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France's Monopolistic Online Gaming Laws Facing Legal Challenges

France's Monopolistic Online Gaming Laws Facing Legal Challenges 0001

France's protectionist policies regarding online gambling are facing mounting legal challenges, with the latest blow dealt by its own Cour de Cassation, France's top court. In a ruling handed down last month, the court overturned a decision that had previously banned a Maltese competitor from offering online betting associated with horse racing in France. The ultimate fate of the Maltese company Zeturf may take over a year to be known, as it must now work its way back through the court of appeals for a rehearing. But the decision handed down by France's highest court will undoubtedly have immediate consequences regarding France's historically predatory proceedings against online gambling competitors and the EU's pending legal action against France.

In late June, the European Commission issued a "reasoned decision" against France, specifically citing its ban on online gambling advertising for all companies except France's state-owned monopolies, the French Lottery, Francaise des Jeux and PMU. In 2003, the European Court of Justice affirmed that gambling was a service that fell under the EU's articles to Freedom of Establishment and Freedom to Provide Services. Under the EU treaty, a member state must allow other EU member states the same right to provide online gaming services as the member country allows its owned state-owned monopolies. In its recent decision, the European Commission threatened legal action by its European Court of Justice should France not change its laws regarding foreign-based gambling advertising. France has rejected the EU's warning, stating that they were ready to defend their policies in the EU's highest court. But that was, of course, before the decision by France's highest court.

Over the past year, France has vehemently enforced its laws regarding online gambling competition. The most recent example, and one the EU specifically cited, was France's banning of a cycling team from the Tour de France because it was sponsored by the online site Unibet. The Cour de Cassation case was a result of France threatening the online company Zeturf with fines of $68,000 a day if they did not suspend operations by January 4, 2007. In March 2007, France fined Patrick Partouche 40,000 euros and his company, Group Partouche, 150,000 euros for violating France's laws relative to online gaming. And in September 2006, France arrested two executives of the online gambling company Bwin for "organizing illegal bets online" and "advertising online betting."

France's online gaming laws and penchant for prosecution influenced a number of enterprises to withdraw from French terrain. The WPT and EPT had both hosted successful poker tournaments in France in the past, but both withdrew their events this year. PartyGaming withdrew from the French market in February 2007.

France appears to be between the Cour de Cassation's rock and the EU's hard place, but a sudden decision to open France to an online gambling competitive free-for-all may not be around the corner. France has defended its monopolistic gambling policies based on protecting public interests. If forced to open its market, it would undoubtedly be within a highly regulated framework. France also has a number of options that don't include completely opening up their online gambling market. If they terminated their state-run monopolies, France could ban all online operations and be in compliance with both national and EU laws. The EU has stated that its goals relative to online gaming are to promote fair competition where it exists, not to force legalization.

A more likely scenario is one that would have France seek a narrower legal definition of gambling services and competition; one that would only require them to open up to the specific types of gambling allowed by their state monopolies. Or they may just pay the price and fight what now appears to be a decidedly steeper uphill battle. While France may have a number of paths to choose from, the recent decisions by the Cour de Cassation and the EU are forcing them down one sooner, rather than later.

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