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Friday, September 25, 2009
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The Italian gaming authority has issued the decree setting the terms of the call for tenders relating to the assignment of the new licenses concerning the setting up and the management of the network connecting the NewSlots (the only type of slot machines which can be placed outside of casinos) and Videolotteries.  The current licenses will expire on 30 October 2010 and the Italian gaming authority will launch by 30 April 2010 a new call for tenders for the assignment of the network licenses which will last 9 years, starting from 1 November 2010.
The call for tenders will be open only to operators that have reached experience in Italy or abroad in the gaming sector managing at least 2,500 gaming terminals. However, it will be possible to participate to the procedure also through a consortium of companies in which only one of its members needs to be a gaming operator. Also, the participants to the call for tenders need to have gained a turnover of at least € 30,000,000 during the period 2008-2009. As a consequence of the award of the license, operators shall, within the following 6 months, set up the gaming network and install at least 5,000 NewSlot and a number of Videolotteries not exceeding 14% of the installed NewSlots.
The possibility for non-gaming operators to participate through a consortium to the call for tenders represent a very relevant factor. In fact, companies active for instance in the telecommunications sector might have the technical capabilities to offer the required service, but do not have experience in the gaming sector. Italian authorities hope that through this call for tenders new companies will enter into the Italian gaming market that for the time being is open only to few players.
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Wednesday, September 23, 2009
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The criminal court of Rome has issued a relevant decision on the liability of hosting providers in Italy. The dispute concerned the placing on the website www.ragazzeinvendita.com of banners connecting to the website www.girlsinchat.com where it was possible to connect via chat or via phone to the girls showed on the website. The proceeding concerned, among others, the contributory liability of the website www.ragazzeinvendita.com for the crime of exploitation of the prostitution. 
The court held that the company managing the website www.ragazzeinvendita.com was not liable for the crime since there was no connection with the company managing the website www.girlsinchat.com and in particular because the former did not gain any profit from the activity connected the second website.
This decision is quite interesting since it follows the opinion of the Advocate General of the European Court of Justice relating to the dispute Google v Louis Vitton. According to the interpretation of the Italian criminal court and of the Advocate General, the liability of the hosting providers seems to be linked to the profit that the hosting provider can potentially obtain from the unlawful activity. Should this interpretation be supported by other courts it might make hosting providers that charge a fee to their users liable for any illegal activity performed by the latter even if the hosting providers are not aware of the illegal contents published on their websites.
I believe that such interpretation is in contrast with the provisions of the E-Commerce Directive 2000/31 that prohibits any law obliging hosting providers to monitor the contents published on their websites and only requires them to promptly remove or disable access to the illegal contents as soon as they become aware that such contents are unlawful.
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Tuesday, September 22, 2009
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The Advocate General of the European Court of Justice has issued today its opinion on the Google v. Louis Vuitton case which related to the possibility to consider the use by Google, in its advertising system "AdWords" of a keyword corresponding to a third party's registered trade mark as an infringement of that trade mark.

The Advocate General held that:
  • the selection by AdWords customers of a keyword reproducing or imitating a trade mark registered by a third party and covering identical or similar goods and the displaying of ads in response to keywords reproducing or imitating registered trade marks without the trade mark owner's authorisation does not give rise to a trade mark infringement and therefore a trade mark owner cannot object to such use;
  • Google in the provision of AdWords services cannot be qualified as an hosting provider enjoying the liability exemption set forth in Article 14 of the E-Commerce Directive 2000/31/EC since AdWords is "no longer a neutral information vehicle" because "Google has a direct interest in Internet users clicking on the ads' links". On the contrary, Google's search engine may fall under the liability exemption provide in respect of "caching" in Article 13 of the E-Commerce Directive.
This is a very good opinion for Google. However, I do not fully share the view of the Advocate General in relation to the impossibility to apply the hosting liability exemption with reference to AdWords service. I believe that it is not relevant the circumstance that Google gains profit from the AdWords service since otherwise the liability exemption would not be applicable to any other hosting provider which requires the payment of fee to its users. Indeed, as far as Google does not exercise any control on the contents of the advertising claims and the selected keywords I think that the liability exemption should be applicable as they would only store contents provided by AdWords customers.
Finally, please bear in mind that the opionion of the Advocate General is not binding for the European Court of Justice that might adopt a different approach.
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Sunday, September 20, 2009
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The upcoming entry into force of the Regulation (CE) 593/2008 (the "Regulation") on the law applicable to contractual obligations might have relevant consequences on e-commerce websites selling their products to Italian consumers. 
Let's set the scenario:
  • an e-commerce .COM website is run by a US company selling goods to consumers located worldwide; 
  • the website is in English, including its Terms of Sale that are subject to a US law; 
  • the goods sold through the website are shipped worldwide, including Italy. 
Can Italian consumers rely on Italian non-derogable laws?
The answer is YES on the basis of a strict interpretation of the Regulation which according to Italian private international law is applicable also to contracts where the counterparty is not domiciled in the European Union, like a US e-commerce operator.
Indeed, the Regulation requires that the website directs its activity to Italian consumers which according to the recitals of the Regulation can occur when: 
  • the website solicits the conclusion of distance contracts; and
  • a contract has been actually concluded at a distance by whatever means. 
Indeed, it is possible to argue that the mere possibility for Italian consumers to purchase products through the American website (as any other foreign website) implies a direction of the activity of the portal towards Italian consumers. On the basis of such interpretation, Italian consumers under the scenario outlined above will be entitle to exercise the rights prescribed by Italian law which cannot be derogated from by agreement.
However please bear in mind that the validity of the arguments outlined above will depend on the specific features of the website which need to be reviewed on a case by case basis. Likewise, the consequences for foreign websites of applicability of the Italian non-derogable laws and the approaches to be taken in this respect need a review of the peculiarities of the each website.
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Wednesday, September 16, 2009
Launch of call for tenders on instant lotteries in Italy!

The Italian Gaming Authority has launched the call for tenders on the so called "instant lotteries". Instant lotteries include "paper scratch cards" that can now be purchased in almost any tabacco shop in Italy (even though they can be sold also abroad) and "online scratch cards" which are accessible on the websites of any licensees. Players scartching the paper or the online scratch cards can win hundreds of thousand of Euros. 

The call for tenders is open to all the companies which:
  • during the period 2006-2008 have reached a turnover equal to at least € 150,000,000 in the gaming sector. However, if the company has been established less than 3 years before the call for tenders its financial soundness shall be proved also merely through declarations from at least two banks; 
  • collected funds from players (i.e. through buy-in, bets, the price of scratch cards) during each of the last 3 financial years equal to at least € 500,000,000 in connection with games performed through gaming terminals; 
  • managed during year 2008 at least 3,000 points of provision of services (e.g. betting shops, betting agencies, ATM machines etc.). However, please note that the conditions of the call for tenders (i) do not require that these points of provision of services are located in Italy and therefore also large foreign gaming operators can satisfy this requirement; and (ii) do not require that the applicant owns such points of provision of services or that such points of provisions of services are controlled by same; indeed this requirement is only necessary to prove the management skills of the applicant.
It might be relevant for foreign operators to note that the requirements listed above can be met also through affiliated companies and therefore the applicant might also be a newco established only to participate to the call for tenders. Also, applicants can participate to the call for tenders through a temporary group of enterprises (in Italian "raggruppamento temporaneo di imprese") where the abovementioned requirements might be jointly met by the companies part of the group.
The licenses will be assigned assigning specific marks to the value of bid, the technical project of network of sales point and the technical project relating to the safety and reliability of the scratch cards.
The deadline for the placing of the bids is 12 October 2009 at 4 pm and therefore any interested operator shall act expeditiously.   
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Tuesday, September 15, 2009
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The recent decision of the European Court of Justice (see Landmark Decision of the ECJ on European gaming monopolies) in the Bwin vs. Santa Casa dispute might have considerable side effects on the online gaming business. The court held that overriding reasons in the public interest justify limitations set forth by local gaming laws to the principle of freedom to provide services set forth in the EC Treaty.
In practical terms, it means that in theory any EU Member State could implement laws requiring that gaming operators can offer their games to people located in their country only if they obtain a local gaming license. This means that if, in the worst scenario for gaming operators, this approach would be followed by all the EU Member States, a gaming operator which intends to offer its games to all the European residents, shall not only apply for a gaming license in all the EU Member States, but shall also set up a country specific website open only to the people located in each EU Member State.
This means that Italian users will never be able to play with French user and the possibility for gaming operators to exploit economies of scale will be substantially limited. 

This means that gaming operators which intend to launch their services in a new country shall start a new business from scratch without taking advantage of the market recognition obtained in other countries.

And what about the ubiquity of the Internet? Do public interest reasons really justify the limitations to the EU principle of freedom of services? And if so, why are Governments introducing more and more games?
The EU principle of freedom of services is based on the reciprocal trust among EU Member States on the compliance of the legal system of the other EU Member States with minimum standards. The laws governing the gaming sector have not been harmonized through EU Directives, but it seems that the attractive taxes paid by gaming operators are the main reasons behind the restrictive approach of EU Governments in such sector.
In the next future we will see how gaming operators will react to this decision of the ECJ, whether they will decide to comply with local gaming laws or they will decide to implement further solutions to circumvent local gaming laws.     
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Friday, September 11, 2009
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In a dispute of involving a German consumer and a German online retailer, the ECJ held that, in case of exercise of the right of withdrawal prescribed by the Distance Selling Directive, suppliers can charge consumers for the use of returned goods only in case of unjust enrichment or bad faith by the latter
Ms. Messner, a German consumer, bought from Stefan Krüger, a company which operates an Internet based mail-order business, a second-hand laptop computer on the Internet. Nine months after the purchase, Ms. Messner informed Stefan Krüger that the screen of the computer was defective and, after the refusal by Stefan Krüger to repair it, decided to withdraw from the contract of sale and offered to return the laptop computer in return for refund of the purchase price. Stefan Krüger argued that Ms. Messner had to pay compensation for the actual use of the lap top which exceeded the purchase price paid by Ms. Messner.
The Distance Selling Directive governs any contract concerning goods or services concluded between a supplier and a consumer which are not in the same place, such as contracts concluded online, via email or phone. The Directive grants to consumers the right to withdraw from the agreement without penalty and without giving any reason, bearing only the direct cost of returning the goods within at least 7 working days. However, Ms. Messner could exercise the right of withdrawal after 9 months since according to German law in case of distance transactions if the consumer is not informed of its right to withdraw, the period for withdrawal shall not commence until such information is provided.
The Court held that the Distance Selling Directive:
"should be interpreted as precluding a provision of national law which provides that, in the case of withdrawal by a consumer within the withdrawal period, a seller may claim compensation for the value of the use of consumer goods acquired under a distance contract".
Adding also that:
"the functionality and efficacy of the right of withdrawal would be impaired if the consumer were obliged to pay compensation simply as a result of having examined and tested the goods acquired under a distance contract".
However, the ruling also said that:
the provisions of the Directive "do not prevent the consumer from being required to pay compensation for the use of the goods in the case where he has made use of those goods in a manner incompatible with the principles of civil law, such as those of good faith or unjust enrichment, on condition that [...] the functionality and efficacy of the right of withdrawal are not adversely affected, this being a matter for the national court to determine".
Italian law implementing the Distance Selling Directive prescribes the possibility for a supplier to charge a consumer only for the costs of returning the goods and only if this is prescribed by the contract. If the contract is silent on this matter, the supplier shall bear also this cost. Also, the supplier will not be entitled to charge the consumer for the use of the goods, but if the latter did not comply with the principles of diligence in the handing of the goods, it might require him the payment of the damages suffered because of its lack of diligence. 
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Wednesday, September 9, 2009
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The European Court of Justice (ECJ) issued yesterday its decision on the dispute between the Austrian gaming operator, Bwin, and the Portuguese gaming monopolist, Santa Casa de Misericòdia de Lisboa (Santa Casa).

The dispute concerns Bwin’s sponsorship of the Portuguese professional football league which Santa Casa had challenged stating that the deal is in breach of of Portugal’s advertising code that expressly prohibits the advertising of games of chance in Portugal, except for games developed by Santa Casa, and issued fines against both Bwin and the football league.

Bwin and the football league brought actions before the criminal court of Oporto requiring the annulment of such fines and the court referred the dispute to the ECJ asking for clarifications on the compatibility of gambling monopolies under European law. In particular, as already occurred in the Placanica and Gambelli cases, the ECJ had been called to judge on the compatibility between the principle of freedom to provide services set forth in the EC Treaty and domestic laws prohibiting the offer of services in the State by operators established in another EU Member State and lawfully licensed to under the laws of such EU Member State to provide similar services.

Yesterday, the ECJ held that "the prohibition imposed on operators [...] of offering games of chance via the Internet may be regarded as justified by the objective of combating fraud and crime". Indeed, the court recognised these objectives as "over-riding reasons in the public interest" that can justify a limitation to the freedom to provide services.

Moreover, the court also highlighted that "because of the lack of direct contact between consumer and operator, games of chance accessible via the internet involve different and more substantial risks of fraud by operators against consumers compared with the traditional markets for such games".

This is a very relevant decision under an Italian law perspective as well since the compatibility of the Italian gaming licensing system with the EU principle of freedom to provide services had been challenged by gaming operators in several circumstances before national courts (see "Italian Administrative Court rules against the Italian licensing system") and the ECJ. This decision is supposed to bring more clarity to the Italian gaming sector.
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Tuesday, September 8, 2009
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Italian newspapers report today the information about the potential acquisition by Bwin, the listed Austrian gambling company, of Gioco Digitale, one of the biggest Italian licensed gaming operators which has been recently active especially in the skill games sector.

According to the press, Bwin will pay € 90-95m for 100% of Gioco Digitale. The negotiations have been confirmed by Bwin's management, but are still ongoing and in particular it is not clear what impact the potential acquisition will have on Gioco Digitale whose market share was lowering during the last months especially because of the entrance into the market of relevant foreign operators.
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Monday, September 7, 2009
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After several years of disputes, the Italian Supreme Administrative Court (the "Consiglio di Stato") has issued a preliminary ruling in favour of Stanley International ordering the reopening of Stanley's betting outlets in Italy.

Indeed, since 1994 Stanley International has been running in Italy betting outlets involved in the offer of betting services in absence of an Italian gaming licence. Italian authorities had ordered the closure of such outlets for the breach of Italian gaming laws which require an Italian gaming license for each betting outlet. However, the Italian Supreme Administrive Court, making reference to the decisions of the European Court of Justice concerning the Gambelli and Placanica cases, held that, in compliance with the EU principle of freedom of services, Stanley International was entitled to open and run betting outlets in Italy under its UK gaming licence without the need of obtaining an additional Italian gaming licence.

This decision has been highly criticised by other gaming operators and by the Italian gaming authority whose director stressed that the decision is a mere preliminary ruling and the court did not take into account the recent legislative developments which obtained the approval by the EU Commission.
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Thursday, September 3, 2009
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The Italian gaming authority has sent to the EC Commission the draft decrees regulating (i) videolotteries and (ii) cash games and fixed odd games of chance. The EC Commission will have now a 90 days period to raise any relevant comment or request of amendments. Prior to expire of such term the decrees cannot be issued and therefore licensees will not be entitled to lauch such games.

The most relevant contents of the draft decrees are the following:

VIDEOLOTTERIES
  • the maximum cost of a single game shall be € 10 with a minimum stake of € 0.50, while the the maximum allowed wins for each single game will be € 5,000 with the exclusion of the jackpot whose value shall not be higher than € 100,000 if it is determined in connection with a single gaming hall and shall not be higher than € 500,000 if it is determined in connection with a gaming system linking more gaming halls;
  • the percentage of the amount collected from players which is allocated to the prizes cannot be lower than 85%;
  • the videolotteries can be installed only in areas dedicated to the gaming activity (e.g. bingo halls, betting shops, gaming halls etc. with the consequent exclusion of bars and hotels) and a maximum number of videolotteries can be installed in gaming halls depending on their surface.
CASH GAMES AND FIXED ODD GAMES OF CHANCE
  • the maximum amount of money that a player can initially withdraw from its gaming account to have it available during the gaming session to place stakes will be € 1,000;
  • the maximum values of buy-in in case of skill games organised as tournaments has been increased from € 100 to € 250;
  • the applicable taxes are equal to 20% of the amount collected from players which is not returned to them;
  • the provision of the cash games and fixed odd games of chance will be open to all the entities holding an Italian license covering also skill games following the issue by the Italian gaming authority of an express authorisation subject to the compliance of the gaming platform of the licensee with specific technical requirements.
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Wednesday, September 2, 2009
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According to the press, Ca Vendramin Calergi, the company that manages the Venice Casino, has put on sale its stake in the Casino. Currently a Russian entrepreneur and a Greek company appear interested. It is not still clear at which stage the negotiations are. The Venice Casino had revenues of € 200 millions in 2008.
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