Online Gambling, France Faces Legal Challenges

The latest blow dealt by its own Cour de Cassation, France's top court. In a ruling handed down last month, the court overturned a decision that had previously prohibited a Maltese rival from offering online betting related with horse racing in France. The definitive fate of the Maltese company Zeturf may take in excess of a year to be identified, as it must now work back through the court of appeals for a rehearing. The decision handed down by France's highest court will unquestionably have immediate consequences as regards to France's historically voracious actions against online gambling competitors as well as the EU's pending legal action against France.

In late June, the European Commission issued a "reasoned decision" against France, expressly citing its ban on online gambling advertising for all companies except France's state-owned monopolies, the French Lottery, Francaise des Jeux and PMU.

In 2003, the European Court of Justice confirmed that gambling was a service that fell under the EU's articles to Freedom of Establishment and Freedom to Provide Services. Under the EU treaty, a member state must allow other European Union member states the same right to provide online gaming services as the member country allows its owned state-owned monopolies. In its recent decision, the European Commission threatened legal action by its European Court of Justice should France not change its laws concerning foreign-based gambling advertising. France rejected the EU's counsel, declaring they were ready to defend their policies in the EU's highest court. That was, of course, before the decision handed down by France's highest court.

Over the past year, France has vehemently imposed its laws concerning online gambling competition. The most recent example, and one the European Union explicitly cited, was France's banning a cycling team from the Tour de France because the online site Unibet sponsored it. The Cour de Cassation case was a result of France threatening the online company Zeturf with charge of 68,000 euros a day should they not suspend operations by January 4, 2007. In March 2007, France penalized Patrick Partouche 40,000 euros and his company, Group Partouche, 150,000 euros for violating France's laws relating to online gaming. Additionaly in September 2006, France detained two executives of the online gambling company Bwin for "organizing illegal bets online" and "advertising online betting."

France's online gaming laws and inclination for prosecution predisposed a number of enterprises to withdraw from French terrain. The World Poker Tour and European Poker Tour had both hosted successful poker tournaments in France in the past, but both withdrew their events this year. PartyGaming withdrew from the French market in February of this year.

France appears to be between the Cour de Cassation's rock and the EU's hard place, but a abrupt turn around allowing France to open its online gambling to competition, may not be impending. France has defended its monopolistic gambling policies using the premise of protecting public interests. If forced to open its market, it would without a doubt be within a extremely regulated structure. France also has a number of options that do not include entirely opening up the online gambling market. If they ended the state-run monopolies, France could ban all online operations and be in compliance with both national and EU laws. The EU has stated that its goals pertaining to online gaming are to encourage fair competition anywhere it is present, not to force legalization.

It is likely France would inquire about a narrower legal definition of gambling services and competition; one that would necessitate them to open up specific types of gambling allowed by their state monopolies. It is also possible they may just pay the price as a consequence fight what appears to be an unequivocally steeper more difficult uphill battle. While France may have a number of paths to choose from, the recent decisions by the Cour de Cassation and the EU are forcing them to choose sooner, rather than later