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Following the decision of the South African court on 20 August, online poker and all forms of gambling on Internet are now illegal and strictly prohibited in South Africa.

The GGB Committee – Gauteng Gambling Board – who has been struggling to ban online casinos for some time, was finally successful.

Besides, the Committee also said that any poker room or online casino offering its services in the country would be indictable.

The General Counsel of the GGB took charge of warning the operators: “If they carry on their activities, we will arrest and convict them”.

As a further deterrent to illegal gambling, authorities have insisted that any company violating the court order, would be excluded to apply for a licence in case the government decides to regulate the market.

The online gaming operators and players in South-Africa are now punishable by fines up to 10 million rands (1.36 million dollars), 10 years’ imprisonment or both.

The gambling actors who operate in the country are determined to appeal the decision.

Bwin CEOs, Norbert Teufelberger and Manfred Bodner , have declared in an interview for EGRMagazine.com that PokerStars and Full Tilt are operating “illegally” on the US online gambling market.

Bwin is currently the world’s third strongest poker services provider after PokerStars and Full Tilt and they believe that if they hadn’t withdrawn from the US market in 2006 they would have held the pole position right now.

Teufelberger is of the opinion that those two websites obtained their world-wide power due to their monopoly over the American market. It’s not that they have “premier marketing skills or premier technology”; it is their illegal activity in a very profitable context that renders them so strong against the competition. Otherwise, they will have no other competitive advantage to set them apart from the other online gambling operators.

“It’s not because they have premier marketing skills or premier technology, what they have is hundreds of millions of dollars from what we see as an illegal market. We would expect that once the US regulates, these two companies will not have access to the market, and once that happens we’ll then see who the leader will be. They say they’re not operating illegally but I think they are.”

Teufelberger is almost certain that once the US online gambling market will become deregulated, PokerStars and Full Tilt will no longer be offered a license to operate in the new market. He claims that US licensing authorities are aware of these two sites’ illegal activity and so the question is whether or not they will be prosecuted, let alone withdrawing their licenses.

“I used to be personally licensed and operated in the land-based environment in the US so I know how stringent the US authorities are in their licensing process and I cannot imagine that a company which in the view of the DoJ (Department of Justice) and several state licensing authorities in the US, that acts illegally, will be able or qualify to get a licence. In my view this will be absolutely impossible. What does that mean in the end? I don’t know. They may be prosecuted, they may not be prosecuted”.

The Bwin CEOs are however cautious as there is a probability that PokerStars and Full Tilt will be granted a license in the newly deregulated US market. If this will happen, then pulling out in 2006 will have been their “biggest mistake”.

The British company PartyGaming, worldwide renowned in the online gambling field, has signed a multi-year agreement with French traditional bookmaker PMU (Pari Mutuel Urbain). The latter is the monopolistic operator who organizes horse races betting in France. Now, the new deal enables PMU to operate online poker as well.

“This agreement will come into effect once the PMU and PartyGaming have each received a license allowing them to offer online poker in France”, says a statement from PMU.

Both parts hope this agreement will bring them mutual benefits. PartyGaming, which runs the largest online poker room – PartyPoker – is the first online gambling company listed on London Stock Exchange. The agreement provides that “the PMU will benefit from the PartyGaming poker platform services and will ensure the commercialization of its poker offering and the management of its customers”. However, PartyGaming retains the possibility of getting a French license under its own name.

The main objective of the arrangement, as put forward by the PartyGaming’s Chief Executive Jim Ryan, is “to have the largest poker liquidity pool in France”. Similar B2B agreements have been signed in Italy and Denmark.

“Today’s agreement with PMU is consistent with our stated strategy of securing a small number of high value partners in regulated markets”, said Jim Ryan. “PMU is widely recognized as one of Europe’s leading betting businesses and we look forward to providing them with a world class poker service”, concluded Ryan.

The news on the PartyGaming-PMU partnership was nevertheless quite surprising. Firstly, because the partner chosen by the PMU was PartyGaming while Paddy Power seemed better placed. Indeed, the Irish operator has an online poker platform which could have been added to the existing agreement between the two companies. Secondly, because, as we remarked, this new agreement with PartyGaming is not exclusive, meaning that PartyGaming will have the right to enter the French market with a concurrent offer.

As a result of its recent agreements, PartyGaming is expected to improve its fiscal performances. The takeover of the WPT brand gives more reason to believe in a brilliant future for the company.

Online casino players interested in the liberalization of all European gaming markets now have a great opportunity to voice theirs demands. They are encouraged to support a new campaign, named “Right2Bet”, which asks the EU to impose to member states more liberal gambling laws.

The initiative “Right2Bet” seeks to fight against state monopolies on gambling. Initially funded by Betfair, the campaign brings together “European citizens claiming their right to freedom of choice”.

For the moment, the plan regards Germany, Finland, Sweden and Netherlands and is popularised as a petition. Its subscribers demand “the right to use Internet to bet in any country of the European Union and the right to choose gambling sites run by operators licensed in any member state”. The petition also asks that “further steps should be taken to remove barriers that prevent European consumers from exercising their right to purchase services in other European countries.”

The Right2Bet campaign has its legal basis in the “Citizens Intitaive” section of the Lisbon Treaty. Under this section, if a petition is signed by one million citizens, it will be submitted to the European Parliament. Those wishing to freely play online within EU borders hope to influence in this way the political decisions that affect this area. The petition has so far raised about 10.000 signatures.

The campaign’s promoters followed the example of a similar project in US, initiated by Poker Players Alliance.

UK gaming companies have been hardly hit by the economic downturn. Some big names of the online industry have even chosen to move out from UK and establish operation servers in other jurisdictions, with more lenient taxation systems.

In order to counter the slowdown in British industry, the national operators are turning to the closest markets likely to be soon regulated. Party Gaming, William Hill or 888 Holdings could take a breath of fresh air  if they extend their operations in France.

A bill on French market opening will be examined by the nationalParliament on 7 and 8 October. After the law enter into force, local and foreign operators wishing to run poker or sports betting sites will be able to apply for a license to the competent authority.

Jim Ryan, the CEO of PartyGaming manifested big interest for this “great opportunity”. According to the consultancy company H2 Gambling Capital, sales in online gambling will be more than doubled in 2010, the growth being guaranteed by the legal framework. “France is the single largest market on the horizon,” nods Simon Holliday, Head of H2.

France decided to open its market after the authorities had realized that the prohibitory legislation encouraged the illegal offers. This was also a positive response to the pressures made by the European Commission. The EC has several times cautioned UE member states to reform gambling legislation and open their markets. In numerous European countries, the prohibitive legislation is a bar to the free movement of services, a principle set forth in EU Treaties.

When it seemed that the liberalization of online gaming was inevitable, the fall of the monopolies is delayed by the European Court of Justice ruling in “Bwin Liga” case.

The facts are simple: Portugal is among the countries that refuse to open the online gambling market, like Germany, Finland, Sweden or Netherlands. Specifically, the operation of such games is licensed (since 1783) to “Santa Casa da Misericordia de Lisboa”, which holds the monopoly. Advertising gambling or betting activities, others than those offered by Santa Casa, is obviously prohibited and punishable by law.

Perhaps encouraged by the recent jurisprudence of the ECJ, the Portuguese Football League signed a partnership with Bwin, that entitled the latter to post its logo and advertising messages on sports equipment.

Directly regarded by this violation of the law, Santa Casa sued Bwin and the League in criminal court, which preferred to refer a preliminary question to ECJ. This happened on 13 February 2008.

Bwin argued that Article 49 of the EC Treaty (concerning freedom of services) applies to games and online betting. On the other hand, Santa Casa explained the restriction on freedom to provide services by arguing that the main objective of the national legislation is the fight against crime and fraud.

The Court noted that Santa Casa pursuit the public interest and by the tight control of the online gaming it protects consumers of possible fraud by operators. Furthermore (and almost against the spirit of Article 49), the Court recognizes that the physical location of a gaming operator in another EU state could justify the restriction. The foreign checking and monitoring can’t ” be considered a sufficient guarantee for national consumers protection against the risks of fraud and crime”.

The ECJ concludes that in this case, Article 49 is not contrary to the legislation of a Member State which prohibits operators established in other Member States, where they legally provide similar services.

This ruling is surprising especially because the debate in Europe focuses presently on market opening, aiming at the integration of offers such as betting exchange or online casinos services. Even so, this is a case that shouldn’t announce a halt to the EU policy of market liberalization.

British Columbia Lottery Corporation announced on 20th August 2009 it would launch online gaming sites in order to generate an income of not less than $ 100 million per year.

The  games offered by the Canadian company, such as blackjack, roulette and poker would be available on its website PlayNow from March 2010. If the project is fulfilled, there would be a first on the North-American continent, where online casinos have been banished so far.

“This is not really an innovative project, but if it was officially legalized by a north-american government, it would be indeed a great innovation”, said Bill Thompson, Professor of public law at the University of Nevada.

The Lottery hopes to get its part of the $ 87 million amount spent by residents of British Columbia on offshore sites. Michael Graydon, the Lottery Corporation CEO, stated: “Rather than let all that money slip away in some tax-paradises like Antigua, we seek to benefit from the opportunity that is giving to us to bring this money back in the country”.

Unfortunately for the company, this comes after a controversial statement made on 17th August, by which it was announced that the weekly limit on PlayNow deposits could be established between $ 120 and $10 000.

Some politicians ans especially those from Social Democratic Party, didn’t hesitate to strongly criticize the decision, which “was made without taking into consideration people with addiction problems”. But the Lottery responded to these attacks, stating that a security system would be put in place to prevent customers from depositing money in their accounts before 24 hours from another deposit.

If the proposal is approved, this could be a gateway for the introduction of online casinos in the United States.

In an attempt to overturn The Unlawful Internet Gambling Enforcement Act, widely known as UIGEA, New Jersey Senator Robert Menendez has introduced a bill meant to set up the framework for online poker and other games of skill. “Internet Poker and Games of Skill Regulation, Protection and Enforcement Act” focuses mostly on the games where the outcome is determined by the player’s skills and not on the whole field of internet gambling. Besides poker, the other games cited in the bill are bridge, mahjong, backgammon and chess. The specific element that distinguishes these games from other gaming experiences is the little influence the chance has in the final results.

Menendez explains his particular consideration for poker by the significance of this game among Americans spare-time activities throughout their history: “Poker is part of the cultural and recreational fabric of the United States and has been since the founding days of the United States. United States poker aficionados have included presidents, judges, and statesmen.”

According to the proposed bill, the Treasury Department will the institution in charge to make the financial examination of all the applicants. This will reject any person or company that has been accused for any kind of gambling or financial violation. The bill also establishes the security control features that gambling websites will have to include: payment fraud protection and money laundering prevention, age limit policy, residence verification. The compulsive gambling behaviour is another topic of the law. The online casinos and other gaming rooms are obliged to monitor these habits if they want to keep their license. An opt out right for any state or Indian tribe wishing to ban online gambling in their jurisdiction, is equally specified in the text of the bill.

Following a complaint filed by the Remote Gambling Association (RGA), the European Commission presented its critical report on the “Unlawful Internet Gambling Enforcement Act” in the United States. The least we can say is that Brussels gives right to international association and dares to call the law “contrary to free trade rules”. It must be said that the UIGEA concerns particularly gambling operation based in Europe. So, the struggle goes on…

Mid-June, the “Guardian of the UE Treaties” published a report on U.S. laws on online gambling and its hardening provisions for European companies. The report is the result of an one-year investigation conducted in U.S. The object of the investigation was not only the current law, but also its reform and the effects it would have on online games suppliers.

The juridical battle on American gaming market involves another powerful organization, which has the right to punish its disobedient members. This is the World Trade Organization; both U.S. and Eu member states adhered to its agreements. On the European ground, UE may reprove its members claiming the violation of Treaties’ provisions such as the freedom to provide services within its territory. As for the U.S., the European Commission only could call the international agreements. Thus, the EC claims that U.S. measures impede free trade and are contrary to the WTO rules. At the same time, the report suggests they can resolve the disagreement by negotiating with the new administration.

“Online gambling is a complex and critical issue, and we don’t want to dictate to the United States the method for regulating the market” the Commissioner of the Chamber of Commerce said. “However, the United States must comply with WTO rules. I hope we will be able to find an amicable solution”.

The report approached, of course, the alarmist claim of the Remote Gambling Association. Filed on 11th March 2008, it stated that the UIGEA denies access to foreign funds and discriminates radically all foreigners wishing to play or wager in the United States. Nevertheless, in 2006, the most of the European companies decided to act on their own and left the U.S. market. But they still suffer from lawsuits for their past activities on this market. Therefore, the report also concludes that the prosecutions are not legally justified and they are discriminatory.

The European Commission now seeks a solution consistent with international agreements through a dialogue with American administration.