Valoración del Proyecto por el Descuento de Flujos de Caja a Través del Valor

5.1 The approach to the regulation of online gambling in Member States is inconsistent and

gambling is expressly excluded from directives which address other forms of pan-European digital sales. There have been several attempts by regulatory authorities in Member States, and by state licensees and monopoly operators, to apply domestic criminal, administrative and unfair competition laws to prevent online operators licensed in other Member States from operating in or providing services to customers within their territory. These attempts have been contested by operators that have argued that the freedom of establishment and the freedom to provide services under articles 49 and 56 of the TFEU allow them to supply their services under licence from the authorities in one Member State to customers in another Member State, and prevent them from being excluded from domestic licensing regimes on grounds of nationality or otherwise.

5.2 Consequently, a large volume of litigation has been generated before the domestic courts of

many Member States. However, rulings have gone both ways (in favour of governments or those making the challenge) and the only consistent findings in relation to gambling are first, that there is no obligation upon Member States to mutually recognise the validity of non- domestic licences, and second, that there is a wide margin of discretion afforded to Member States to determine its own laws and approach to online gambling unlike other products and services. The Commission (the executive arm of the European Union) despite extensive lobbying by the online industry has declined to recommend a directive to permit passporting of online gambling in the same way as is permitted for certain financial services. Instead it has elected to make a Recommendation to Member States (which does not have the force of a Directive) that they find ways in which to find common standards for customer protection. Again, despite the fact that the Commission has taken action against certain Member States for non-compliance with the TFEU it has not resulted (in every case) with revised laws, policies and regulations. However, such actions have tended to reinforce the bases for operators who continue to justify a supply to the jurisdiction.

5.3 A number of Member States are introducing or have introduced specific provisions in their

national gambling laws concerning the blocking of payments between players and gambling operators not authorised to offer their services in the relevant Member State. However, these tend to be in the minority.

5.4 There are some Member States that have taken a relatively liberal approach to the

regulation of online gambling, such as Denmark, Italy, Spain and the United Kingdom. In some Member States, such as Cyprus, online sports betting is regulated but other online games such as online casino games are prohibited. However, the regulatory environment is constantly evolving and some Member States such as Sweden and the Netherlands, are considering a move towards a more liberal regime under which some types of online gambling services are permissible. Online gambling operators must be (or will be required to be) licensed in order to operate in these jurisdictions. There is therefore a risk that, by facilitating payments involving merchants not licensed in that jurisdiction and their customers, the Paysafe Group may face (accessorial) liability in relation to unlawful online gambling.

5.5 Other Member States, such as Finland and Norway, take a much more restrictive approach

to the regulation of online gambling. Regulatory authorities in such jurisdictions have sometimes taken a passive approach to enforcement of the prohibitions, in particular in relation to operators established outside of the jurisdiction; others are more rigorous in their approach. To date, such actions (if any) have largely targeted gambling operators or entities with a local presence such as media companies and banks. However, processing payments in connection with any online gambling in these jurisdictions may expose the Paysafe Group to the risk of (accessorial) liability. It is possible that the restrictive regulations in some Member States may be challenged as being incompatible with the TFEU, however, it is uncertain whether such a challenge would be successful, or that it would form a valid defence to a criminal prosecution.

5.6 Outside Europe there are no trade freedoms that support cross border activity as the majority of territories exclude gambling from their obligations as members of the World Trade Organisation under the General Agreement on Trade in Services.

6. GERMANY

6.1 The Paysafe Group provides payment processing services to customers engaged in online

gambling activities in Germany. In Germany, there has been a shift from a state monopoly system with an absolute ban on all online gambling services towards a more liberal regime under which at least some types of online gambling services are permissible. The CJEU rulings in the Carmen Media case (joint Cases C-317/07 et al, C- 46/08), in which the court raised doubts concerning the compatibility of the German state monopoly on sports betting with EU law, increased the need for a change in the German regulatory system of the 16 federal states.

6.2 Under the Gambling Act of Schleswig-Holstein (Gesetz zur Neuordnung des Glu¨cksspiels),

which was valid between 1 January 2012 and 8 February 2013, 25 online sports betting licences and 23 licences for online poker and casino games without a banker (casino games with a banker are reserved for land-based casino licences) were awarded to domestic and European operators for the state of Schleswig-Holstein. However, a new Interstate Treaty on Gambling (Glu¨cksspiela¨nderungsstaatsvertrag, (‘‘Interstate Treaty on Gambling 2012’’) was introduced on 1 July 2012, and Schleswig-Holstein became party to the Interstate Treaty on Gambling 2012 on 8 February 2013. As such, as of 8 February 2013, the Interstate Treaty on Gambling 2012 is applicable in all 16 federal states. The licences granted under the Gambling Act of Schleswig-Holstein, however, remain valid for their duration (six years).

6.3 Pursuant to the Interstate Treaty on Gambling 2012, online casino games and poker are

prohibited. However, lotteries (subject to a state monopoly), horse race betting and sports betting can be permitted on the internet (under certain restrictions, such as limits on stakes).

6.4 Furthermore, according to the Interstate Treaty on Gambling 2012, the state monopoly on

sports betting is suspended for an experimentation phase (initially until 30 June 2019). The Interstate Treaty on Gambling 2012 provides that up to 20 concessions may be awarded to (state and/or private) operators for the duration of the experimentation phase following a tender. In notification proceedings under Directive 98/34/EC, the Commission raised concerns about the compatibility of the online gambling regime of the Interstate Treaty on Gambling 2012 with European law. The tender process for the sports betting concessions was initiated in August 2012 and after several delays, the competent authority (Ministry of the Interior and Sport in Hesse) announced in September 2014 the 20 applicants to which it intends to award the concessions. Most of the applicants not considered in the decision of the authority filed for injunctive relief delaying the process. On 5 May 2015, the Administrative Court of Wiesbaden ordered the authority, by way of injunctive relief, to refrain from awarding any licences until there is a final decision in the main proceedings. The court found that the tender did not comply with the required transparency and non- discrimination principles and is therefore is likely to be in violation of the relevant European laws. This decision was upheld by the Appellate Court (Higher Administrative Court of Hessen) on 16 October 2015 confirming a violation of the relevant European laws but also the German constitutional law. The tender process and the licence grant will therefore be further delayed substantially and it is very likely that the licensing framework set out in the Interstate Treaty on Gambling 2012 will now need to be re-evaluated. In fact, in October 2015 the government of Hesse has already suggested five new ‘‘guidelines’’ for an adjustment of the Interstate Treaty on Gambling 2012, including legalized online casino games and an unlimited number of sports betting licences. These guidelines will serve as a basis for the political discussion about potential legal reforms.

6.5 According to the amendments to the German Horse Race Betting and Lotteries Act, which

also entered into force on 1 July 2012, online sports betting targeting German customers is subject to a five per cent. tax on stakes, irrespective of whether the respective organiser holds a licence. Tax authorities have recently sent out information letters to sports betting operators requesting information on compliance with the German Horse Race Betting and Lotteries Act. Non-compliance bears a significant risk of tax (criminal) law prosecution, including against individuals.

6.6 Many operators licensed in other EU jurisdictions have continued to take German business, relying upon the argument that the restrictions imposed by the Interstate Treaty on Gambling 2012 are in breach of European market freedoms and therefore unenforceable and that the tender process for the sports betting concessions fail to meet fairness and transparency principles enacted under European laws. There is still no definitive German case law on the Interstate Treaty on Gambling 2012’s compliance with European laws, and the courts of lower instance take different views. In its decision of 7 May 2014, the district court Sonthofen (Amtsgericht Sonthofen) referred questions on the legality of the tender process for the sports betting concessions to the CJEU. On 22 October 2015, Attorney General Szpunar issued a non-binding opinion on this case, which emphasised that the tender process should follow the criteria of ‘‘equality, non-discrimination in respect of nationality and transparency’’. He also stated that a system under which only public bodies can be expected to obtain a licence is flawed and must be found incompatible with European law. The CJEU’s judgement in this case is pending under file number C-336/14 and is expected later this year, or early 2016.

6.7 The offering of public games of chance without a (German) licence is subject to

administrative fines and may qualify as a criminal offence under German laws. The offering of public games of chance without a licence qualifies as a predicated offence under money laundering rules, and the acceptance or handling of respective proceeds may trigger the criminal offence of money laundering under German law.

6.8 The Interstate Treaty on Gambling 2012 further provides that payment service providers may

be requested by the competent authority to cease handling proceeds resulting from illegal gambling activities.

7. GREECE

7.1 The Paysafe Group provides payment processing services to customers engaged in online

gambling activities in Greece. Under the new Greek Gaming Law (4002/2011, as amended by Laws 4038/2012, 4141/2013 and 4261/2014), online gambling operators require a licence

by the Hellenic Gaming Commission (the ‘‘HGC’’). Until the issuance of the relevant

licences, operators with a licence from another EU or EEA member state may continue providing their services within Greece under the condition of becoming subject to a specific tax regime. Only 24 interim licences have been awarded, but in practice many more companies offer services through partnerships with the licence holders.

7.2 In its decision Stanleybet (joint cases C-186/11 and 209/11) on the Greek monopoly on

sports betting and lottery games, the CJEU confirmed its previous case law on the justification requirements for establishing monopolies. In the event that the monopoly was considered to be incompatible with EU law by the competent national court and the case was referred back to the CJEU, the CJEU also stressed that the Greek authorities could still take the view that a reform of the existing monopoly would be the better measure for ensuring the regulatory objectives pursued than a liberalisation. Despite this, the Greek government submitted a new draft law to the European Commission to withdraw the licences (lodged in March 2014). This has also been the subject of challenge. In the meantime in the Stanleybet and William Hill case, the Greek Council of State (the country’s top administrative court) rendered its ruling and has now rejected the joint petition of two operators further entrenching the Greek monopolistic regime. The State Council has thus adopted the view that the establishment of a gaming monopoly in Greece is required to ensure a high level of customer protection and that the current legislative framework aims to reduce illegal gaming opportunities, by reference also to the changes implemented to the Greek gaming framework over the course of the last three years (Law 4002/2011, set up of HGC as the Regulating Body).

7.3 In late 2012, the HGC also announced its decision to elaborate a blacklist of ‘‘unauthorised

websites’’ on the basis of which internet service providers and payment service providers shall block websites and payments. Service providers which do not comply with such an order face administrative or criminal sanctions. This change was notified to the European Commission and the relevant standstill period has now expired. The black listing when published prompted a number of operators to block the territory as only those holding an interim licence were not included on the list.

7.4 To date, the Directors are not aware of any sanctions imposed on payment service providers on the basis of law 4002/2011 or the decision that was notified under Directive 98/ 34/EC (no. 2012/710/GR), apart from the interruption of the transmission and visibility of ‘‘unauthorised websites’’, as well as related bank transactions.