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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.