eGaming Review

The recent arrest of Bwin’s co-chief executives came as an unpleasant shock, but the lasting impact for European egaming operators remains uncertain.

By Jake Pollard 

As news filtered through last month of the arrest and detention of Bwin co-chief executives Manfred Bodner and Norbet Teufelberger by the French authorities, the world of online gaming must have felt it was stuck in a nightmare remake of Groundhog Day.

Following the arrests in the US of (now ex) BetonSports chief executive David Carruthers in July and of (again now former) Sportingbet non-executive chairman Peter Dicks in September, the French moves couldn’t have been worse timed.

The operation was carried out following a joint complaint brought in Spring 2005 by the French gaming and betting monopolies, the Française des Jeux (FDJ) and Pari Mutuel Urbain (PMU). 

One of the more surprising aspects of the arrests of Bodner and Teufelberger is that it happened in Europe. The immediate reaction was disbelief. Protectionist moves and restrictive policies by various European state operators have been common in recent years, but few would have expected the actual arrest and detention of online gaming executives.

As Hannes Androsch, chairman of Bwin, said in a statement released after the news broke: “This stands in fundamental contrast to the principle of proportionality, particularly as both the company and the chief executives would have answered any summons issued by the French authorities at any time.” 

This is a point picked up on by Thibault Verbiest, senior partner at Brussels-based law firm Ulys: “The French authorities were in the process of issuing a summons to their Austrian counterparts to bring Bodner and Teufelberger in for questioning. However, the French were not being overly aggressive in their attitude. Meanwhile, Bwin continued to promote its products in a highly visible and aggressive manner, and in the meantime became the leading egaming operator in France by some distance.”

However, for Verbiest what really got to the French authorities was when Bwin issued press releases and promotional information about its activities, and in particular the fact that it had announced it was to be the main sponsor of AS Monaco (ASM) football club, one of France’s biggest clubs. When the French gaming police, the ‘courses et jeux’, heard Bwin would be holding a press conference on French soil to highlight its sponsorship of ASM, it seized the opportunity by sending up to a dozen officers to bring in the two executives for questioning.

For Verbiest, there is little doubt that Bwin’s high visibility and brazen activities led to the high profile arrests. “All this would not have happened without all the promotion and noise surrounding Bwin’s sponsorship of Monaco,” he says. “Bodner and Teufelberger could have gone in front of the judge for questioning under much better circumstances.” 

French authorities keep industry guessing

In the direct aftermath of the events, the FDJ said it would challenge through the courts any other operators which “attempted to break its monopoly”. The irony of such a statement will not be lost on industry observers. However, the key issue has to be whether the officers from the ‘courses et jeux’ will agree with the FDJ and take other egaming firms to court on similar charges to those against Bwin.

“To my knowledge, there is only one legal complaint in France against private operators and I cannot see the FDJ going to war against all the bookmakers,” Verbiest says. “The unknown quantity will be the attitude of the ‘courses et jeux’. They have the power to go after every operator working in the French market.”

When eGaming Review spoke to its source at the ‘courses et jeux’, they said that “if there were other operators who were in contravention of the (French) penal code, there was always the possibility that they could be pursued by the authorities. It is not because other executives from other firms are not being pursued by us at the moment that it could not happen in the future”. In other words, they are keeping their options open.

One of the other possible scenarios is that the French authorities would have turned a blind eye to operators being betting partners of a number of football clubs, as long as they didn’t make the step up to become the clubs’ principal shirt sponsors.

This situation has been drastically altered for the 2006-07 season, with not only Bwin but also 888 and Gamebookers becoming main sponsors of Toulouse Football Club and FC Nantes Atlantique respectively.

As going to press, the situation had changed yet again. The Ligue de Football Professional, the French football league, ordered a number of clubs remove their perimeter advertising featuring egaming companies. This was in addition to Gamebookers being removed from Nantes shirts and the 888 logo replaced by three question marks .com on the Toulouse shirts.

The events are complicated further by the ambiguous behaviour of the clubs who are unhappy at the FDJ and private operators for using their logos and star players’ names to promote their odds and games. But some of those clubs are also happy to accept advertising and affiliate revenues from the likes of Bwin and Gamebookers and unlike the FDJ, operators at least share any revenues generated from the deals they have with some of them. 

Added to this is the influence the groups Partouche and Barrière, the two biggest offline casino operators in France, might have exerted on the authorities after they were refused permission to operate their own online casinos in France. In March this year, Partouche opened a London office to operate its egaming products.

From the perspective of European competition law, online gaming operators arguably have the law on their side and are being denied access to European markets through restrictive policies and monopoly abuses by the state operators. The French authorities have also made a point of bringing Bwin to justice under French law and have repeatedly said that what the operators are doing contravenes the French ‘code pénal’. Although things are not looking good for Bwin at the moment, what this case might do is open up the market and finally bring things to a head. 

For Simon Holliday, partner at Global Betting and Gaming Consultants (GBGC), the recent setbacks suffered by Bwin are battles in a long-term war with national operators in Europe. “The effect of the licence suspension in Germany is interesting. Now that Bwin is not allowed to use the dot de site to promote its products, it can instead advertise all its products through its dotcom domain and promote its poker and casino products to go with sports betting.” 

The problem online gaming operators in Europe face is that it takes time for any judgement by the European Court of Justice (ECJ) to come into action. Even when the European Commission announced last April that it would launch an inquiry into the practices of the national sports betting operators of seven member states it will still take until the end of December 2007 for the findings to be returned. In that time, much can happen, as Bwin has discovered.

Operators vs the state monopolies

“Should Bwin take the state of Saxony or the FDJ to the ECJ, it would most likely win,” Verbiest adds. “European community observers have always said France was one of the worst offenders when it came to gaming policy. The European Commission recently announced it would hold a meeting on 18 October to discuss companies abusing their state monopolies and European law. The implication being, this time we are going to go after the French (monopoly).” 

However, Verbiest adds that even if the current European (general) context is not particularly friendly towards France, “it always takes a long time to resolve these matters”. European operators may have EU law on their side but as long as the ECJ has not formally issued a verdict in their favour, individual state operators will continue to use any means they have at their disposal to halt their progress.

As for the possibility of further arrests of egaming executives, eGaming Review’s source at the ‘courses et jeux’ says it will apply the letter of the French law to individual cases and that it believed it had not broken any European competition law.

When it was suggested to him that such drastic actions may not be taken against operators who adopt a more discreet attitude in promoting their products or sponsorship ventures, he said: “I wouldn’t say we would let any illegal operator exploit the French market with impunity but there may well be some relevance to such a train of thought.”

Posted: 2006-11-15