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Sunshine in Barcelona fails to lift the spirits

12th July 2012 8:00 am GMT
The sunshine came as a relief to sodden north European delegates but there was little to cheer from the stage at the ludicrously glamorous W Hotel in Barcelona.The views of naked men promenading up the Barcelona beach provided a bizarre backdrop to one of the gaming industry’s better conferences but the World Gaming Executive Summit in Barcelona got off to a fairly depressing start with few glimmers of good news from the keynote speakers. Deutsche Bank strategist Jim Reid delved deep into the history books to conclude that the current economic crisis is likely to lead to the rise of extremist politicians across Europe. He pointed to the rise of Greece’s anti-austerity Syriza party, which came from nowhere to claim second place in recent elections, or  Italy’s Five Star Movement, which is not even an official political party but is polling at around 20 per cent. His best case scenario was that we are likely to have shorter business cycles in a low growth world. Well, the rise of regulated markets has led many to accept and plan for lower margins so I guess that could just about qualify as good news. Just. Next up was MEP Jurgen Creutzmann, whose report on online gaming formed the European Parliament’s official response to the European Commission’s green paper on online gambling. Creutzmann is in favour of European harmonisation but noted member states’ right “to regulate in common with their own traditions and culture”. In many cases this will probably mean limiting the number of operators and limiting the type of games on offer. As the ECJ has confirmed, this is okay as long as the restrictions are proportionate and consistent. “You need a stable and attractive supply or consumers will go to illegal operators,” said Creutzmann. The industry seems to have accepted that member states will regulate in a manner that they might not have chosen but the fear among many is that it will go much further with its restrictions. The Council of Europe has already agreed a resolution to restrict live betting and Creutzmann’s acceptance of “a possible ban on certain types of gambling” does not bode well for anyone hoping for a counterbalance to the Council in the European halls of power.Furthermore, Creutzmann did nothing to lessen operators fears of the European institutions handing sports federations more power over betting. The spectre of the sports betting right looms large whenever a politician talks about “effective cooperation between regulators, operators and sports federations”. In summary though, Creutzmann somehow managed to bring his speech to a more satisfactory conclusion. “The Commission seems to be taking a very broad approach rather than proposing regulations,” mused Creutzmann. “I’m not convinced soft law will be enough considering the differences between member states. I am confident that in two years the Commission will conclude it needs to go further.” If Creutzmann finished on an optimistic note, it was left to Philippe Vlaemminck of Belgian law firm Altius to start on a more realistic note. Vlaemminck, who has advised the Belgian government and the European Lotteries Association (among others) for about 20 years, was in typically rumbustious form as he tried to provoke debate in the Global Lotteries’ room. “We still dream about harmonisation,” said Vlaemminck, “but I would say forget about it for the next five to 10 years.” Vlaemminck recalled discussions of harmonisation going back 20 years but despite some 30 judgments on the issue, fundamentally, he said, nothing has changed. Regulations will be left to the states by European institutions. “Is that a bad thing?” he asked. “I don’t think so. Because a number of states who were afraid of moving forward can now do so.” As they are doing in the US. Tony Cabot of Vegas-based law firm Lewis & Roca gave a sprightly summary of legislative efforts in the US. Interestingly, he is the first lawyer I have heard to completely disregard New Jersey’s confrontational effort to introduce sports betting. The challenge to PASPA is, Cabot reckons, doomed. “I’m not going to talk about horseracing either,” said Cabot. “Nobody under the age of 65 cares about horseracing apart from the Kentucky Derby. It is a dying industry.” I’m not sure the listening representatives from Betfair, which spent $50m on the US horseracing channel TVG, or Sportech, which bought Scientific Games Racing for $83m, will appreciate that thought very much. Entertaining as Cabot was, there was little in his speech to provide much optimism for any executives hoping to build a business there. He accepted that the Department of Justice ruling of December 23rd was “huge” in that it allowed any form of online gaming bar sports betting. It forces states to move full steam ahead. This is the good news. But the problem is that unless some sort of federal legislation is enacted he can see the situation developing whereby one state approves something and another stops it. The example provided was of MGM being forced out of New Jersey because of its Macau business, which Nevada had already approved. Cabot had some interesting points to make about the situation in his home state too. He pointed out that if you take MGM, Caesars and Station, the three biggest casinos, out of the equation then only six others have applied for an online licence. (Remember only land-based casinos can operate online in Nevada.) That’s six casinos out of 120! So with 11 B2B suppliers applying for a licence to service six operators, something does not add up. Especially when you consider that Nevada is only the 32nd most populous state in the US. “They’re betting on federal pre-emption,” stated Cabot. Because if a federal law is passed that appoints “preferred regulatory agencies” then Nevada will be the regulator of choice.   However, after quickly dismissing the prospect of any success from Senators Barney Frank or John Campbell, he went on to appraise the prospects of a bill produced by Senators Kyl and Reid. He said American Gaming Association chief Frank Fahrenkopf has assured him that Reid and Kyl will try and get something done before the lame duck session following the November election. However, he rated this as only 25 per cent likely. So all in all, not many reasons to be cheerful - apart from the weather!
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