Ladbrokes to Appeal Dutch Court Ruling

Looking at the European Union for precedent, Ladbrokes officials today announced they are challenging a Dutch court ruling aimed at blocking their business from going online in the Netherlands.

Earlier this month, a Dutch lower court ruled that Ladbrokes had to create a system on its Web site that would block Dutch visitors from placing bets.

The ruling came after Dutch lottery operator De Lotto turned to the courts for help in making sure Dutch citizens don't gamble on Web sites that aren't licensed in the Netherlands.

Despite losing in the lower court, Ladbrokes intends to take its case to the Appeal Court and on to the Dutch Supreme Court if necessary.

"We believe the Dutch ruling breaches the principles of free and fair trade across the European single market."

-John O'Reilly

Ladbrokes also said it will try to take the case to the European Court of Justice in Luxembourg at the earliest opportunity. A ruling either way from the European Court could have massive implications on cross-border betting throughout the continent.

De Lotto is a state monopoly operator and was the first to file such a suit, but other state gaming monopolies quickly followed. Earlier this month, Holland Casino used the same argument in trying to get officials with Casino Lux to stop targeting Dutch residents for its online casino. A decision in that case is expected by the end of February.

John O'Reilly, managing director of Ladbrokes e-Gaming, said the company would attack the Dutch court's ruling by carrying the banner of the European Union's single market policy.

"The ability of member states to trade across borders freely and without hindrance was a founding principle of the E.U.," he said.

The argument that Ladbrokes will use before the courts is that the company is a "responsible U.K. operator within a regulated U.K. industry." As such, the company believes, it has the right to provide its services to E.U. citizens just like any other industry according to European Union law.

O'Reilly said the Dutch courts have overlooked the European Union law in favor of protecting Holland's monopolies.

"We believe the Dutch ruling breaches the principles of free and fair trade across the European single market," he said.

O'Reilly said consumers, no matter where they are located in the European Union, should have the option to gamble with a state monopoly or with another provider.

"It is essential that free and fair competition exists and gives European customers the opportunity to exercise choice," he said. "A limited range of bets at monopoly prices is not consistent with the principles of the single market."

Justin Franssen, a Holland-based lawyer who is working with Casino Lux, said the Ladbrokes' approach was a new one. He said European Union law is specific regarding gaming, but that it would likely be updated soon to address Internet-based gambling as well as cross-border issues.

E.U. law allows for each jurisdiction to decide how many, if any, games of chance it wants to enact and gives each country the authority to license operators, Franssen said.

By Ladbrokes using the single market argument for its case, Franssen said Ladbrokes could be forcing the issue of change within the European Union.

Being based in a highly regulated and licensed jurisdiction such as the United Kingdom could bode well for Ladbrokes, Franssen said. The company could argue before the E.U. court that its approach to business is at the same level, and maybe even higher, than that of the monopolies in the Netherlands.

O'Reilly said Ladbrokes' policy of operating in highly regulated jurisdictions will be a key element of its argument.

"The U.K. system of licensing and regulation provides a model for the rest of Europe, and we want to offer European consumers the chance to benefit from the safety, superior choice and odds the U.K. model offers -- all within a tightly regulated environment," he said.

While Ladbrokes would love to see the European Union enact gaming regulations and guidelines, O'Reilly realizes that will be a long shot. He did say, however, that his company has no problems adapting its procedures to comply with international laws as well as national standards that govern online gaming.

Dutch gaming regulators weren't immediately available for comment, and one spokesperson said there was little to be said in light of the ongoing court battle.

Ladbrokes caught the ire of Dutch officials last summer during the 2002 World Cup when the company placed five advertisements promoting betting services online throughout the Netherlands.

As a result of those advertisements, De Lotto asked Ladbrokes to stop advertising and to block Dutch residents from accessing its services.

Ladbrokes agreed to desist from advertising, but refused to block Dutch residents from accessing its online betting and gaming portal.

In January De Lotto turned to the lower court, arguing that Ladbrokes was in violation of the Hazard Games Act.

Like many legal experts, Franssen sees the outcome of the Ladbrokes case stretching far beyond the Netherlands and possibly laying the groundwork for how the European Union deals with cross-border betting.

"This could answer a lot of our questions," he said.