Will Ruling Open France to Online Poker & Online Gambling?

France's highest appeals court, the Cour de Cessation, has overturned an appeals court decision to ban Malta-based company Zeturf from offering online betting on horse races in France, adding to pressure from the European Commission (EC) for an end to the French state gambling monopoly.

Online poker and online gambling industry analysts are hoping the court ruling signals a chance to end the powerful French state gambling monopoly in the near future.

Originally, Zeturf was ordered by the appeals court January 4 to suspend its operations in France or face daily fines of 50,000 Euros (USD $68,800), in response to a complaint filed by Pari Mutuel Urbain (PMU), who is a monopoly operator of betting on horse racing, sports, lotteries and other forms of gambling in France.

Under European Union rules, limits to competition, even those "stemming from limits on gaming as a special or exclusive right, cannot be justified," the court said Wednesday with announcement of its decision.

Such restrictions can be used only to block gambling companies from "criminal or fraudulent" activities by "channeling them through controllable avenues," the Paris-based court said in its ruling, dated Tuesday.

The judges who heard the case at the Cour de Cassation also commented that the appeals court had not sought to discover whether the French government was upholding the monopoly simply to increase state revenues.

The decision sends the case against Zeturf back to a Paris appeals court for a rehearing. It could take up to a year for the case to come back to court.

OTHER EU MONOPLIES TARGETED TOO

Online poker, lotteries, sports betting, and online gaming are state-owned or state-supported monopolies in many EU countries. Government dependency on sizeable revenues from the monopolies has lead many legislators to create protectionist policies and laws to thwart competition from the private-sector.

Last month the European Commission (EC), an executive arm of the European Union (EU), issued final warnings, called 'Reasoned Opinions', to France and Sweden after rejecting their explanations for their protectionist gambling monopolies. If corrective action is not taken, the countries will be sued by the Commission in the European Court of Justice (ECJ) (click here for related article).

France has two months to respond to the commission's concerns.

Besides France and Sweden, the EC already has cases, at different phases, underway against Austria, Denmark, Finland, Germany, Greece, Hungary, Italy and the Netherlands.

For example, Greece was sent an initial Formal Notice last month, asking for information about its criminal proceedings against Greek market makers, while the Greek government's publicly listed OPAP company freely maximizes profits.

Charlie McCreevy, the EU financial services commissioner, has said he wants to foster competition where gambling is allowed, not force countries to legalize it.

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