The two founders of the online gambling group Bwin – formerly Bet and Win – were released on bail by a French examining magistrate yesterday, but were told they could face up to three years in jail if found guilty of violating gaming laws.

Manfred Bodner and Norbert Teufelberger, joint chief executives, were arrested on Friday as they prepared to give French journalists details of a sponsorship deal with AS Monaco football club.

The move is a worrying development for other internet bookmakers and gaming groups targeting French customers. Last month, the internet casino and poker group 888 said it had struck a two-season shirt sponsorship deal with Toulouse football club. PartyGaming’s latest acquisition Gamebookers has a similar deal with Nantes to have its name on team strip.
A Bwin spokesman, Konrad Sveceny, admitted that the company, which is listed in Austria, may have been in breach of French gambling laws. „French betting law says we cannot advertise in France unless we have a French licence, and to have a licence you have to be one of the two French betting monopolies.“

Trading in Bwin shares, which had been suspended after the pair’s arrest, resumed in Vienna yesterday, with the price closing 17% down.

The investigation into Bwin’s activities follows a complaint from the French lottery and horse betting operators. Bwin’s promotional activity in France is dominated by its shirt sponsorship deal with Monaco and web-based sponsorship deals with two other French clubs.

Mr Sveceny said: „It [Bwin’s promotional campaign in France] may not be in accordance with French law, but it is in accordance with European law.“

Three years ago, a judgment from the European court of justice, known as the Gambelli ruling, went some way to limiting efforts by EU member states to inhibit online firms from competing with domestic operators. A further ECJ judgment is expected to strengthen the hand of online operators later this year.

Meanwhile, the actions of French magistrates over Bwin’s publicity campaign is a worrying development for other operators promoting their services in France. Asked last night if 888 thought its deal with Toulouse was in breach of French gambling laws, a spokesman declined to comment. PartyGaming said the Nantes deal had been inherited from Gamebookers‘ previous owners.

A hardening French stance will also be of concern to the Swedish gambling group Unibet, which recently acquired Mr Bookmaker, an online business heavily promoted in France and Belgium.

William Hill’s online betting service is available in French, although rival Ladbrokes is not.

The two Bwin bosses were required to put up bail of EUR 300,000 (GBP 202,000) each yesterday to cover any potential fines. No official charges have been brought, the company stressed, and it could be up to a year before the investigation is complete.

The French magistrate told Bwin to post a message on its French gaming pages making clear the service might be in contravention of gambling regulations.

About three-quarters of Bwin’s business is in Europe, and 43% of its revenues are from sports bets, with the rest split between online poker and casino games.