On Friday 15 September 2006 Manfred Bodner and Norbert Teufelberger, joint CEO's of the online betting company BWIN were detained by French authorities in Monaco on charges of violating France's internet gaming laws. They were released on Monday 18 September on bail of €300,000 each after a hearing in Nanterre, France. They have been placed under investigation, a preliminary step that could lead to a trial and a possible three year prison sentence.

In a press conference held in Vienna on the 21st September, Thomas Talos, BWIN's lawyer, said that the pair had been subjected to "human rights violations." Moreover, he called the action taken by the French against them as constituting "a crass violation of Community Law."

Seemingly not content with having banged up the Co-CEO's of BWIN for a few nights, the French Government subsequently announced that in the future it would be taking a tougher stance against any online gambling companies that illegally advertised its services to French citizens.

The French Budget Minister Jean-Francois Cope stated that the new measures, which would be attached to a bill aimed at dealing with childhood delinquency, would raise the fine for illegal advertising from £3000 to around five times the cost of the advertising investment.

"Nous avons décidé de renforcer les sanctions financières contre la publicité pour des offres (de jeux, ndlr) illégales. Ce sera prévu dans le cadre de la loi de prévention de la délinquance. L'objectif est que la sanction aille "jusqu'à cinq fois le montant de l'investissement publicitaire", en général "de l'ordre de 300.000 euros", alors qu'actuellement la sanction pour ce type de publicité "est de 4.500 euros, a-t-il précisé."

Legal threats and the case of Zeturf

In March 2005 Pari Mutuel Urbain threatened to take a number of online bookmakers, including Sportingbet, Bet and Win and Mr Bookmaker (now Unibet) to court for violating French gambling law. A spokesperson for the PMU, Francoise Toussaint, was quoted at the time as saying;

"These bookmakers are breaking the law of 1891. What they are doing is illegal. We are launching legal proceedings against them...They have recently launched French internet sites on which they offer odds on a range of French sporting events, including horse races and football matches."

In July 8 2005, the Maltese online bookmaker Zeturf was ordered by le tribunal de grande instance de Paris to stop accepting bets on French horse racing. The company filed an appeal against the interim order on July 22, and, on September 9 lodged a complaint against France and the PMU with the EU Commission.

On 4 January 2006, however, the Appeal Court of Paris, once more found in favour of the Groupment d'Internet Economique Pari Mutuel Urbain (PMU), and accordingly it increased the fine imposed on Zeturf for non-compliance to €50,000 (Lm21,500) per day.

On 29 September 2006 the French Professional Football League (La Ligue de football professionnel) announced that it had banned its clubs from advertising any form of gambling on their shirts or in their stadiums. BWIN currently sponsor Monaco, 888 recently struck a two year shirt sponsorship deal with Toulouse, whilst Gamebookers owned by PartyGaming have a similar deal with Nantes.

On 27 February 2007, 888 PLC issued the following statement to the London Stock Exchange;

"888 is aware of potential press speculation with regard to its French activities.888 confirms that its non-executive director and former Chief Executive Officer, John Anderson, has been asked to attend an interview with the French authorities. 888 is in consultation with its legal advisers with regards to this inquiry and further announcements will be made in due course if appropriate."

On the same day The Guardian newspaper reported that; "PartyGaming, the online gambling group, quietly closed its website to French customers last Friday without telling investors. Just three days later one of the firm's largest shareholders sold 123 million shares.....The company's closure to French customers came on the day letters were received by online operators requesting executives attend interviews in France."

In June 2007 the PMU won a case before the Tribunal de Grande Instance in Paris, with the Court ordering a company called Eturf to stop offering information on French horse races through its Web site and fining the company €120,000 into the bargain.

In support of the French gambling monopoly

The International Federation of Horseracing Authorities, which has as its chairman, the head of France Galop, Louis Romanet has consistently come out in support of the French gambling monopoly. In repsonse to the judgement of le tribunal de grande instance de Paris against Zeturf, the organisation issued the following statement;

"The International Federation of Horseracing Authorities welcomes the judge's reading and believes that operators and jurisdictions must respect the jurisdictional integrity of other countries. Malta, that forbids its own citizen to bet online, encourages the establishment of online gaming operators that target foreign consumers. As online gaming through foreign operators is forbidden in most countries in the world, the Maltese policy is more than questionable. The IFHA has therefore filed a complaint with the European Commission against Malta for not respecting EU law. According to EU law, a Member State must respect the laws of another Member State in areas where the EU has not yet harmonised legislation, such as gambling."

On a more topical note, considering the link between BWIN and Monacco football club, Maurits Bruggink, the IFHA's Executive Director, recently stated at the European Gambling Forum in Brussels;

"On the other hand, the enforcement authorities in many racing nations are not acting sufficiently vigorous. Why for example do many countries that prohibit online gambling through unauthorised betting websites still allow for these same websites to advertise on their soil? Look for example at all the football teams that play matches around Europe with shirt advertising for gambling sites."

Jacques Toubon, a right wing Member of the European Parliament for the Île-de-France, and a member of the UMP party is also a strong advocate for the continuation of the French gambling monopoly.

Toubon was highly critical of the European Commission's decision to farm out a report on the European gambling industry to the Swiss Institute of Comparative Law and the Centre for the Study of Gambling in Salford, Manchester;

"In 2004, the Commission awarded a contract to the Swiss Institute of Comparative Law (ISDC) for a study on gambling services in the internal market. The ISDC has sub-contracted out part of that study to a UK university the Centre for the Study of Gambling (Manchester) which apparently receives funding from bookmakers. There are also doubts over the independence of the ISDC itself, the financial viability of which depends on orders placed by those involved in the gambling sector. This economic connection would seem to constitute a de facto conflict of interest that could cast doubt on the validity of the report's conclusions. In view of the indisputable impact that the study will have on the rules governing the gambling sector in the future, what steps does the Commission intend to take to ensure that the study is objective, and what guarantees to that effect can it give to all those involved in the gambling sector in Europe?"

At a recent gambling industry conference Toubon let his feelings as regards the European Commission be clearly known;

"It seems in terms of a harmonisation, it is a contest between the European commission and British bookmakers versus European parliament member states' parliaments and the rest of the world, especially the USA."

Whither Gambelli? Whither Placanica?

In the wake of the ECJ's judgement in Gambelli, restrictions against private betting operators are only justified if they reflect a genuine concern to bring about a diminution in gambling opportunities. Moreover, any restrictions that are imposed on such operators, must be suitable to attain the alleged public interest objective but they must not go beyond what is necessary to attain it. It is not permissable to impose restrictions, purely on the basis of preventing a diminution or reduction of tax revenue or, because of an inherent need to finance social activities.

The judgement in Placanica expressly states that a Member State may not apply a criminal penalty for failure to complete an administrative formality where, in breach of Community law, such completion is refused or rendered impossible by that Member State. So, where a country's gambling laws are inconsistent with European law, that country may not resort to criminal sanctions against private gambling operators who target that country.

Second, the judgement stated that where a country's gambling laws do not adhere to the strict guidelines now laid down in EU case law, it is not permitted to prohibit from its betting and gaming sector companies that are listed on Europe's stock markets. So, where a country continues to flaunt EU gambling law, through, for example, the blatant advertising of gambling services, that country is not entitled to exclude the llikes of BWIN, Ladbrokes, Power Leisure, William Hill and Sportingbet from operating in its market.

Placanica asserts that a country may not restrict the number of licences available in its market, unless it is itself genuinely engaged in bringing about a dimunition in gambling opportunities within its borders.

The PMU

Changes to the Horse Racing Act in 1930 to allow off-course betting, gave rise to the Pari-Mutuel-Urbain (PMU), an economic interest group that includes amongst its members France Galop (flat racing) and Societe du Cheval Francais (trotting). The PMU's monopoly operation is regulated by the French Treasury and the Ministry of Agriculture.

The PMU's 2005 annual report openly celebrates new product launches, the opening of new distribution channels, and, the healthy growth rates achieved by exisiting product's within the company's portfolio;

"The major event of 2005 was the launch of the New Quinté+. This flagship bet is popular among punters as it allows them to win more money, more often. Its success reflects that of the company as a whole. Other marking factors are the healthy growth of the Multi, the dynamism of the Pariez spOt and the fusion of the Couplé/Jumelé and Trio/Trio Hippodrome bets.

Turnover through the PMU's internet channel grew by 75% in 2005 to 250 million euros, with the number of active players increasing by 50% to 120000. In the PMU's own words the internet channel "attracts new customers, allured by the ease of use...."

In the financial year ending December 2004 the PMU spent 23.1 million euros on "Publicite" ; in the year to December 2005, this figure had risen to 28.2 million euros, an increase of 22%. And, it was obviously money well spent, for of the 6.5 million bettors the PMU attracted over the last 3 years, 1.5 million were first time customers.

The PMU's 2005 annual report also celebrates a significant milestone achieved in terms of turnover, salutes promotional efforts and heralds the launch of a mobile betting service;

"The activity of the PMU continued to progress in 2005..... Betting turnover reached the new psychological threshold of 8 billion euros, an increase of 6 % compared with 2004.....The promotion of the PMU brand was reinforced through our promotional participation in many major events; le Tour de France, Roland-Garros, la Foire de Paris.....Towards the end of 2005 the PMU signed a contract to become the offical partner of the French Rugby league for three years, ensuring publicity at all 429 league matches."

A notable incident at this year's Tour de France saw the Australian sprinter Robbie McEwen openly criticise the dangers of giant green cardboard hands, bearing the PMU logo, that were being waved from the crowd.

In 2001 the tender to manage horse racing at Madrid's Hipodromo de la Zarzuela, was awarded to, and then taken away from Equalia, a joint-venture between Antena 3 TV and the PMU. It was alleged that the government panel had concluded that the PMU's real interest was to market French betting in Spain over and above the rehabilitation and management of the racecourse.

Between 2001 and 2006 turnover at the PMU increased by a healthy 30%; 2001 + 7%; 2002 +4%; 2003 +9%; 2004 +8%; 2005 +6%.

Francaise des Jeux

La Francaise des Jeux, in which the French state still holds a 72% share was granted a licence to operate lottery-style and sports betting games in France in 1978, but, since 2001, the company has expanded its offering to include a range of online casino games.

In 2005 La Française des Jeux reported turnover of 8.9 billion euros, mainly attributable to the growth of the Euro-wide online lottery Euro Millions, where turnover came in at 869 M€ compared with 587 M€ in 2004 - an increase of 48%.

A further factor driving growth during the year was the strengthening of the company's distribution network with the addition of 1,200 new draw-game points of sale.

As with the PMU, Francaise des Jeux has enjoyed significant turnover growth over the past five years (27%).

An extract from a press release issued by Francaise des Jeux, highlights a number of measures clearly designed to stimulate gambling activity;

"The turnover in the scratch-card range (3.5 billion euros), which is particularly sensitive to the economic climate, was again subject to favourable development, with 1.5% growth. This result is due particularly to the successful launch of a new gaming concept in the last quarter: 7EXTRA. Furthermore, the sports forecast games displayed a turnover of 283 million euros (compared with 221 million in 2004). This growth was due to the success of Loto Foot 7&15 and the changes made to Cote & Match with its formula 2/2 and the setting up of the single-odds bet. The game systems operated by the multimedia channel (Loto, Euro Millions, scratch card games and sports forecasts) continue to develop. They displayed a turnover of 68 million euros (compared with 29 in 2004), and represent 0.8% of the company's overall turnover."

The total number of players registered on the Française des Jeux internet site more than doubled in 2005, with the number of weekly players rising to 60,000 compared with 22400 the previous year.

On the very sensitive subject of advertising, the Française des Jeux's website states;

"Today, 78% of French people have heard of at least one La Française des Jeux product, which they associate with dreams, emotion and creativity. This exceptional level of awareness owes a great deal to the retail network, but also to advertising, which has always been an effective tool for promoting the company's image among players. Light-hearted, humorous and contemporary, La Française des Jeux's commercials are very popular with the public."

No mention, alas, of the following advertisement for Super Lotto, with its enticing mention of prizes to the value 15 million euros.

In a discussion of the sports-betting segment, which generates 3.2% of the company's sales, the company says that; "as demand is strong and there is a real threat from illegal gaming, the company intends to expand its business in this market segment. The launch of Cote & Match, a fixed-odds game, is a significant innovation in its offering this area." (The company's French website when discussing the launch of this new product speaks in terms of "la nécessité de lutter contre le jeu illégal.").

Since 1997 La Française des Jeux has also sponsored a professional cycling team that participates in the Tour de France. This programme has, according to the company's website, allowed it to develop a scratch card called "Sprint", which was launched in June 2001.

Keeping the onland casinos offline

A notable feature of the French gambling market has been the refusal of the French Government to allow land based casino operators, such as Groupe Partouche, Groupe Lucien Barriere and Moloflor Loisors to lauch online products, whilst giving the green light to Francaise des Jeux to do so.

This seemingly inequitable decision led to a syndicate of said casinos, Syndicat des Casinos Modernes, to file a complaint with the European Commission against "La Francaise des Jeux" on the grounds that the company is guilty of abusing a dominant market position, per Article 87 (1) of the EU Treaty which stipulates that;

"Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.

The European Court of Justice has also seperately ruled that any measure that confers on an enterprise an economic or financial advantage that it would not otherwise enjoy, must be deemed to be state aid.

On 15 March 2007 le tribunal correctionnel de Nanterre sentenced Patrick Partouche, the Chairman of the Executive Board of Groupe Partouche, to a suspended prison sentence and a 40.000 euros fine for lending his name to an online poker website. Two website administrators also received suspended prison sentences and fines, whilst Partouche International was fined 150.000 euros. The Court ruled that private operators in the French market were not allowed to offer online gambling services, seemingly, regardless of where those services were hosted.

The banning of Team Unibet

In April 2007 the European Commission criticised the French ASO for banning Team Unibet.com from the Tour de France, the Paris-Roubaix and the Belgian one-day races Liege-Bastogne-Liege and the Walloon Arrow.

European Commission spokesperson Oliver Drewes was quoted as saying;

"The whole matter is violating the rules of the internal market," "No team can be excluded from another country just because you don't like the sponsor."

And in a letter to Unibet the EU Internal Market Commissioner Charlie McCreevy supported the notion that France was employing twisted logic in order to uphold its monopolistic claims on the gambling industry.

“The consistency of the French approach is highly questionable, given that other teams sponsored by gaming operators in France, such as the Française des Jeux, are permitted to participate and given that the main sponsor of the event is in fact a gaming operator, the PMU. All this is in breach of internal market rules.”

The case for the defence

In a recent interview with the Financial Times, Christophe Blanchard-Dignac, chief executive of Francaise des Jeux, put forward three notions to justify his company's monopoly position. Firstly, he said that FDJ does not sponsor football clubs, viewing such as representing a conflict of interest (Since the end of the summer of 2001, La Française des Jeux and Loto Foot have been partners with France Télévision in a football programme Foot 3.). Second, the FDJ website imposes a weekly maximum (€500) on France Nationals, something that most of the illegal sports betting websites do not do. Thirdly, there is no overlap as regards the products being offered by the PMU, the FDU and the online casinos, thus minimising as best as possible gambling activity.

Blanchard-Dignac was not asked for a comment as regards the following quip taken from within his company's website; "Il répond ainsi à l'objectif de La Française des Jeux d'élargir son bassin de joueurs......."

A reasoned opinion from Brussels

Following our examination of the commercial activities of the PMU and Francaise des Jeux, it would be difficult to see how those that manage these organisations could ever convince anybody that said activities reflect a genuine concern to bring about a diminution in gambling opportunities. Accordingly, in the absence of such a desire one is left to contend that the gambling industry in France is not being regulated in a non-discriminatory, proportionate and consistent manner.

In June 2007 it became clear that the French authorities had failed in their battle to convince Irishman Charlie McCreevy, that they were operating a restrictive gambling policy, concerned with bringing about a dimunition in gambling opportunities within their borders.

The European Commission addressed a "opinion reasoned" to France, asking them to modify existing state legislation. If France fails to comply it will be dragged kicking and screaming before the Court of Justice in Luxembourg. Sweden and Greece will also receive a reasoned opinion. Austria, for now, has been saved. Good news indeed for the boys at Zeturf.

On July 10, the PMU's case was undermined further when the Cour de Cassation, overturned the ban which had sought to prevent Zeturf from offering online betting on horse races taking place in France. The case will now be sent back before the Appeal Court of Paris, which in January 2006 had found in favour of the Groupment d'Internet Economique Pari Mutuel Urbain (PMU), and increased the fine imposed on Zeturf for non-compliance to €50,000 (Lm21,500) per day. In its judgement, the Cour de Cassation said that there was some doubt whether the ban on Zeturf was legitimate in the light of the European Court's rulings in Gambelli and Placanica. Most specifically, the Court said that the onus was on the Appeal Court to determine whether the French government was infact upholding the PMU's monopoly simply to increase state revenues.

Open Betting Markets French Style

According to France's Minister for Budget and Public Accounts, Eric Woerth; the French government "is not hostile to the notion of opening up its sports betting markets to competition, provided that such an opening "is controlled." But, lest one should reach for the champagne, it should be noted that Woerth does not envisage some sort of free for all, with the likes of Ladbrokes, William Hill and Paddy Power opening up betting shops on the The Champs-Élysées, and setting up pitches at Longchamp, Auteuil, Chantilly, Deauville, Maisons-Laffitte and Saint-Cloud. No, what the French model actually envisages, is the opening up of the French betting market to online betting companies that are prepared to be licenced in France, and to be taxed on a comparable basis to the way in which the state monopolist PMU is currently taxed. Perhaps, not surprisingly, there are likely to be few takers, and it remains to be seen whether the European Commission will be fobbed off by such protectionist nonsense................

On October 22 2007, Petter Nylander, the CEO of online gaming company Unibet, was detained by Dutch authorities after checking in to a flight to the UK. The background for his detention is the proceedings filed in 2006 by the French lottery monopoly Française des Jeux and horse betting monopoly PMU against Unibet, alleging breach of the French national laws from 1836 and 1891 protecting those State-owned monopolies.

Whilst the arrest also serves as a warning shot across the bow of those other online betting companies that have continued to flaunt French gambling law, it would seem to run somewhat contrary to the spirit of the European Court's recent ruling in Pacanica.

Accordingly, it was no surprise to hear the brains at the European Commission have something to say on the matter; ""Quelqu'un a été arrêté alors qu'il pourrait très bien être innocent selon le droit européen", a déclaré Oliver Drewes, porte-parole du commissaire au Marché intérieur, Charlie McCreevy."

The French minister for European Affais Jean-Pierre Jouyet declared that the arrest conformed with the laws of the European market; "C'est parfaitement normal à ce stade puisqu'il n'y a pas de marche intérieur pour les paris", a-t-il déclaré.

The story of French gambling laws has descended into something of a French farce. Nonetheless, it is anticipated that France will have reached agreement with Brussels by the spring of 2008; however, there remains significant doubt whether France would be prepared to allow either betting exchanges or fixed odds betting on horse racing.

On 18 January 2008 the Court of Appeal of Versailles announced that it would request additional information as to whether French gambling laws were compatible with the decisions reached by the European Court in the cases of Gambelli and Placanica. The Court's decision centred around a request by Didier Dewyn, the former chief executive of Mr Bookmaker, to have proceedings against him for organising an "illicit lottery" and "clandestine betting on horse races" thrown out.

To cite this article: Niall.A.O'Connor (2008) "French Gambling Law...Plus ça change?". (Bettingmarket.Com).