The New Belgian Gaming Legislation: B2B Model For Online Gambling Operators
On December 3rd, 2009 the Lower Chamber of the Belgian Parliament adopted the New Belgian Gaming Legislation (hereinafter referred to as the « Gaming Law »). The Gaming Law has been passed without any substantial amendments , notwithstanding the EU Commission’s objections with regard to some of the core provisions of the Gaming Law. The Gaming Law has been published in the Belgian Official Gazette on February 1st, 2010: it should enter into force by January 1st, 2011 at the latest, even though Implementing Regulations (Royal Decrees of Execution) may provide for some provisions to enter into force earlier. This article will briefly discuss the Gaming Law’s main features and will draw some conclusions as regards its application to new entrants on the Belgian online gambling market.
Gaming Law’s Main Features
Put simply, under the new regulatory regime, all kinds of games of chance will be covered by the scope of application of the Gaming Law, whether such games of chance are provided offline or online, except when otherwise provided for. Concretely, a licensing system will be imposed for all kinds of games of chance, including but not limited to poker, sports betting (whether fixed-odd or mutual) and horse race betting, except for lotteries which remain the monopoly of the state-owned incumbent, La Loterie Nationale, and are thus excluded from the Gaming Law’s scope of application. The Belgian Gaming Commission will be entrusted with the task of granting licenses to both offline and online gambling operators.
The requirement for a Belgian land-based license
In order to be able to offer online gambling services, the Gaming Law requires operators from other Member States to already hold a license for land-based gambling operations in Belgium and to (re)locate their server in a permanent establishment on the Belgian territory. This means that a foreign operator, duly licensed and operating from another Member State, must first become the licensed operator of a casino (license A), a gaming arcade (license B) or a betting service (license F1) in Belgium, in order to then apply for an online license to offer the same services to Belgian consumers (A+, B+ or F1+ licenses). In addition, in order to obtain the online license applied for, such operator is required to relocate its servers into a permanent establishment in Belgium. Furthermore, the Gaming Law also provides for a limitation by Royal Decree of the maximum number of land-based licenses for casinos, gaming arcades and betting services. In order to determine this maximum amount, account must be taken of the number of operators already present on the Belgian market.
Needless to say, these requirements not only rule out any account that could be taken of obligations to which an operator is already subjected in its home Member State. They also seem to be discriminatory towards any foreign operators not yet established in Belgium. For instance, there are only nine licensed casinos in Belgium, and these licenses have already been awarded for a (renewable) period of 15 years. In these circumstances, it would indeed seem very difficult, if not impossible, for a foreign EU operator to obtain one of those licenses as a prerequisite for obtaining an online license for casino games in Belgium.
The Belgian Government’s confidence in enacting such a legislation may have been boosted by the ECJ’s recent landmark ruling in Santa Casa v. Bwin (September 8th, 2009) which refused to upheld the mutual recognition principle, as set out in Cassis de Dijon, in the field of online gambling across the EU. Hence, according to the Belgian Government, the restrictions on both the free movement of services and the freedom of establishment contained in the Gaming Law can be considered to be justified by mandatory requirements in accordance with settled case law of the ECJ. Notwithstanding the above justifications put forward by the Belgian Government, we doubt that the Gaming Law could pass the proportionality test whose observance is incumbent upon Member States pursuant to consistent case law of the ECJ. Accordingly, one cannot rule out the possibility that the Gaming Law could be challenged on the basis of sound EU law principles, whether by private stakeholders or the EU Commission.
B2B Model For Online Gambling Operators
In view of the requirement for a Belgian land-based license, as a prerequisite for obtaining an online one, it is our understanding that major online gambling operators could consider entering into cooperation agreements with Belgian land-based licensees who could then apply for a corresponding online license.
Clearly, this would be a win-win form of cooperation. On the one hand, Belgian land-based licensees do not necessarily have the marketing skills and software know-how to run online gambling services by their own means. On the other hand, online gambling operators will not have to establish in Belgium to offer their services to end users and will thus allocate their resources in the most efficient way, provided all stakeholders reach a mutually satisfactory agreement.
Our understanding is that such cooperation agreements will have to be scrutinized in light of Commission Regulation No 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices and, where appropriate, of Belgian Competition law in order to ensure their compliance with competition rules. The interface between ex ante online gambling sector-specific regulation and ex post competition rules is likely to become a reality in the gambling industry…