French gambling monopoly undermined by web firm's victory

France's highest court, the Cour de Cassation, overturned a previous ruling which barred Malta's Zeturf from operating in France. The Court said a monopoly would break EU competition laws.

France operates a state monopoly on gambling and Pari Mutuel Urbain (PMU) is the operator for horse racing betting. It brought the case against Zeturf, which was allowing French people to gamble online on horse races.

The Court, though, ruled against PMU, saying that the monopoly it enjoyed was not consistent with EU competition law. Article 49 of the EC Treaty guarantees free movement of services within the EU.

One French legal expert said that the ruling will probably open up France's betting market, but only in those areas where French monopolies already operate. "I think France will have to open sports betting to all EC companies, but only in the case there was already a market with only one actor, such as horse race betting," French law expert Cedric Manara told online news service The Register.

There is a power struggle in Europe about the regulation of gambling. France and Germany are trying to maintain state-controlled betting monopolies, while the European Commission is attempting to enforce Article 49 of the Treaty, which should undermine monopolies.

French authorities arrested executives from Bwin Interactive, the company behind BetandWin, last year in connection with its online gambling business. The executives were released. The firm said that the arrests took place after the company filed a formal complaint to the European Commission about France's gambling monopoly.

This week's Court ruling follows a judgment from the European Court of Justice earlier this year which said that Italy cannot bar operators in other countries from offering gambling services in Italy.

Italy had issued 1,000 gambling licences, but three men operated as intermediaries for Stanley, a UK company which did not have an Italian licence. The Italian courts asked the ECJ to clarify whether or not that country's licensing policy was in breach of the Treaty and the EU principles of free trade.

In March this year the ECJ said that Italy's laws restricted trade. It said that the blanket exclusion of companies from tender procedures for the award of licences goes beyond what is necessary to achieve the objective of preventing criminals from being involved in gambling.

There are other ways of monitoring the accounts and activities of operators which impinge to a lesser extent on the freedom of establishment and the freedom to provide services, it said, such as gathering information on their representatives or their main shareholders.

The ruling pointed out that criminal legislation may not restrict the fundamental freedoms guaranteed by Community law.