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Dave,
See below broad summary from certain key Eurpoean jurisdictions. The "concern" countries are Belgium and the Netherlands. J ---------------------- Forwarded by Justin Boyd/LON/ECT on 26/05/2000 12:58 --------------------------- Enron Capital & Trade Resources Corp. From: "West, Nick" <nick.west@linklaters.com< 26/05/2000 12:58 To: "'jboyd@enron.com'" <jboyd@enron.com< cc: "Didizian, Marly" <marly.didizian@linklaters.com< Subject: Enron online/sports.com competition Dear Justin You asked for a summary of the UK and foreign advice which we have collated on the lawfulness of the Enron online/sports.com "spread betting" competition. I have set out a short note below. Marly and I would be happy to discuss it with you further by telephone at any time this afternoon. I have assumed that the competition is based predominantly on chance. I have also assumed that there is no element of indirect consideration required to enter the competition. We may need to discuss these points in more detail. UK: There appears to be no problem. The competition cannot be a lottery as the contestants do not pay to enter. The competition may fall within the definition of gaming, but only unlawful gaming is prohibited. The competition format which you have described is unlikely be an unlawful game. Germany: There appears to be no problem as far as gaming laws on lotteries and the German Trading Regulations are concerned, because the participants will not pay to enter the competition. However, it is possible that there may a breach of unfair competition laws. One of Enron's customers without online trading capacity or one of Enron's competitors could argue that the competition is anti-competitive i.e. Enron is trying to influence the decision of its online trading customers as to whether they should trade with Enron at all. We should consider this risk in greater detail. If the game was held to be anti-competitive, Enron would have to cease to offer it to German customers. Netherlands: Under the Dutch Games of Chance Act (GCA), games of chance are generally prohibited, even if participation is free. However, we have been advised that, to date, it is not clear whether the GCA even applies to internet games. We have also been advised that, in any event, the Dutch authorities are unlikely to consider it a high priority to try to enforce the GCA against a game offered for a limited time with only a moderate prize. Finally, we have been advised that if the game complies with the law in the country of its origin, this would decrease the likelihood of any Dutch action. Thus the key decision in the Netherlands is whether the commercial benefits of the competition outweighs the risk of a fine for contravention of the GCA - maximum NLG 25,000 (approx 10,000 USD). The GCA also only applies to games of chance. The provisions of the act could be avoided if a greater degree of skill was introduced in to the competition. Italy: You may recall that under Italian law, it appears that Enron will need to get the approval of the Italian Ministry of Finance to offer the game to Italian customers as it falls within the definition of an "advertising contest". Having discussed this matter with our Italian colleagues, it seems that Enron will be unable to avoid this requirement unless it does not offer prizes. Authorisation is likely to take a minimum of 30 days - there is no fast track process. Furthermore, since the website will be co-branded Enron online/sports.com, we have been advised that both parties would need to seek authorisation. Failure to obtain authorisation may result in a fine of up to 15m Lire (approx 7,500 USD) and continuing an unauthorised game in contravention of an order of the Ministry of Finance may result in a fine of up to 100m Lire (approx 50,000 USD). We have also been advised that the Italian Ministry of Finance does not undertake regular or thorough searches of the internet to identify potentially unlawful advertising contests. With this is mind, Enron may consider that the commercial benefits of running the competition in Italy outweighs the risk of being fined. We may need to consider this issue in more detail. Belgium: The advice we received from our Belgian colleague is inconclusive. The game does not fall foul of the new Law on Games of Chance as no entry fee is charged. However, we have been advised that there is a small risk that the game may be prohibited under the Law on Lotteries of 1851 since it is a game of chance. This risk can be alleviated by limiting the access to the game to defined group of users - as is the case here - and by increasing the level of skill involved. We may need to consider this risk in more detail since civil and criminal sanctions may be imposed on the organisers of a non-authorised lottery - imprisonment for up to 3 months and a fine of up to BEF 600,000 (approx 14,000 USD) for the organiser of the competition (Enron) as well as a fine for the distributor (sports.com) of up to BEF 200,000 (approx 4,500 USD) Switzerland: There appears to be no problem under Swiss law as the contestants do not need to pay to participate. ____________________________________________________________ This message is confidential. It may also be privileged or otherwise protected by work product immunity or other legal rules. If you have received it by mistake please let us know by reply and then delete it from your system; you should not copy the message or disclose its contents to anyone. ____________________________________________________________
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