The European Commission has published the “Study
on Sports Organisers’ Rights in the EU”, which was carried out by
the ASSER International Sports Law Centre (T.M.C. Asser Institute) and the
Institute for Information Law (University of Amsterdam).
The study critically examines the legal protection of
rights to sports events (sports organisers’ rights) and various issues
regarding their commercial exploitation in the field of media and sports
betting, both from a national and EU law perspective.
In a number of posts, we will highlight some of the key
findings of the study.
“It was Hyde, after all, and
Hyde alone, that
was guilty.”
In recent years, numerous national and European sports
organisers have called for the adoption of a specific right to consent to the
organisation of bets (“right to consent to bets”), by virtue of which no
betting operator could offer bets on a sports event without first entering into
a contractual agreement with the organiser.
A sports organisers’ right to consent to bets was first
introduced in Victoria (Australia) in 2007. Yet it was the recognition of a
similar right in France that created the true momentum for sports organisers to
advocate its adoption at the EU or EU-wide national level. The argument is
twofold. First, a right to consent to bets would entitle sports organisers to
demand a “fair financial return” for the commercial exploitation of theirs
sports events by betting operators. Second, it would establish a statutory
obligation for betting operators to work in partnership with sports organisers
to preserve the integrity of sports events. According to the contractual
provisions agreed upon by the involved parties, mutual obligations (for e.g.
fraud detection) and conditions of information exchange can be identified.
A
restriction to the freedom to provide services?
From an EU internal market law perspective, it is
important to note that the conditions implementing a right to consent to bets
are capable of constituting a restriction of the free movement of services
within the Union (within the meaning of Article 56 TFEU). Indeed, the
requirement for betting operators to obtain consent for the organisation of
sports bets could impede or render less attractive the free provision of
gambling services.[1]
The Court of Justice (CJ) has consistently held that restrictions
on gambling activities are acceptable only if justified by an imperative
requirement in the general interest and compliant with the principle of
proportionality. The CJ has accepted the prevention of fraud as a legitimate
objective justification. The financing of public interest activities through
proceeds from gambling services, on the other hand, can only be accepted as a
beneficial consequence that is incidental to the restrictive policy adopted.[2]
It follows that a strict regulatory framework that
genuinely reflects a concern to prevent the manipulation of sports events must
accompany the introduction of a right to consent to bets.
The origins
of the French betting right
With the enactment of a new gambling law in 2010, the
French legislator, following case law precedent recognizing sports bets as a
form of commercial exploitation of sports events, introduced a right to consent
to bets in the French Sports Code.
Interestingly, the concept of the right to consent to
bets evolved considerably during the course of the legislative process.
When the draft law opening up online gambling and betting
to competition and regulation was introduced in the French parliament, the
rationale of the right to consent to bets was solely expressed in terms of generating
a “fair financial return” to sport. Under Chapter IX (“Provisions concerning
the exploitation of sports events”) of the original draft law, the following
addition to Article L.334-1 of the Sports Code was proposed:
“The
use, for commercial purposes, of any characteristic element of sporting events
or competitions, notably names, calendars, data or results, requires the
consent of the owners of the exploitation rights under conditions, in
particular of a financial nature, defined by contract, subject to the
provisions of articles L. 333-6 to L.333-9”.[3]
On 5 March 2009, the French authorities notified the
draft law to the European Commission, in accordance with the provisions of
Directive 98/34/EC of 22 June 1988.[4] In its detailed opinion,
the Commission stressed that several provisions of the draft law would infringe
Article 56 TFEU if they were to be adopted without due consideration of the
Commission’s objections. Amongst other things, the Commission rightly observed
that the financing of sport through gambling revenues could not justify an
obstacle to free movement, in this case the requirement to obtain consent from
the sports organiser. The Commission further noted that the characteristic
elements that are already in the possession of sports organisers, such as
calendars, data or results, could not qualify for sui generis database right
protection.
It was only during the subsequent first reading of the
draft law in the French National Assembly that the statutory recognition of the
right to consent to bets was presented as a means of preserving sports
integrity. On 21 July 2009, the French Minister for the Budget declared:
“in
reality, the interest of this right for sport is not financial but ethical, by
requiring commercial agreements between gambling operators and the organisers
of sports competitions, this right finally will give professional sport the
means to make the operators share their concerns in matters of competition
ethics”.[5]
Accordingly, the relevant provision was substantially
amended to address the concerns about its compliance with the EU internal
market rules. First, it no longer mentioned that the consent to the
organisation of bets was related to the use of fixtures and schedules. Second, the
title of Chapter IX was changed to “Provisions concerning the exploitation of
sports events and the fight against fraud and cheating in the context of
these events” (emphasis added). Third, multiple paragraphs were added, so
as to stipulate that (1) the betting right contracts should impose obligations
on betting operators concerning fraud detection and prevention and (2) the
financial contribution is intended to compensate for costs incurred by sports
organisers for anti-fraud mechanisms.[6]
The
proof of the pudding is in the eating
On the basis of an in-depth assessment of the exploitation
of the French right to consent to bets, the study concludes that the rationale
of safeguarding the integrity of sports events did not really override its economic
rationale.
Decree No. 2010-614 requires the betting right marketing
contracts to specify information and transparency obligations imposed on
operators to detect fraud and prevent the risk of harm to the integrity of
sports events.[7]
Contrary to the relatively strong language about the stipulation of
“information and transparency obligations” imposed on the operators, Decree No.
2010-614 merely requires the holder of the right to consent to bets to specify
in the contracts the measures it “intends”
to introduce for preventing the risk for the integrity of the events in
question. However, the law does not mandate the effective implementation of
these integrity measures. Furthermore, although the compensation paid for the
right to organise bets must take account “in
particular the costs incurred in detecting and preventing fraud”, there is
no guarantee that the income is allocated to fraud prevention and detection.
If Member States would consider introducing a right to
consent to bets, it appears critical from an EU law perspective that it is
genuinely designed to protect a
non-economic public interest objective in a proportional manner. The Victorian
(Australia) regulatory regime is recommended as a best practice model. Here,
the financial return is truly a compensation for the integrity assurances given
by the sports bodies. Before a sports body is legally entitled to exercise the
right to consent to bets, it must first invest time and resources into
developing adequate integrity mechanisms. Furthermore, in case the sports body
fails to fulfil its contractual obligations, the gambling regulator may revoke
its ability to exercise the right to consent to bets. Indeed, the rights and
obligations in the betting right agreements must work both ways: sports betting
operators are also entitled to expect that the sports organisers truly
implement the integrity policies.
For a detailed exploration of the virtues of a right to
consent to bets and the challenges of adopting such a mechanism from a legal,
institutional, and practical perspective, check out the full study available at
http://ec.europa.eu/sport/news/2014/study-on-sport-organisers-rights_en.htm.
[1] All measures that prohibit, impede or render less
attractive the exercise of the fundamental freedoms must be regarded as
restrictions, see e.g. C-439/99 Commission v Italy [2002] ECR I-305, para. 22;
Case C-205/99 Analir and Others v Administratión General del Estado [2001] ECR
I-271, para. 21.
[2] See e.g. Joined
Cases C 316/07, C 358/07 to C 360/07, C 409/07 and C 410/07 Markus Stoß and Others
v Wetteraukreis and Others [2010] ECR I-8069, para. 104; C-67/98 Questore di Verona v Diego Zenatti [1999] ECR I-7289, para. 36; Judgment of the EFTA Court in Case 3/06 (Ladbrokes)
para. 63.
[3] Unofficial translation by the research team (“L’utilisation, à des fins commerciales, de
tout élément caractéristique des manifestations ou compétitions sportives,
notamment leur dénomination, leur calendrier, leurs données ou leurs résultats,
ne peut être effectuée sans le consentement des propriétaires des droits
d’exploitation, dans des conditions, notamment financières, définies par
contact, sous réserve des dispositions des articles L. 333-6 à L. 333-9”).
[4] Directive 98/34/EC of the European Parliament and of
the Council of 22 June 1998 laying down a procedure for the provision of
information in the field of technical standards and regulations (1998) OJ L
204/37. This “Transparency Directive” requires Member States to notify their
rules on information society services in draft form, and generally observe a
standstill period of at least three months before formal adoption, in order to
allow other Member States and the European Commission to raise concern about
potential trade barriers within the EU.
[5] Assemblée Nationale, Audition de M. Éric Woerth,
ministre du budget, des comptes publics, de la fonction publique et de la
réforme de l'État au cours de la réunion du 21 Juillet 2009.
[6] In the context
of the second reading of the draft law in the French Senate, the rapporteur of the Finance Committee
welcomed this solution to accommodate the European Commission’s concerns
regarding Article 52. Sénate, Rapport
n° 209 (2009-2010) de M. François Trucy, fait au nom de la commission
des finances, déposé le 19 janvier 2010.
[7] Décret no. 2010-614 du 7 Juin 2010 relatif aux
conditions de commercialisation de droits portant sur l’organisation de paris
en relation avec une manifestation ou compétition sportives, Article 2.
