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No Love for Ladbrokes in Sweden

14 July 2005

British betting giant Ladbrokes, one of the most aggressive bookmakers fighting in foreign courts for the right to operate across Europe, suffered a defeat in Sweden last month when the country's Supreme Administrative Court rejected the company's appeal to acquire a betting license.

The company applied for a license in Sweden in 2003 following the European Court of Justice's decision in the Gambelli case. After being denied, the group took the matter to Sweden's courts to determine whether the rejection conflicts with European law. The case inevitably reached the Supreme Administrative Court, which ruled that Sweden's gambling monopolies may be upheld because they serve to protect players and maintain social order.

The ruling relies upon the foundation built by a somewhat similar case decided by the same court in October 2004. That case--brought by a restaurant, Wermdö Krog AB, that served as an intermediary betting agent for British firm SPP Overseas Betting Limited--originated in 1998 and questioned whether a SEK 100,000 (US$13,000) fine against the restaurant was legally justifiable. The plaintiff lost and appealed to the Stockholm Administrative Court of Appeal, which issued a similar ruling in September 2001 before it arrived at the Supreme Administrative Court in 2004.

By the time Wermdö's case reached the Supreme Administrative Court, the restaurant's lawyers had integrated the 2003 European Court of Justice decision on the Gambeilli decision into their case. The Gambelli ruling stated, among other things, that gambling restrictions must limit betting activities in a consistent and systematic way and that a member state may not encourage consumers to participate in games while at the same time asserting that the preservation of public order requires restrictions of gambling opportunities. Thus, Wermdö's central argument was that Sweden's true aim is not to preserve public order but to obtain income from the state. The restaurant claimed that Sweden had no intention of limiting gambling but instead wanted to promote the country's two monopoly providers--Svenska Spel and AB Trav och Galopp--while at the same time keeping legitimate foreign providers out of the market.

The Supreme Administrative Court concluded that the main aim of the Swedish Lottery regulations is not to enrich state-supported enterprises. Instead, Sweden's regulations were found to protect public order because they preferred enterprises that are considered to offer better consumer protection over the foreign gaming companies that offered likely riskier products. Wermdö was thereby defeated and ordered to pay the fine.

In last month's decision, while Ladbrokes attempted to prove that the monopoly system in Sweden discriminated against legitimate foreign providers, the Swedish government argued that its monopolies were legal under European law because the profits from the operations were used for the common good. The Supreme Administrative Court criticized this rationale, but still awarded the decision to the Swedish government. Its conclusion in the case was once again that the state's monopoly system does indeed serve to protect players and maintain social order by preferring a very limited number of gambling providers. Ladbrokes' application for a Swedish license was therefore rejected.

Douglas Roos, Ladbrokes' CEO for the Nordic region called the court's decision, "A ruling made to order for the government." He added, "The judges are totally lacking in integrity."

Ladbrokes can no longer appeal the case through the Swedish court system, but the company is likely to file a complaint to the European Commission.

No Love for Ladbrokes in Sweden is republished from iGamingNews.com.
Bradley Vallerius

Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials.

Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Websites:

www.FortheBettorGood.com
Bradley Vallerius
Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials.

Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Websites:

www.FortheBettorGood.com