Following similar US events, in France the ceos of online gambling group Bwin were arrested and bailed just before announcing a sponsorship deal with AS Monaco football club. Then the European Commission announced an investigation of the same laws on grounds they unfairly advantaged French gambling monopolies.
Which future for the monopolies of the Française des Jeux (FDJ) and of the Pari Mutuel Urbain (PMU) on gambling in France?
Following their recent arrest and release on bail, the leaders of the online gambling group Bwin could face up to three years in jail and fines of up to € 100.000 for violation of the sport betting monopolies of the FDJ and the PMU.
But not if the European Commission's suspicions are justified. Just three weeks after the Bwin arrests, the Commission announced it was investigating these self same laws, as well as similar laws of Austria and Italy. The pretext? The laws under scrutiny potentially impeded the Single Market by conferring unfair advantage on indigenous gambling businesses.
But back at the Bwin case, the arrests arose particularly out of Bwin ads encouraging French net surfers to bet on line and its sponsorship of French Football Clubs such as AS Monaco. The Bwin website claims Bwin to be a world leader among sport betting sites, accepting bets on football, tennis, basketball matches and also on horse and Formula 1 races.
French duopoly files complaint
The FDJ and the PMU filed complaints of prohibited lotteries and prohibited advertising for lotteries. Indeed, on French territory, betting and gambling are forbidden and the sole authorized games are those run by the FDJ and the PMU, who benefit from legal monopolies and whose capital (72%) is owned by the French State. The FDJ and the PMU are the only ones able to run and to promote betting and gambling games in France. Two of the missions entrusted to the FDJ and to the PMU by the French government are to promote responsible gaming and to operate transparently.
Bwin took the risk to operate on French territory because there is an intense legal discussion on the matter to know if the French monopolies granted to the FDJ and the PMU are (still) compatible with European law and the principles of free provision of services and of free competition, throughout the Common Market.
In this field, two exceptions are generally called upon to defend such monopolies: the protection of the consumer (risk of addiction) and public order (links with organized crime).
ECJ ruling allows some restrictions
In 1994, the European Court of Justice ruled that such grounds were able to justify some restrictions on gambling and betting and even their prohibition on the territory of an EU State. This reasoning was adopted in 1997 by the French High Court to ban the advertising of gambling games by English bookmakers on French territory.
In 2003, the European Court of Justice handed down an important decision stating that the ground of consumer protection could not be evoked in a theoretical way and that the State must prove that he really seeks to protect the consumer.
But, everybody knows that the FDJ and the PMU now engage in very aggressive marketing that incites the consumer to bet money on their games. There are always about thirty new gambling and betting concepts, designed to fit as closely as possible the expectations of the consumer and the trends of the market. The FDJ's marketing also targets minors by proposing a funny game called "Dédé the little pig" or by launching a "Star Wars" scratch card at the time the movie is on screen.
Multi channel marketing by state monopolies
The FDJ and the PMU advertise their games by any means (press, TV, Internet, and so on). Furthermore, alongside its media communications, the FDJ chose to become involved in sport sponsoring. Thus, since 1997, the FDJ has been supporting a professional cycling team that participates every year in the Tour de France, among other races. This has enabled the FDJ to launch a scratch card called "Sprint" in June 2001.
With sales of € 8.93 billion in 2005, the FDJ is a leader among world lotteries. Draw games amount to 57.5% of sales and € 5.13 billion, scratch games to 39.3% of sales and € 3.51 billion and Sport betting games to 3.2% of sales and € 0.28 billion (FDJ Sources).
State gambling monopolies must be handled with care
So, even if the "Bolkestein directive" voted by the European Parliament at the end of 2005 excludes gambling and betting from the field of free competition, each State must be careful that the monopolies that they have granted to some companies still aim at protecting the consumer and not at making profits.
Bwin considers that it is not the case anymore with the French monopolies and declared that she intended to sue the FDJ and the PMU before the European Court of Justice for violation of the European principles.
For its part, the French government intends to strengthen the financial penalties against advertising for illegal gambling and betting games, but is the end of the line in sight for FDJ and PMU following Bwin's impending challenge and the recently announced European Commission investigation? .
Time will tell.
