Bwin loses EU Court battle: now what?

Bwin Interactive Entertainment AG, an online bookmaker and a significant source of employment in Gibraltar, recently lost an appeal against Portugal’s sports-betting monopoly that could impact online wagering in Europe. A Bloomberg report said that the ruling by the European Court of Justice could affect other pending cases including a suit by Ladbrokes Plc against the Netherlands. The EU’s highest court said restrictions such as in Portugal may be justified to meet certain policy goals, including the fight against crime, as long as they aren’t discriminatory and don’t go beyond what is necessary to achieve their aim. The Court of Justice said that restrictions may be necessary for Internet gaming because of missing EU rules. Bwin stock  fell as much as 9.5 percent after the ruling.>

Thomas Talos, a lawyer for Vienna-based Bwin said the case shows there needs to be a political solution to disparate online gambling rules within the 27-nation EU. The ruling is a “clear message to politicians to finally provide a regulatory framework for online gaming,” Talos said after the ruling. “Market reality shows that an Internet monopoly in the 21st century does not work.”
The ruling is a “clear message to politicians to finally provide a regulatory framework for online gaming,” said Talos. “Market reality shows that an Internet monopoly in the 21st century does not work.”
“The verdict is a major setback,” Alfred Reisenberger, an analyst at CA Cheuvreuxin Vienna said by telephone. “Bwin has lost a battle, not the entire war. They will continue to fight and in the long term they will be successful.”
The rapid pace of technological development has created a “legal vacuum” for Internet gaming, Norbert Teufelberger, co- chief executive officer of Bwin, said in a statement, referring to more than 12 cases pending at the EU’s top court and lawsuits that the European Commission is planning against countries.
The Commission, which has threatened to sue France, Germany, Austria and at least seven other countries over gambling restrictions, is “working towards a solution” in some cases, including those against France and Austria, said Oliver Drewes, a spokesman for the Brussels-based commission.
The Remote Gambling Association, whose members include Ladbrokes, Betfair Ltd. and 888 Holdings Plc, said the ruling’s scope was too narrow to apply to other cases.
“Nothing in it should stop the European Commission from pursuing ongoing infringement proceedings,” said Clive Hawkswood, the association’s chief executive, in a statement. EU countries shouldn’t “construe this ruling as permission to enact protectionist regulations.”
Peter Szopo, an analyst at Sal. Oppenheim Jr. & Cie, told clients in a note today that the "the ECJ decision is worse than we expected." He added ",The investment case for online operators such as Bwin has now to focus on the market potential in states which are expected to introduce a more liberal regime.".
The decision is a “great victory,” said Friedrich Stickler, president of European Lotteries, in a statement. It “explicitly states that governments can prohibit commercial online gambling operators such as Bwin from offering games of chance via the Internet.”
In another, allied case, Portugal’s gambling authority had fined a unit of Bwin €74,500 for concluding an August 2005 sponsorship deal with a Portuguese football league. The agency in Lisbon said the deal breached the nation’s exclusive gambling rights. Santa Casa, the agency in Portugal, in an e-mailed statement said the decision defends the public interest and the legality of the Portuguese legislation. A Portuguese court, which had sought the EU tribunal’s guidance in the dispute, will give a final ruling in line with today’s judgment.
Bwin sponsors an extensive list of sports activities, ranging from events to teams, including Spain's Real Madrid.