World's leading online betting company takes government to court over illegal monopoly designed to exploit Dutch punters; launches formal complaint to European Commission
BETFAIR, one of the world's leading online betting companies, has started legal action against the Dutch government in a court case which could result in a claim for damages running into millions of Euros.
The decision follows a letter from the Dutch Ministry of Justice urging Dutch banks not to process payments from any Dutch customers wishing to place a bet on any legal gaming website. The measure would block access to the services of Betfair and many other UK licensed operators.
Mark Davies, Managing Director at Betfair, said:
"This is a desperate move by the Dutch government to prevent a company that is fully licensed and regulated in jurisdictions across Europe from being accessed by residents in the Netherlands. Its actions are against the interests of the Dutch consumer and fly in the face of the EU principles of open and fair competition. This serves only to protect the Dutch government's own gaming monopoly and keep prices high.
"It is madness that the Netherlands, as one of the founding members of the single market, has resorted to illegal tactics that prevent consumer choice and go against the Treaty.
"The government's objective of shutting out foreign operators while feather-bedding domestic monopolies, one a big US multinational, and protect a cosy cartel cannot be allowed to continue. We will fight this. We will fight anyone who unlawfully prevents us and our customers from doing business."
Betfair has also made a formal complaint to the European Commission stating that the government's action unlawfully protects the Dutch gaming monopoly and violates EC laws concerning the free movement of services within the EU.
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Notes to editors
Where has the action been filed?
The action has been filed with the Civil District Court of The Hague. The Defendant is the State of the Netherlands (Ministry of Justice).
What is the purpose of the action?
The action is aimed at obtaining a declaratory judgment to the effect that the recent actions of the Ministry of Justice (financial blocking by calling for a boycott by financial institutions) and the underlying policy are unlawful. Betfair will then continue the proceedings with a claim for damages.
Betfair is arguing that the Dutch Ministry of Justice does not have the power, under Dutch law, to make the request contained in its letter and that sending this letter constitutes an unlawful act towards Betfair. As EC law can also be applied directly by the Dutch courts, Betfair is arguing in these proceedings that the Dutch government, by taking such a step, is acting in breach of EC law (ie in breach of the principles of the freedom to provide services in the EU and the free movement of capital in the EU).
In addition, as EC law is relevant to this case, Betfair has also made an official complaint to the European Commission, urging the Commission both to continue with its infringement proceedings against the Netherlands and to require the Dutch Ministry of Justice to withdraw its letter.
The European Commission has questioned the lawfulness of current Dutch gambling legislation, having started proceedings for infringement of the EC Treaty against the Netherlands in 2006. These infringement proceedings have now progressed from a letter of Formal Notice to a Reasoned Opinion. This is the second of three stages; the final stage is areferral by the European Commission to the European Court of Justice.
The Reasoned Opinion was sent to the Dutch Ministry of Justice by the European Commission more than a year ago. However, the Dutch government has only recently published it.
In addition to the infringement proceedings, two Dutch courts – the Supreme Court and the Council of State – have referred cases involving UK gambling companies (Ladbrokes and Betfair) to the European Court of Justice. The timing of the Ministry of Justice in sending these letters to banks is also questionable given that the ECJ has yet to rule on questions around the compatibility of the Dutch Betting & Gaming Act with EC law.
The primary impact of the letter issued by the Dutch Ministry of Justice is that Dutch residents with domestic accounts at banks based in the Netherlands will be unable to deposit funds on Betfair's website. Therefore, Betfair is seeking a declaration from the Dutch courts that the letter of the Dutch Ministry of Justice is illegal and, following that, claim damages based on the revenue the company would lose as a result of the Ministry's actions.
Betfair is only passively available in Holland and is not actively pursuing customers in the country, and so the move by the government is one predominantly against the activities of Dutch citizens who independently seek out the services offered by Betfair.
About Betfair: (www.betfair.com)
Betfair is the world's biggest online betting community and pioneered the first successful betting exchange in 2000. Driven by cutting-edge technology, Betfair enables customers to choose their own odds and bet even after the event has started. The company now processes over six million transactions a day from its two million registered customers around the world. In addition to sports betting, Betfair offers a portfolio of innovative products including casino, exchange games and poker.
Betfair has twice been named the UK's ‘Company of the Year' by the Confederation of British Industry and remains one of the only betting companies to win a Queen's Award for Enterprise, being recognised for Innovation in 2003 and most recently for International Trade in 2008.
Betfair currently employs over 1,500 people, principally in London, Malta and Tasmania. The company is a licensed betting operator in the UK, and holds additional licenses in Australia, Germany, Austria, Italy and Malta.
The Dutch monopoly, De Lotto, has for many years brought repeated court actions to
prevent Dutch consumers to access foreign online betting companies. The European Commission started infringement proceedings against the Dutch government in 2006, and has subsequently issued a Reasoned Opinion against the Netherlands, stating its view that the Dutch Betting & Gaming Act is not compliant with the free movement of services under EC rules. In addition, the Dutch Supreme Court and the Council of State have referred two gambling cases to the European Court of Justice.
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