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Big Changes for EU Online Gambling Laws?

September 9, 2009 (CAP Newswire) — Recent reports that Austrian online betting giant bwin was in the final stages of acquiring Italian Internet gambling site Gioco Digitale S.p.A. ("Gioco Digitale") have been sharing the European iGaming headlines in recent days with a high-profile court case that may spell an end to such across-the-border acquisitions in the EU. 

Almost as if in response to the Gioco Digitale acquisition reports, a European Union court ruled to prevent a sponsorship deal between bwin and Santa Casa, a Porteguese-based soccer league. The Portuguese state betting monopoly had opposed the sponsorship because it would allow bwin to advertise in a nominally restricted market.

If it sets a precedence, which isn't unlikely, this ruling could come as a potential setback for the more ambitious larger online gaming companies, many of whom were counting on an acquisition campaign to buoy their financial performances in the short and long terms.

"It's a bit disappointing because the hope was that the European Commission and the European Court of Justice were actually in favor of markets opening up," said James Hollins, analyst of gambling stocks at Daniel Stewart & Company, as quoted in Reuters. "It looks like (the ruling) would strengthen the hand of countries who want to continue to protect state monopolies, which include Portugal or Germany.” (Read the Reuters article here).

Although bwin has stated that it feels the ruling is too narrow to apply across the board at this point, “the judgment represents a significant setback for online gaming companies, who have been battling for years to break down barriers preventing them doing business in many EU countries,” writes the Financial Times. “More than a dozen similar challenges are in the pipeline at the ECJ [European Court of Justice], and could take a lead from Tuesday’s decision. The ruling could also have ramifications for about 10 cases brought by the European Commission, in which officials accuse individual countries of breaching EU principles through laws that protect state-owned gaming monopolies. The Commission said it was 'studying the latest ruling very carefully'." (Read the Financial Times article here.)

Meanwhile, other news sources are speculating that, much like last week’s new interpretation of online gaming laws in the U.S. (read about that here), the new decision could open the way for the EU to allow each country to set its own agenda regarding online gambling (even more so than it currently does).

"The decision by the European Court of Justice said that online betting could be blocked in countries that opt to run state gambling monopolies such as Finland, Greece, Hungary, the Netherlands and Sweden,” interpreted Roddy Thomson of the AP. (Read his article here.)

This ruling has even inspired some to claim that EU nations now have the legal power to censor all online gambling activity (read about that here).  

Though bwin has denied the finality of the Gioco Digitale deal (read that press statement here), reports of the acquisition had nonetheless been helping to inspire a rise in the company’s financial performance (read those reports here). However, newer reports of the ECJ court’s ruling turned that rise around; the company’s shares dropped about nine and half percent yesterday (read about that here).