Press Release
Free movement of services: Commission inquires into restrictions on the provision of certain gambling services in Sweden

The European Commission has decided to send an official request for information on national legislation restricting the supply and promotion of certain gambling services to Sweden. In April 2006 the Commission sent a similar request for information to Sweden concerning sports betting (IP/06/436). In this new case the Commission wishes to verify whether all national measures relating to poker games and tournaments are consistent and therefore compatible with Article 49 of the EC Treaty, which guarantees the free movement of services. The Commission’s decision relates only to the compatibility of the national measures in question with existing EU law. It does not touch upon the existence of monopolies as such, or on national lotteries. Nor does it have any implications for the liberalisation of the market for gambling services generally, or for the entitlement of Member States to seek to protect the general interest, so long as this is done in a manner consistent with EU law i.e. that any measures are necessary, proportionate and non-discriminatory. The letter of formal notice is the first step in an infringement procedure under Article 226 of the EC Treaty. Sweden has two months in which to respond. The Commission hopes that the answer it receives will lead to an early and satisfactory resolution of the matter.

This latest inquiry into Swedish national gambling restrictions focuses on various issues relating to poker games and tournaments.

Poker games and tournaments are today offered in Swedish international casinos and, since 2006, the state-owned company also offers such services online on a large scale. However, the national legislation prevents online poker games and tournaments offered by operators licensed and regulated in other Member States. Also, it provides for restrictions and criminal sanctions on the promotion both of online poker offered by a licensed service provider in another Member State, and of poker organised within licensed premises in another Member State.

The European Court of Justice has previously stated that any restrictions which seek to protect general interest objectives, such as the protection of consumers, must be “consistent and systematic” in how they seek to limit betting activities. A Member State cannot invoke the need to restrict its citizens’ access to betting services if at the same time it incites and encourages them to participate in state lotteries, games of chance or betting which benefits the state’s finances.

(Source)

Press Release
Free movement of services: Commission inquires into restrictions on gambling services in Germany

The European Commission has decided to send to Germany an official request for information on national legislation restricting the supply of gambling services. The Commission wishes to verify whether the measures in question are compatible with Articles 43, 49 and 56 of the EC Treaty. This decision relates only to the compatibility of the national measures in question with existing EU law. It does not have any implications for the liberalisation of the market for gambling services generally, or for the entitlement of Member States to seek to protect the general interest, so long as this is done in a manner consistent with EU law i.e. that any measures are necessary, proportionate and non-discriminatory. The letter of formal notice is the first step in an infringement procedure under Article 226 of the EC Treaty. Germany has two months in which to respond. The Commission hopes that the answers it receives will lead to an early and satisfactory resolution of the matter.

This new inquiry focuses on a number of provisions of the new legislation which entered into force on 1.1.2008. Some of the key restrictions that are questioned in terms of their compatibility with the EC Treaty’s Internal Market provisions are as follows: the total prohibition of games of chance on the Internet; notably sports betting, on which the Commission sent to Germany in March 2007 a detailed opinion; advertising restrictions on TV, on the Internet or on jerseys or billboards; and the prohibition on financial institutions to process and execute payments relating to unauthorised games of chance. In addition, questions are raised regarding the authorisation regime to be granted to intermediaries as well as the criminal sanctions or administrative fines provided for in cases of organisation, advertising and participation in on-line games of chance.

However, it should be noted that in Germany horse race betting on the Internet is not prohibited and slot machines have been widely expanded. Moreover, advertising of games of chance by mail, in the press and on radio is still permitted.

The European Court of Justice has previously stated that any restrictions which seek to protect general interest objectives, such as the protection of consumers, must be “consistent and systematic” in how they seek to limit activities. A Member State cannot invoke the need to restrict its citizens’ access to these services if at the same time it encourages them to participate in State games of chance.

The Commission decision to inquire into the compatibility of the measures in question is based on complaints made by a number of service providers and on information gathered by Commission staff.

(Source)

Press Release
Regulating Internet Gambling Would Generate Billions in New Revenue for Critical Government Programs
Congressman McDermott Urges Congress to Support Internet Gambling Legislation

(Washington, D.C. – January 31, 2008) A new tax revenue analysis announced by Representative Jim McDermott (D-WA) estimates that regulating Internet gambling would generate between $8.7 billion to $42.8 billion in federal revenues over its first ten years. The findings of the analysis, prepared by PricewaterhouseCoopers, were provided to all Members of Congress by McDermott earlier this week.

“Before us is a tremendous opportunity to protect consumers and recoup billions of dollars that should be collected by the Internal Revenue Service,” said Representative McDermott. “These are revenues that are desperately needed, given that we are at war and face difficulty financing the nation’s priorities.”

Representative McDermott introduced the Internet Gambling Regulation and Tax Enforcement Act (H.R. 2607), which would tax regulated Internet gambling.

“To be clear, these are not mostly new taxes – the bulk of the revenues generated would come from taxes required under existing law,” said McDermott. “This is simply a framework to collect taxes on existing activity that is currently unregulated, unsupervised, and underground.”

The current approach, prohibiting Internet gambling through the Unlawful Internet Gambling Enforcement Act (UIGEA), has proved to be a failure. Notwithstanding the UIGEA prohibition, millions of Americans are still able to gamble online. In addition, proposed rules by the Treasury Department to implement the current prohibitions have been severely criticized by many parties, including the American Bankers Association, Credit Union National Association, Financial Services Roundtable, and other leading financial services companies and groups.

“Instead of this ineffective attempt to prevent adults from gambling over the Internet, we need a more sensible approach to protect consumers and ensure that revenues that now flow offshore stay here in the U.S. and are therefore subject to taxation,” added McDermott. “A new, safer, more sensible approach is needed to regulate Internet gambling and protect consumers.”

McDermott’s legislation functions as a companion bill to the Internet Gambling Regulation and Enforcement Act (H.R. 2046), legislation introduced by Representative Barney Frank (D-MA) which would establish a licensing and enforcement framework for regulated Internet gambling in the U.S. The legislation would allow States to retain full control over the regulation of Internet gambling within their borders, applying additional taxes, protections and limitations as determined necessary and appropriate.

”By prohibiting a popular, recreational activity that many millions enjoy in the comfort of their own homes, the U.S. is forfeiting billions of dollars in revenue needed for critical government programs,” said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. “It is time for Congress to regulate and tax Internet gambling to ensure security controls are in place to protect consumers and capture billions in revenue.”

To read the McDermott letter, please visit: http://www.safeandsecureig.org/media/mcdermottfinanceltr.pdf

To read the PricewaterhouseCoopers analysis, please visit: http://www.safeandsecureig.org/media/taxestimate.pdf

About Safe and Secure Internet Gambling Initiative
The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit www.safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives.