The end of the state monopoly in France?

An online gambling firm has won the right to operate in France, undermining the former state monopoly on gambling.

France’s highest court, the Cour de Cassation, overturned a previous ruling. The Court said a monopoly would break EU competition laws.

France operates a state monopoly on gambling and Pari Mutuel Urbain (PMU) is the operator for horse racing betting. It brought the case against Zeturf, which was allowing French people to gamble online on horse races.

The Court, though, ruled against PMU, saying that the monopoly it enjoyed was not consistent with EU competition law. Article 49 of the EC Treaty guarantees free movement of services within the EU.

One French legal expert said that the ruling will probably open up France’s betting market, but only in those areas where French monopolies already operate. “I think France will have to open sports betting to all EC companies, but only in the case there was already a market with only one actor, such as horse race betting,” French law expert Cedric Manara told online news service The Register.

There is a power struggle in Europe about the regulation of gambling. France and Germany are trying to maintain state-controlled betting monopolies, while the European Commission is attempting to enforce Article 49 of the Treaty, which should undermine monopolies.

This week’s Court ruling follows a judgment from the European Court of Justice earlier this year which barred operators in other countries from offering gambling services in Italy.

Italy had issued 1,000 gambling licences, but three men operated as intermediaries for Stanley, a UK company which did not have an Italian licence. The Italian courts asked the ECJ to clarify whether or not that country’s licensing policy was in breach of the Treaty and the EU principles of free trade.

In March this year the ECJ said that Italy’s laws restricted trade. It said that the blanket exclusion of companies from tender procedures for the award of licences goes beyond what is necessary to achieve the objective of preventing criminals from being involved in gambling.

The ruling pointed out that criminal legislation may not restrict the fundamental freedoms guaranteed by Community law.