EU challenges French gaming monopoly

The European Commission has asked France for an official explanation about Pari Mutuel Urbain's (PMU) horseracing betting monopoly. Charlie McCreevy, the EU Commissioner for the Internal Market, views French sports betting legislation as breaching European rules on the free movement of services.

In defending its monopoly, PMU had last year taken Zeturf, a Malta-licensed betting company to a French court and obtained a judgment that ordered Zeturf to cease taking bets on horse races organised in France. Zeturf was also ordered to pay millions of euros - a fine that is believed to be the heftiest ever incurred by a Maltese-registered company.

PMU are now seeking to enforce the French judgment in Malta. The judgment relating to the enforcement procedures is expected to be delivered by the Maltese courts on November 14.

Zeturf last year filed a complaint with the European Commission against both France and PMU, pointing to disregard of EU law by PMU and French gaming law. The European Commission's decision to forge ahead gives considerable legal and moral backing to Zeturf's challenge to PMU's monopoly.

The latest action by the EU Commission brings to nine the number of governments that face possible action at European level - Italy, Austria, Germany, Holland, Hungary, Denmark, Sweden and Finland.

The action has been spearheaded by Mr McCreevy, who bases his views on the case-law of the European Court of Justice, which has confirmed over a number of rulings that betting and gaming activities should be treated as services and must therefore enjoy freedom of establishment and freedom of provision in the EU internal market.

While gaming is a state monopoly in most European member states, Malta became the first member state to liberalise remote gaming, following the publication of the Remote Gaming Regulations in April, 2004.

The latest developments come at a time when Malta's remote gaming industry is experiencing an unprecedented success.

There are 180 licensed remote gaming companies in Malta with an annual turnover of $4 billion. Gaming taxes paid by these companies amount to over Lm3 million, while direct employment in the industry is in excess of 800.

Remote gaming companies are also generating substantial indirect employment in the IT, real estate, marketing, legal and accounting sectors.

Only last week the government announced in the Budget estimates that revenue derived from gaming taxes will be Lm18.5 million, an increase of Lm6.5 million over the previous year. Most of that increase is expected to be generated by the remote gaming industry.