Joanne Fenech | Wednesday, 18 March 2009

France will grant online betting licenses in 2010. Is this the way forward?

Joanne Fenech

Last week, various international publications gave coverage to the news that the French Treasury Minister Eric Woerth made an official public release confirming that France will open its gambling market to competition and begin to grant online betting licenses in 2010.
The bill will be submitted to the French Ministers’ Council at the beginning of April 2009 in order to be passed and signed into law by the French Parliament before the summer 2009.
It all started in June 2007 when the European Commission addressed the French government an opinion with regards to the pending proceedings before French courts against illegal online gambling websites. This included the threat of a lawsuit, and an end to state gambling monopolies to comply with EU competition laws. This opinion was undoubtedly the way chosen by the European Union to urge the French government to introduce fair-trading and competition on the online gambling market.
The French government took this issue very seriously and conducted a serious of studies, consultations and reports in this regard. Finally in 2008 a draft bill related to the opening of the online gambling market was issued, based on the recommendations of the report released in 2008 by Bruno Durieux.
One argues is this a step in the right direction? Will this opening of the French online gambling market create further implications to the present licensed operators in an EU country?
What is clearly stated is that this is a controlled opening and proper legislative framework will be in force to affect this. In a nutshell: An independent regulation authority will be created; It will be entitled to grant free licences renewable five-year periods; The number of licenses to be granted will not be limited; The authority shall also be responsible for the creation of the licence specifications, detailing the terms of use of said licence; These specifications shall for example specify that operators may operate from any country, except from a tax heaven; Operators will also be compelled to appoint moderators and to be affiliated to an accredited entity aiming at preventing gambling addiction; users will be compelled to have a bank account in France; lastly, this regulation authority will be responsible, and will be granted the necessary tools and resources, to enforce these specifications and the legal framework in general; as to online gambling taxation operators will be taxed on the stakes up to 7.5 per cent for horse races and sports betting and up to 2 per cent for poker; the fiscal income collected will partly finance the prevention of gambling addiction and will also contribute to the financing of sport industry.
The main aim is to have fair-trading and competition in the online gambling market, in order to meet the expectations of the French citizens. Also to ensure more effective protection of public order rules and minors.
But the real big issue addressed in bold seem to be the hunt of illegal gambling and betting websites. It was reiterated by Mr Woerth that the draft bill confirms the government’s will to hunt illegal gambling and betting websites. A leading French law firm Ichay & Mullenex Avocats commented that pursuant to the new bill, the latter will, inter alia, not be allowed to carry out sponsoring, their financial transactions could be locked, the operation of their websites could be hindered and they will not be allowed to advertise (breach of such ban may be punished with an fine equal to four times the amount of the advertising expenses at stake). Moreover illegal online gambling can be convicted up to 3 years imprisonment and a fine of €45,000. And up to 7 years imprisonment and a fine of € 100,000 if committed by an organised gang.
A few unanswered questions during the mentioned press conference surely are creating doubt. Mr Woerth has confirmed that France will not recognize licences issued by other Member States. One may question, how can the French Authorities declare gambling websites as illegal when these have been declared legal in other Member States?
Mr Woerth has stated that this bill has not been submitted to the European Union yet, although the latter had made it clear that it hoped for the mutual recognition of licences granted by Member States.
Undoubtedly there is still a lot to accomplish in order to ensure the opening in early January 2010.

The author represents PKF Malta, a member of PKF International Limited, an association of legally independent member firms



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18 March 2009

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