WG: EGBA Newsletter Issue 8: Serving Europe's wider goals

23.05.2011, Our business contributes to Europe's wider goals, and EU's current green paper 'window' is a unique opportunity to show how.

First, an EU framework for online gaming and betting would mean not only a single market for business and additional tax revenue for European exchequers but also a single market for consumer safety and a single market for growth-promoting digital technologies. Online gaming and betting technologies are a prime example of positive high-tech spillover from one sector to the rest of the European economy. If Europe continues to tolerate obstacles to cutting-edge online innovation, others will take this market. Second, our sector is a significant contributor to the European sports industry through its sponsorship of sports.

As the European Sponsorship Association (ESA) explains, the gambling sector as a whole was among the top sponsors of sports teams and events in Europe in 2010, and the trend is upwards. But differing advertising and sponsorship rules in EU member states are alas holding back this natural symbiosis between our sector and the sports sector in Europe. Third, our sector is expanding its campaign to educate players about the risks inherent in sports and betting. As the EU Athletes association says in this issue, a key element of the campaign involves top athletes going into the dressing-room to discuss face to face with their fellow players about how to behave properly in relation to sports and betting. This campaign has already had major cutthrough with players and is thus helping to keep sport clean.

Sigrid Ligné, EGBA Secretary General

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How gaming and betting operators help drive sponsorship
Helen Day, Head of European Policy, European Sponsorship Association 1. What is the European Sponsorship Association? What is the contribution of gambling to sponsorship?

The European Sponsorship Association (ESA) is the trade organisation representing the sponsorship industry in Europe. Amongst its members it has gambling companies, rights owners such as sports bodies that have gambling sponsors, agencies and others like lawyers involved in gambling sponsorship contracts1.

In 2008, gambling companies did around € 65 million of reported sponsorship deals. In 2010, the gambling sector ranked in the top 10 of investors as sponsors of sports teams and events in Europe by number of deals reported. Sponsorship spend by the gambling industry has increased, with the growth of sponsorship by online gambling businesses being particularly notable.

2. Will the European Commission's Green Paper on online gambling have an impact on your association?

Yes, and we are supportive of steps being taken at EU level to ensure that legal restrictions imposed by member states are compatible with EU law, and to address cross- border issues.

Today, the promotion of gambling services through sponsorship is governed by a variety of quite different legal and regulatory regimes within Europe. In addition, the legality of some national restrictions is not always clear. This uncertainty can have an adverse impact upon the European sponsorship market. The enforcement of prohibitions on the promotion of gambling services has affected sponsorship arrangements between high-profile sports teams and regulated gambling operators.

. Do you think that there is a conflict of interest when gambling companies sponsor teams or events?

Absolutely not. This is a purely theoretical risk which is neither supported by any evidence nor borne out in the reality of sponsorship arrangements between sports participants and regulated gambling operators:

• The European sponsorship market is largely closed to unregulated and illegal gambling operators due to national regulations; • The maintenance of sporting integrity is fundamental not only to sport itself, but also to the gambling industry.

There is thus a shared interest in cooperation between sport and gambling industries which helps promote and maintain the integrity of sport; • Legitimate, regulated gambling operators who do sponsor sport have everything to lose, and relatively little to gain, by seeking to exploit inside information or influence sports results. Any short-term benefits could never outweigh the risks to such operators, which include the potential loss of operating licences and a loss of trust from customers - without either of which the operator would not survive; • The very purpose of a sponsorship arrangement is to create a positive association between the sponsors and the sponsored party. There is, therefore, no conflict of interest as a sponsor has every incentive to ensure the integrity of the relevant sporting event, as its own brand and reputation are on the line.

4. Which principles should guide sponsorship agreements? Successful sponsorships are those where there is an appropriate link between the sponsor and the sponsored party and where they are managed in a mutually responsible and well- organised manner. The principles for gambling operators in sponsorship should generally include: • Not encouraging problem gambling or harm, nor exploiting children or other vulnerable persons; • Not displaying gambling-related branding on children's replica kit; • The provision of details about help and support available to those who may have concerns about their gambling or that of their families or associates; • Ensuring that sponsors obtain the appropriate accreditation from organisations such as Gamcare.

The gambling and sponsorship industries have put in place self-regulatory initiatives ensuring that gambling sponsorships and advertisements are implemented with a proper regard to application of corporate responsibility and to address social issues. ESA strongly supports and encourages such self-regulatory initiatives.

5. What do you think about sponsorship in relation to the "fair return" issue? The right to sponsor, whether by a gambling operator or any other party, should not be linked to any "fair return" obligation to contribute to the sport or to good causes. The issue of such contributions is separate from the issue of sponsorship which, by its nature, provides valuable funding for the sponsored party. 1 http://www.sponsorship.org

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New sports and betting education campaign: face-to-face education of athletes is key
Walter Palmer, General Secretary, EU Athletes

We at EU Athletes recently decided, in cooperation with EU betting companies, to broaden our campaign to educate professional sportsmen about the risks inherent in sports and betting both onand offline. In last year's successful pilot phase, we reached out to 2500 sportsmen from around 200 sports teams across France, Germany and Spain about rules and best practice in relation to sports, betting and match-fixing. The 2011 campaign will now integrate the Professional Players Federation from the United Kingdom and thereby target an additional 5500 sportsmen. All four countries combined, the campaign will cover a total of seven sports (including football in the UK) and aim to educate a total of 8500 players in its second year of operation.

What did we learn from the first pilot year of the campaign? First, we found out that there is a real information problem on the ground. Some sports federations do not have any rules at all on sports betting. Others have rules, but there is a communication gap between the authorities issuing the regulations and the players who are supposed to be

following them. Statistical evidence from the UK, mirrored by experiences on the continent, showed that a worryingly large percentage of players were not aware of New sports and betting education campaign: face-to-face education of athletes is key their sports rules on betting. Second, we also learned that players' associations are particularly well placed to provide guidance to sportsmen on what the rules are and how to behave - and be seen to behave - in a way which will avoid any suspicion of wrong-doing in relation to betting on sports. The pilot campaign has already had major cut-through with players and is thus helping to keep sport clean, and this direct, real-time feedback loop from players to EU Athletes representatives will help to ensure continued success in year two. The second year of our campaign includes a new, common European code of conduct on sports and betting. The code stands at the heart of the campaign and sets out simple, brief and concrete guidelines for professional sportsmen on how to avoid, or deal with, specific risks that they may face in relation to their sport and betting. Individual sportsmen will be familiarised with the new code of conduct through their national associations. In a nutshell, the five main messages to professional sportsmen are as follows: • Fixing any part of a competition is a complete no-no. • The odds are that you will be caught. • Report anything suspicious. • Play safe - don't bet on your own sport. • Be careful with sensitive information. Apart from helping individual players, this new Europe-wide code and campaign is designed to be a contribution to the current EU sports policy debate, in particular on the integrity of sport. Sport in Europe needs the support of its partners in the European betting sector for many reasons, and we are delighted to work with them again in this important area.

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The legal view - Monopolies jackpot ads to stop
Professor Dr. Ehlermann, Senior Counsel at WilmerHale and a former Director-General of the Legal Service of the European Commission

Advertising and sponsoring by gambling operators are ubiquitous in everyday life. The logos and names of public monopolies and private operators alike appear on TV screens, sports shirts and billboards. A very diverse range of commercial and noncommercial sectors is keen to cooperate with gambling service providers as the sponsorship, media and marketing agreements provide substantial revenues to support their activities.

As gambling is an economic activity that is subject to the EU freedom to provide services, agreements on advertising and sponsoring for these services also fall within that freedom. But the Court of Justice of the European Union has clarified that if a Member State chooses to restrict the gambling market by granting exclusive rights, it is also obliged to restrict the volume and kinds of advertising carried out by that monopoly.

While being allowed to direct consumers to the monopoly offering... Already in the Placanica ruling of 2007, the Court held that when a Member State has a monopoly to prevent crime and fraud, it might also have 'advertising on a certain scale' to draw players to the regulated offer1.

In the Stoß ruling of September 2010, the Court extended the same reasoning to Member States having a monopoly with the objective to protect consumers. It held that 'a certain amount of advertising may [...] contribute in certain cases to directing consumers towards the offer emanating from the holder of the public monopoly'2. What is striking from these references is that the Court limits the level of advertising to "a certain" level, implying that monopolies are allowed to advertise for gambling, but only to ensure that players are "channelled" towards its offer. ... advertising must not aim to encourage or trivialise gambling ...

But in the Stoß ruling, the Court goes a step further and imposes very strict requirements on any admissible advertising for gambling by a monopoly. According to the Court, when a Member State chooses to have a monopoly, its advertising must be 'strictly limited to what is necessary in order thus to channel consumers towards authorised gaming networks. Such advertising cannot, however, in particular, aim to encourage consumers' natural propensity to gamble by stimulating their active participation in it, such as by trivialising gambling or giving it a positive image due to the fact that revenues derived from it are used for activities in the public interest, or by increasing the attractiveness of gambling by means of enticing advertising messages depicting major winnings in glowing colours'.3

... and must not advertise the funding of "good causes" or major winnings Not only does the Court conclude that the volume of advertising must be strictly limited to what is necessary, but for the first time the Court also explicitly rejects certain ways of advertising by monopolies. The Court prohibits monopolies from using image campaigns based on the financing of so-called "good causes" and from advertising major winnings to entice consumers to gamble.

It does not require much more than a quick glance to see that many monopolies make abundant use of these kinds of advertising campaigns. For example, many State lotteries regularly boast their allegedly huge and ever-increasing jackpots in TV-spot advertisements. In Stoß, the Court put a stop to such jackpot spots. The simultaneous Stoß and Carmen Media rulings rightly attracted a lot of attention in September 2010 for the clarification the Court brought to the need for Member States to have truly consistent gambling policies4. In contrast, the Court's conclusions on advertising received much less attention. But as it is very doubtful that the advertising of any of today's monopolies meets the requirements set out above, the Stoß ruling may well have far-reaching implications for many of the monopolies currently operating in the EU.

1 Judgment of 6 March 2007 in Joined Cases C-338/04, C- 359/04 and C-360/04 Placanica and Others, para 55.

2 Judgment of 8 September 2010 in Joined Cases C- 316/07, C-358/07 to C-360/07, C-409/07 and C-410/07 Markus Stoß and Others, para 102.

3 Stoß, para 103.

4 Judgment of 8 September 2010 in Case C-46/08 Carmen Media Group Ltd.

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