superior court will now be handed down to the Porto judiciary who will make a final ruling on the case - setting an EU precedent.

A statement is expected from Bwin shortly.

The European Gambling and Betting Association (EGBA) was quick to comment on the Court's finding, observing that it included the wording that restrictions imposed by a Member State "...must be suitable for achieving the objective or objectives invoked by the Member State concerned, and they must not go beyond what is necessary in order to achieve those objectives. Lastly, in any event, those restrictions must be applied without discrimination."

Sigrid Ligné, Secretary General of the EGBA remarked: "Given the stringent anti-fraud regulations applicable to EU licensed operators which ensure a high level of integrity, transparency and traceability over Online Gambling transactions, we do not believe those conditions are met. Several jurisdictions in the EU already prove that it is possible to guarantee a high level of consumer protection and have a well regulated and competitive online gaming market at the same time."

Ligne observed that the judgment should also be seen in the context of the increasing number of Member States that are now in the process of rethinking and redrafting their gaming legislation.

"As has been obvious for all other consumer markets before, none of the Member States currently drafting legislation has chosen a monopoly model to regulate this modern Internet based market," she said.

When we went to press Tuesday, Bwin shares had taken an almost 10 percent hit on the news.

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