ARRESTS OF BWIN EXECS 'SCANDALOUS' SAYS COMPANY (Update)

And it looks as if the French lottery monopolists were behind the moves

Friday's surprise arrests in France of two senior Bwin executives introducing a company sponsorship to the AS Monaco football club elicited an immediate expression of outrage from the Austrian public company. And French lottery officials admitted the detentions were inspired by similar US Department of Justice attacks against international businessmen visiting the United States recently.

Bwin joint managing directors Manfred Bodner and Norbert Teufelberger were arrested at the training centre of AS Monaco, a first division soccer club where they were scheduled to hold a news conference, a police official revealed. BWin has links to several first division clubs, and the company is allegedly violating French gaming laws, unidentified police and judicial officials said.

The AS Monaco centre is located in France's Alpes-Maritime region, near Nice, and ten or more police officers took part in the arrests, which happened in front of startled sports journalists. The executives were questioned in the changing-rooms for some 30 minutes before they were taken to a police station in Nice last night.

Judge Jean-Marx Cathelin of Nanterre, near Paris, authorised the arrests. The judge has been investigating alleged illegal gambling, lotteries, advertising illegal lottery advertising and illicit horse betting since November 2005 after the French state gambling monopoly Franise des Jeux (FdJ) filed a lawsuit against BWin and other online bookmakers. The judge opened a formal inquiry into the claims that online bookmakers have organised illicit gambling and the publicity of an illicit activity, according to a judicial source.

Depending on a hearing scheduled for today (Saturday) the two executives could be placed under investigation - a step short of being actually charged - for allegedly violating French laws which prevent online gaming and advertisements from companies other than the two which hold a monopoly there, the Francaise des Jeux, which conducts the lottery, and the PMU which conducts bets for horse races.

In Austria, the reaction of Bwin spokespersons was immediate. After confirming that the company's shares had been temporarily suspended from trading BWin spokeswoman Karin Klein called the detention "scandalous." Speaking to Dow Jones Newswires, she said the company did not yet know exactly why the two executives had been detained.

The state-owned Franise des Jeux (FdJ), which runs the national lottery, the football pools and scratch-card games in France, followed the arrests with a threatening statement. This suggested that the French action was a copy-cat approach of that adopted by American Department of Justice and state officials recently to target visiting British gambling executives.

A spokesperson said: It is reasonable to assume that any other executive from an online bookmaker who came to France would also be arrested. We are doing exactly the same as the authorities in the US who arrested the British executives.

Internet betting infringes French legislation, which allows gambling run only by the FdJ, the PMU, a state-run body specialising in racing, and by state-licensed casinos, according to the FdJ spokeswoman.

She said that lawsuits had been filed against "all" online gambling companies seeking custom in France through publicity.

These include Gamebookers.com and 888.com, which, like BWin, are sponsoring professional football clubs.

The arrests caused 888.com and Party Gaming shares to slip 6 and 9 percent respectively, whilst Sportingbet suffered rather more with a 10 percent decline.

An interesting insight into French official thinking on the Bwin detentions

eGaming Review provided an intriguing insight into official French thinking on the Bwin arrests this week. Quoting a source in the legal section of the betting and gaming unit of the French Renseignements Gaux (Section judiciaire de la sous-direction des courses et des jeux des renseignements gaux), the Review reported that French authorities would do their utmost to prevent any other private operators from operating in the French market.

The unnamed source said: It [online betting] has always been illegal and as the stakes are getting more and more important the decision to take action was implemented. But this was made possible by the fact that both individuals were on French soil. If they had been there a year ago they would have been arrested.

He added that online betting, lottery and casino games are illegal and that operating the site is the main offence.

When questioned whether the French authorities would be worried over European Commission moves regarding the running of national gambling monopolies, he said each state is currently within its rights to set in place a repressive system in order to regulate its games policy.

eGaming Review sources also suggested the action of the French authorities may have been triggered by the two biggest land-based casino groups in France, Partouche and Barrie.

The two companies had recently wanted to launch online versions of their casino products but had not been allowed to do so by French gaming and gambling authorities. Partouche subsequently set up an office in London to operate its online gaming business

hoping for an interesting day tomorrow after the release of the french.