On most national markets, gambling and gaming are regulated by law and all such operations are required to obtain permits. Consequently, political decisions may affect Betsson operations (see for example the sections on USA, Turkey, Norway and Sweden below). Betsson is dependent on the legal preconditions for the gaming industry, especially those within the EU where the majority of company customers are active. The EC Court has, in a number of highprofile and precedent-setting rulings (the Schindler, Läärä, Gambelli, Lindman and Placanica rulings) stated that, in principle, state restrictions on the gaming field are to be regarded as violations of one the of the basic EU principles. In spite of this a number of member states have retained their restrictions with the aim of making operations difficult or even impossible for private, on-line operators. Within the near future, more European gaming monopolies will probably be challenged in the form of national legal processes. Currently it is difficult to obtain a clear view of how the legal situation will affect the commercial preconditions for online operators. It should be emphasised in this context that Betsson does not offer its services to customers residing in USA due to legislation containing a ban on forwarding of payment transactions linked to Internet gaming in USA that entered into force in October 2006. There is still pressure being applied on EU countries to adapt their national legislation to applicable EC law, with its free movement of goods and services. Several countries have announced that they are working on new legislation in line with EU requirements. However it is still not clear when such new legislation will be introduced onto the main Betsson markets, however when this does occur the company will be able to enjoy increased marketing opportunities and market presence.
In 2007, Turkey introduced legislation against Internet gaming with the aim of protecting its state gaming company IDDAA. Betsson’s Internet-based gaming operations exhibit a clearly-defined, crossborder character which means that international law is applicable. According to the principle of the sovereignty of states, each country is of equal value; consequently one state’s legal regulations cannot take precedence over those of another state. Betsson’s marketplace is Malta and operations are undertaken in accordance with Maltese legislation and answer to the Maltese legal system. As a part of Malta’s market place, Betsson is able to claim immunity to Turkish legislation that may attempt to prevent Betsson from carrying out its operations. This is, according to legal experts, a principle that Turkey accepted through its membership in WTO and through other international agreements. In addition to the above, Turkey has the intention of becoming a full member state of the EU and has accepted, in principle, the EU treaty concerning the free movement of goods and services between member states. Turkey has signed an Association Agreement which is to regulate the country’s journey to full membership. According to legal expertise, this gaming legislation is in breach of EU law and not strictly in line with the Association Agreement. This Turkish legislation makes operations more difficult for Betsson on the Turkish market, even though Turkey can apply no sanctions against Betsson due to the principle of sovereignty. Consequently, Betsson’s future revenues from Turkey continue to be more uncertain than those generated by its other markets.
Norway intends to expand its ban on the promotion of gaming arranged abroad. This ban will hit banks in that it will be a criminal act to operate a redemption service in connection with payment for gaming to gaming companies via credit and debit cards. When this law enters into force it may affect Betsson’s future revenues in a negative manner.
In Sweden, in December 2008, a government committee of enquiry on gaming presented its report including proposed new legislation. This proposed legislation has been the subject of harsh criticism. Betsson’s assessment is that the proposed legislation is contrary to EU law and that it will not be included in its current form. No legal changes to the Swedish gaming law are expected before the parliamentary elections in September 2010. People who suffer from gambling addiction may sue companies within the Betsson group for this addiction. Although such claims would probably be rejected, they may give rise to considerable cost and also reduce confidence in the Betsson group, which ultimately could lead to decreased revenues. Betsson is accredited by the G4 organisation which works to prevent gambling addiction and, as part of its commitment to this activity the companies have adapted their sites in order to offer full support to the guidelines established by G4. In addition, Betsson has established a special department and skilled, experienced staff have been recruited so that Betsson will be able to maintain its position as a leader in the field of responsible gaming. One result of Betsson’s efforts to manage long term gambling addiction issues was that, in December 2009, it was designated as the world’s most socially responsible gaming operator.
Disputes
In 2001, Betsson reported the Swedish Government to the Chancellor of Justice (JK) as the state had not notified its prohibition on prize and wheel of fortune games and also failed to apply reasonable transition regulations. This negligence has cost Betsson considerable sums. Betsson requested JK to investigate whether the state was liable for these losses. JK gave a negative response in 2003. The justification of the JK response was not clearly-defined and Betsson has sought external legal expertise in order to investigate the opportunities of suing the state and claiming damages for breach of EC law. The findings of this study established that the state was in error when it did not notify of the 1997 legislative changes (Wheel of Fortune) under the provisions on technical regulations in Directive 98/34 EC. The ban therefore becomes void and could not be applied to Betsson. The state has consequently been guilty of a breach of EC law. According to this assessment there are, consequently, good prospects for the success of an action for damages concerning the 1997 amendments. This conclusion finds further support in recent rulings of the EC Court and the Supreme Court. On 1 November 2006, Betsson filed a lawsuit against the state which made a claim of damages of SEK 81 million. In September of 2010 Stockholm court of justice announced it’s ruling against Betsson. See the verdict here (only in Swedish).
In May 2008, Betsson opened a betting shop in Stockholm. The Gaming Board for Sweden felt these operations were contrary to the Lotteries Act and, on threat of penalty, required the shop to cease the promotion of gaming operations. This decision was appealed by Betsson (Shopsson) to the County Administrative Court. The County Administrative Court rejected the appeal, in the company’s opinion in violation of EC law. Betsson then appealed the decision to the Administrative Court of Appeal. This court gave Betsson leave to appeal in January 2009 and upheld the Betsson claim for interim relief, which meant that the County Administrative Court ruling no longer applied. In December 2009 the Administrative Court of Appeal gave its ruling that once again, on threat of penalty payment, the shop must cease to promote gaming operations. Company management held fast to their view that the decision was contrary to applicable EU law and appealed once again to the Supreme Administrative Court. In order to avoid penalties, management was forced to close the shop. Two days after the shop closed the Supreme Administrative Court upheld Betsson’s claim for interim relief, which in practical terms means that Betsson once again was entitled to conduct operations in anticipation of court’s decision to enter into legal force or the Supreme Administrative Court to grant notice to appeal. The shop was opened again in January 2010. On September 22, the police conducted a search of the shop in order to identify the possible illegal gaming operations. Betsson’s view is that all gaming operations within the group are conducted in Malta. The police investigation is progressing and is will be completed within the next six-month period.