BETFAIR starts legal action against Dutch government
May 7, 2009
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 Web site. 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.
More info provided by Betfair
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.
Background
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 a
referral
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.
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