Two warning signals have been sent out to the betting sector in France within a few days.

Whereas at the end of June 2007, the European Commission warned France that it was about time it opened up its sports betting market, the Cour de Cassation also ruled on July 10, 2007 on the conditions in which the French State’s monopoly on online betting (held by PMU) may be considered as a breach of the European principle of the free movement of services.

According to the French courts, such a breach is only justifiable if it is necessary in order to (1) reduce gambling and betting, or (2) prevent the use of gambling for criminal or fraudulent purposes by channeling it into controllable circuits.

Now, the highest French court has ruled that it does not appear to be the French national authorities’ objective to reduce betting and gambling, considering its policy to expand the sector in France clearly in order to increase the State’s revenues.

It also found that the Court of Appeals of Paris should have checked, before issuing its ruling, whether the applicable law in the country where the online betting company was incorporated (in this case the PMU sued a company set up in Malta) contained any provisions aiming to prevent the use of betting and gambling activities for criminal or fraudulent purposes. If it did, PMU’s competitor should have had the possibility of offering its services in France insofar as the applicable Maltese law provided the necessary guarantees.

The courts reviewing the case should therefore take account of these arguments and the current context, which is clearly forcing France into amending its betting and gambling legislation.

In this respect, according to the European Commission’s reasoned opinion of June 27, 2007, in which it formally requested France to remove obstacles to the provision of online betting services, France has until October 29 to answer to the European Commission’s reasoned opinion. Failing this, the Commission is expected to refer France to the European Court of Justice in Luxembourg (ECJ) with all the risks that this implies.