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STUDY OF GAMBLING SERVICES IN THE INTERNAL MARKET OF THE EUROPEAN UNION

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This report is the result of more than twelve months of research carried out under the responsibility of the Swiss Institute of Comparative Law (Lausanne, Switzerland) pursuant to a Study Contract concluded with the European Commission. The Swiss Institute of Comparative Law sub-contracted with the Centre for the Study of Gambling at the University of Salford (Manchester, United Kingdom) for the preparation of the economic data and analyses contained herein. The Swiss Institute of Comparative Law is nevertheless responsible for the entire report. All readers of our Report are asked to bear in mind the following important points: –This report is intended to reflect the situation that prevailed in the European Union on 31 December 2005 and is primarily based upon information that was supplied or otherwise available to the authors up to that same date. Information subsequently received and developments that occurred early in 2006 are included in the body of this Report only if they have been perceived to be of particular importance and/or could be taken into account without the need to modify large sections of the text; –With respect to substance, our Report provides a status quo description of the legislation and jurisprudence of each of the Member States, but offers no assess- ment or interpretation of the appropriateness of the norms contained therein or of their compatibility with European Law. Any scientific interpretation or comment would counteract the aim of the Study, namely to prepare a completely neutral presentation of existing gambling regulation in the EU; –With respect to form, all country reports concerning either the legal or the economic situation in individual Member States are structured in an identical manner, so as to facilitate cross-sectoral reading; –Translations of court decisions and legislative material into English or French have, unless otherwise indicated, been undertaken by the Swiss Institute of Comparative Law and thus should not be considered to be official translations.
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Institut suisse de droit comparé
Schweizerisches Institut für Rechtsvergleichung
Istituto svizzero di diritto comparato
Swiss Institute of Comparative Law













STUDY OF GAMBLING SERVICES
IN THE INTERNAL MARKET
OF THE EUROPEAN UNION


Final Report




14 June 2006





This report has been prepared for use within the European Commission.
It does not represent the European Commission’s official position.




© European Commission, 2006



ISDC - Dorigny - CH-1015 Lausanne (Suisse) - tél. +41 21 692 49 11 - fax +41 21 692 49 49
www.isdc.ch - secretariat.isdc-dfjp@unil.ch



SYNOPTIC TABLE

SYNOPTIC TABLE


Executive Summary

Table of Contents



1st PART – LEGAL STUDY

Chapter 1
NATIONAL REPORTS
Chapter 2
EUROPEAN UNION-WIDE SURVEYS

Compatibility of National Measures with Art. 43, 49 EC Treaty

Taxation of Gambling Services in EU Member States



2nd PART – ECONOMIC STUDY

Chapter 1
INTRODUCTION
Chapter 2
DIMENSIONS OF THE LEGAL GAMING SERVICES
INDUSTRIES IN THE EUROPEAN UNION

Chapter 3
GENERAL ECONOMIC OBSERVATIONS
Chapter 4
OBSERVATIONS ON THE EU CASINO GAMBLING SECTOR

Chapter 5
METHODOLOGY AND DATA GATHERING

Chapter 6
NATIONAL REPORTS

ii


SYNOPTIC TABLE



Chapter 7
THE IMPACTS OF INTERNET GAMBLING AND OTHER FORMS
OF REMOTE GAMBLING ON THE EU GAMBLING MARKET

Chapter 8
REVIEW OF SCIENTIFIC LITERATURE ON GAMBLING

Chapter 9
PROBLEM GAMBLING
Chapter 10

EUROPEAN STATISTICAL OVERVIEW

Chapter 11

DEVELOPING SCENARIOS FOR THE FUTURE






APPENDICES





iii


EXECUTIVE SUMMARY


STUDY OF GAMBLING SERVICES
IN THE INTERNAL MARKET OF THE EUROPEAN UNION


EXECUTIVE SUMMARY


This report is the result of more than twelve months of research carried out under the
responsibility of the Swiss Institute of Comparative Law (Lausanne, Switzerland) pursuant to
a Study Contract concluded with the European Commission. The Swiss Institute of
Comparative Law sub-contracted with the Centre for the Study of Gambling at the University
of Salford (Manchester, United Kingdom) for the preparation of the economic data and
analyses contained herein. The Swiss Institute of Comparative Law is nevertheless
responsible for the entire report.

All readers of our Report are asked to bear in mind the following important points:

This report is intended to reflect the situation that prevailed in the European Union on
31 December 2005 and is primarily based upon information that was supplied or
otherwise available to the authors up to that same date. Information subsequently
received and developments that occurred early in 2006 are included in the body of this
Report only if they have been perceived to be of particular importance and/or could be
taken into account without the need to modify large sections of the text;

With respect to substance, our Report provides a status quo description of the
legislation and jurisprudence
of each of the Member States, but offers no assess-
ment or interpretation of the appropriateness of the norms contained therein or
of their compatibility with European Law
. Any scientific interpretation or comment
would counteract the aim of the Study, namely to prepare a completely neutral
presentation of existing gambling regulation in the EU;

With respect to form, all country reports concerning either the legal or the economic
situation in individual Member States are structured in an identical manner, so as to
facilitate cross-sectoral reading;

Translations of court decisions and legislative material into English or French have,
unless otherwise indicated, been undertaken by the Swiss Institute of Comparative Law
and thus should not be considered to be official translations.


1. PURPOSE OF THE STUDY
1.1. General Purpose
The purpose of the study is to evaluate how the differing laws regulating on-line and off-line
gambling services, as well as games in the editorial content of the media and certain types of
promotional games, impact upon the smooth functioning of the Internal Market
for these and
associated (e.g. media, sports, charity, tourism) services and thus could restrict the eco-
nomic and employment growth associated with such services.


iv


EXECUTIVE SUMMARY

The objective of the Study of gambling services is to:
– Describe
all the relevant national rules and laws pertaining to the commercial
communications, establishment and provision of services in the eight market sectors
set out below.


Describe, on the basis of information collected from Member States, stakeholders and
market analysts, the expected cross-border development of each of these market
sectors
and their associated markets in the light of the existing market trends taking
due account of technological change and international market trends.


Determine, in view of these regulatory and market reviews, the existence and
nature of Internal Market barriers
in these market sectors and relevant associated
sectors.


1.2. Market sectors
Gambling services should, for the purpose of this study, be considered to cover any service,
including any information society service, which involves wagering a stake with monetary
value in games of chance, including lotteries and betting transactions.

Promotional games should, for the purpose of this study, be considered to cover the offer to
participate in a game, in which the winner is designated by any element of chance and the
exclusive purpose of which is to encourage the sales of goods or services. Promotional
games covered within the scope of this study are all promotional games that offer prizes in
excess of €100,000 and all promotional games where participation is exclusively linked to
purchase of the promoted good or service.

The study covers the following on-line and off-line market sectors (henceforth referred to as
“market sectors”):

Betting
services (including horse and dog racing, event betting and pool competitions)
Bingo
services

Casino
services
Gambling
services operated by and for the benefit of recognised charities and
non-profit making organisations.

Services related to gambling machines that can be placed in locations other than in
licensed casino services
Lottery services

Media gambling services (i.e. games in the editorial content of the media).

Sales promotion services consisting of promotional games with a prize exceeding
€100,000 or where participation is exclusively linked to purchase.

In this respect, the following definitions are to be found in legislative texts in force in various
Member States. It must nevertheless be stated here that the Study did not aim to find a
uniform definition for each of the types of gambling listed above. Each country report sets out
the legal definitions used in that country in respect of the market sectors studied. The
following pages only state major similarities or differences between the legislative provisions
of Member States.


v


EXECUTIVE SUMMARY

1.2.1. Game of Chance
Even if not all Member States have a legal definition of the concepts of “Games of Chance”
and “Gambling”, in most European countries (Austria, Belgium, Czech Republic, Estonia,
Finland (under the generic term of lottery), Germany (although controversial), Greece,
Hungary, Ireland, Latvia, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia), a
game of chance is defined as a game that offers an opportunity to compete for prizes, where
success depends completely or predominantly on coincidence or an unknown future event
and cannot be influenced by the player. One of the players at least loses his or her stake.

The first important element characterising a game of chance is that of stake money. The
second essential characteristic of a game of chance is the element of chance. Success or
loss must depend completely or predominantly on coincidence and not on abilities and
knowledge. Success is considered to depend in any case on coincidence, if the relevant
aspect is the occurrence of an uncertain event.

In the Czech Republic, the probability of winning (a lottery or a tombola) may not be less than
1 : 200.

In general, the nature of the prize is of no legal importance (this is true in Belgium, Cyprus,
the Czech Republic, France, Hungary, Lithuania, Luxembourg, the Netherlands, Slovakia,
Slovenia, Spain, Sweden and the United Kingdom). Some legislators nevertheless make a
distinction: the prize can take the form of money (in Austria and Finland) or of money or
monetary value (in Malta), or of an additional chance to win (in Austria, Finland and Portugal,
but not in Belgium or Estonia) or be offered by a third party (in Austria).

In general, the conditions of the game are specified by the operator in advance (Austria,
Belgium, the Czech Republic, Estonia, France, Germany (subject to certain particularities as
regards machine gaming), Latvia, Lithuania, Luxembourg, the Netherlands, Slovenia and
Spain).

Some countries exclude certain games from the scope of their gambling laws, such as sports
betting (in Luxembourg), card games outside casinos (in Belgium), games played at fairs that
offer low prizes (in Belgium), commercial contests (in Finland, France, Luxembourg and
Sweden), or free commercial contests (in Luxembourg and the United Kingdom (Great
Britain)). In Estonia, gaming by means of a machine is not deemed to constitute gambling for
the purposes of the gambling law, if the only chance of winning is a free game to be played
by means of the same machine. The same applies in Latvia; automatic games with non-
pecuniary prizes are also excluded from gambling law.

Certain Member States (the Netherlands, Germany, Portugal and the United Kingdom) also
exclude from the scope of their gambling laws, as a matter of principle, all life insurances,
certain public loan regimes and non-commercial games of chance that are not open to the
public.



1.2.2. Lotteries
In most countries, there are a variety of lottery games, often depending on when the draw is
made. The precise legal definitions can be found in the national reports.



vi


EXECUTIVE SUMMARY

Technically, a lottery is defined (in Austria, Belgium, the Czech Republic, Estonia, France,
Ireland, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal and
Slovakia) as a prize game in which an organiser accepts bets on the chances which several
numbers have of being extracted at random from a defined series of numbers or symbols.
The winning numbers are determined by public draw. The prize money is divided into several
winning categories and equally apportioned among the winners within each of these
categories.

Some countries (Finland, Germany, Latvia) distinguish between cases in which the prize
takes the form of money (e.g. Lotto) and those in which it takes the form of goods or services
(e.g. a raffle).

Two countries (Cyprus and Sweden) include in this category raffles and games played at
fairs or at amusement parks and also bingo and certain card and dice games.



1.2.3. Casino Gaming
Some Member States (Denmark, Finland, Ireland and the United Kingdom) have not directly
defined the concept of casino gaming.

In several countries (Belgium, the Czech Republic, France, Luxembourg, Portugal and
Slovakia), a casino is defined as a place where games of chance are organised (whether
automatic or not) and where other cultural and social activities (theatre, restaurants) take
place. In other countries (Austria, Denmark, Estonia, Finland, Germany, Latvia, Malta, the
Netherlands and Sweden), it is not necessary that the casino manage other social or cultural
activities.

Two Member States (Cyprus and Ireland) entirely prohibit casino gaming.



1.2.4. Machine Gambling Outside Casinos
According to the laws of a number of Member States (Austria, Belgium, the Czech Republic,
Denmark, France, Germany, Hungary, Lithuania, Luxembourg, the Netherlands and
Sweden), a slot machine is a mechanical, electronic or electric process that can result in the
distribution of prize money or anything else of value, including a right or mechanism per-
mitting free play on the machine. Success depends completely or predominantly on the
coincidence and cannot be influenced by the player.

In Germany, there is a controversy as to whether machine gambling outside casinos is to be
considered as a game of chance. In Austria (with the exception of the Bundesländer of
Vienna, Styria and Carinthia) the operation outside casinos of gaming machines which offer
cash prizes or merchandise is prohibited. All machine gambling is prohibited in Cyprus. In
Greece and Portugal, machine gambling outside casinos is totally prohibited.





vii


EXECUTIVE SUMMARY

1.2.5. Betting
In many Member States (Austria, Belgium, the Czech Republic, Estonia, France, Germany,
Lithuania, Luxembourg, Malta, Poland, Portugal, Slovakia and the United Kingdom (Great
Britain)), ‘betting’ means making or taking a bet on –

(a)
the outcome of a race, competition or other event or process,
(b) the likelihood of anything occurring or not occurring, or
(c) whether anything is or is not true”.

It is considered (in Belgium, France, Luxembourg and Portugal) to be an aleatory contract by
which the parties agree, with respect to a disputable assertion, that the party whose
assertion is shown to be wrong shall perform something for the benefit of the other party or
(in Latvia) a third person. According to German law, a bet originally aims at settling a
controversy.

The amount of the prize can either depend on the total amount of the pre-paid stakes (i.e. the
so-called “totalizator systems”, pari mutuel or “pool betting”) or on the stake-winnings ratio
that is agreed between the bookmaker and the player (ie. pari à la cote or “fixed-odds
betting”).

In general, “sports bets” are prize contests, whereby participants must predict the results of a
sports competition (Austria, Denmark, Estonia, Finland, France, Latvia, the Netherlands,
Portugal and Sweden). There is considerable doubt as to whether betting on the outcome of
horse races should be classified as sports betting; it clearly cannot be so classified in
Finland, whereas in the Netherlands, it is classified as a special form of sports betting.



1.2.6. Bingo
According to the laws of four Member States (Austria, Finland, Latvia and Malta), bingo is a
game of chance, in which the player uses a scorecard or an electronic representation thereof
bearing numbers and is played by marking or covering numbers identical to numbers drawn
by chance, whether manually or electronically, and won by the player who first marks or
covers the “line” which is achieved when, during one game, for the first time all five numbers
on one horizontal row on one scorecard are drawn; or the “house” or “bingo” is achieved
when, during one game, for the first time all the fifteen numbers on one scorecard are drawn.
Prizes are generally in kind (Denmark and Finland) and paid immediately (Sweden). In the
Netherlands, limited money prizes are nevertheless possible and in the United Kingdom,
nothing prevents providers of bingo services from offering purely cash prizes.

In some countries (Austria, the Czech Republic, Cyprus, Denmark, Estonia, Finland,
Germany, Ireland and Sweden), bingo is considered to be a specific form of lottery.

As an exception, bingo in Belgium consists in a ball game where the player must lodge the
ball in holes on the horizontal side of the machine and thus obtain a number of points that
light up on the vertical side of the machine. Bingo can equally be a sort of table game in
Belgium, in which event it can only be organised in casino facilities or after authorisation of
the local authorities.





viii


EXECUTIVE SUMMARY

1.2.7. Media Gambling Services
In Belgium, Luxembourg and France, media games are said to serve commercial or
advertisement purposes. Not every Member State has enacted a specific definition of media
gambling services (i.e. Austria, Cyprus, Denmark, Estonia, Finland, France, Germany, Ire-
land, Latvia, the Netherlands and the United Kingdom have not).

In general, “broadcasting media game” means any game which is organised by the owner or
operator of a radio or television station, where the participation of players therein takes place
by or as a result of their presence during the transmission or recording of the programme
during which such game is organised or by any intervention on their part by any means of
distance communication (Internet, handy) during or after the transmission or recording of the
programme during which such game is organised (Malta, Sweden)

In two countries (Spain and Portugal), the possibility of gaining a prize by calling a television
program to answer a question and offering non expensive prices to the public, on a "just for
fun" basis is not considered as gaming.



1.2.8. Sales Promotional Gambling
In France, Germany, Latvia, Luxembourg and the Netherlands, sales promotional games are
said to serve commercial or advertisement purposes.

In Luxembourg and to some extent in Germany (depending on the type of game operated),
sales promotional games are not legally characterised as games of chance. In the Nether-
lands on the other hand, promotional games of chance (including free promotional games,
media services and sweep-stake contests) are considered to be games of chance. In
Portugal, sales promotional games are defined by public law as a specific category of games
of chance and cannot involve money prizes.

In Cyprus, sales promotional prize competitions are expressly declared to be illegal. They are
also prohibited by law in Belgium and Portugal, unless participation in the competition is
offered free of charge.



1.2.9. Charity Gambling

In general, a “non-profit game”, or charity gambling means a game organized by a non-profit
organization, the net proceeds of which are intended for a religious, sports, philanthropic,
cultural, educational, social or other civic purposes (Belgium, France, Germany, Luxem-
bourg, Malta, the Netherlands and the United Kingdom (Great Britain)). In Cyprus, an activity
qualifies as charitable if it is intended to finance the erection of a church, mosque, or public
hospital, or is considered by the Minister of Finance to be charitable. In Portugal, charity
gambling arrangements, mostly in the form of lotteries, are defined as temporary games.



ix


EXECUTIVE SUMMARY

2. METHODOLOGY
2.1. Identification of all relevant norms and economic data
The Swiss Institute of Comparative Law proposed to identify and specify all national
regulations concerning services relating to the defined market sectors
in EU25 by
presenting and analysing, country by country, the various regulatory measures applied (or
proposed) by public authorities or private organisations.

A full examination of the statutory and regulatory position in each Member State (EU 25) has
been carried out by:

Direct written contact with the relevant Government Department and/or Agency in each
Member State with primary powers in the area of gambling services relating to each of
the defined market sectors;

Direct written contact with the relevant national Courts, administrative authorities,
enforcement body (e.g. gambling regulator) or self regulatory organisations with
powers in the area of gambling services relating to the defined market sectors; and

Collecting information on national fiscal regimes to determine the regime applicable to
each of the market sectors.

In this respect, the Swiss Institute of Comparative Law contacted a total of 1020 poten-
tial stakeholders, of which only 20% (about 200) have responded.

At the same time, potential stakeholders were specifically invited to supply to the
Centre for the Study of Gambling detailed statistical and economic information
concerning:


the size and structure of their sectors of the relevant national market for gambling
services, in terms of the number and type of operators and the revenues generated;

taxation rates (including both VAT and gambling-specific taxes), license fees and
mandatory payments to charity and “good causes”;

employment in terms of the number of full time equivalent posts dependent upon the
supply of gambling services;

linkages between sectors of the relevant national gambling market and impacts of the
gambling industry upon other parts of the economy and on the voluntary and sports
sectors;

gambler profiles, the prevalence of problem gambling and the nature and extent of
measures taken to prevent and treat problematic gambling behaviour.

The response rate concerning the economic aspects of this Study was even lower
than 20%
. Most of the respondents covered several of the identified sectors in their
submissions, but they indicated that they had no information available with respect to the
Media Gambling, Sales Promotional and Charity Gambling sectors. Almost all of the
government entities who responded to the questionnaires indicated that they do not have
data about charitable gambling licenses, because these are typically granted on a
decentralised and temporary basis. Other relevant stakeholders have been approached, but
they have not provided any serious data.


x

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