This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.
This Summer has seen some worrying developments for bookmakers in the continuing debate over whether they should have to pay for the right to take bets on sporting events. French sports governing bodies have been lobbying for the creation of this new right for some time, and in June the Head of the Sport Unit at the European Commission, Michal Krejza, said that "in principle, we take a positive view of the French idea of creating exploitation rights of sport event organisers from the sports betting operators".
The Commission's attitude will be of concern to bookmakers, who have so far generally been able to resist attempts by sports governing bodies to tap into their profits. The governing bodies initially sought to rely on intellectual property rights, most notably (in the case of horseracing and football in particular) attempting to establish that they owned database rights in their fixture lists. However, the 2005 Court of Appeal case of William Hill v British Horseracing Board resulted in a victory for the bookmakers. Moving from database rights to trade marks, football club Paris Saint Germain argued before the French courts in June 2008 that Bwin and Unibet had unlawfully exploited the club's trade mark for their commercial gain. The claim was rejected. Then, in July this year, football clubs Juventus, PSV Eindhoven and FC Porto also unsuccessfully argued before a Belgian court that Betfair had infringed their intellectual property rights by using their trade marks online.
The difficulty in establishing revenue streams from intellectual property rights leaves the governing bodies reliant on contractual rights to receive payment for providing accurate and up-to-date information to bookmakers. Whilst there is certainly a value in this information, it may not be sufficiently large to satisfy the governing bodies, who have limited scope to increase their prices for fear of opening themselves up to claims of abusing a dominant position, in breach of EU competition law.
A second argument used by governing bodies has been that gambling on sport poses a threat to its integrity, which costs money to combat. As with the majority of arguments in support of additional revenue for rights holders, this argument has been championed by the Sports Rights Owners Coalition (SROC) (as we reported in April last year). SROC have argued that bookmakers should require a licence to take bets on sports events, with licence conditions including obligations to report suspicious betting patterns and share information, and a licence fee to fund efforts to combat corruption. An interesting question is whether any such licence fees would all go into the fight against match-fixing, or whether they would include a profit element for governing bodies.
The governing bodies' third argument is that they have a monopoly over the commercial rights in the tournaments they organise, of which a right to bet is one. Last year, the French courts offered hope to the sports organisers by ordering Expekt and Unibet to stop taking bets on the French Open tennis tournament at Roland Garros when they were found guilty of commercial free-riding (parasitisme), on the basis that they were profiting from the investment made by the Federation Francaise de Tennis (FFT). So far, this has proved to be a peculiarly French approach, with the Belgian courts dismissing a similar claim by the FFT against Ladbrokes, Betfair and Bwin.
However, if the EU Commission continues to support the French approach, then there is little doubt that sports governing bodies across Europe will present a united front in furthering the cause, with cash from bookmakers looking all the more attractive in a difficult market for raising sponsorship (and in some cases broadcasting) revenues. It will take some determined lobbying from the bookmaking industry to make a difference.
The only slight consolation for bookmakers is that the draft French law which the Commission has been considering provides that, if a sports organisation concludes an agreement with a betting operator, it must offer similar terms to other betting operators, and cannot therefore grant a monopoly to a single operator for the right to take bets.