Mark

FYI

Justin

---------------------- Forwarded by Justin Boyd/LON/ECT on 01/09/2000 12:57 
---------------------------
   
	Enron Capital & Trade Resources Corp.
	
	From:  "Murton, Rachel" <rachel.murton@linklaters.com>                        
   01/09/2000 12:43
	

To: "'justin.boyd@enron.com'" <justin.boyd@enron.com>, 
"'dave.samuels@enron.com'" <dave.samuels@enron.com>
cc:  

Subject: Enron Online Game advice


PLease see below for the consolidated gaming advice from the various
European jurisdictions:

1 List of countries where employees of Enron's customers can play the
game and be awarded prizes ("approved countries"):
 UK (because the participants do not pay to enter, the game is not in
public, and the game is not promoting Enron's business);
 Germany (because the participants do not pay to enter, and provided
the game is only advertised to existing customers and is not used as a
marketing tool);
 Austria (because the participants do not pay to enter, and provided
the game is only advertised to existing customers and is not used as a
marketing tool);
 Switzerland (because the participants do not need to pay to enter);
 Finland (because the participants do not need to pay to participate,
the game is not used as a promotional tool and Enron as a foreign organiser
do not have tax liabilities to the Finnish government);
 Portugal (because participants do not pay to enter and the game is
run outside Portugal);
 Poland (because participants do not pay to enter and the game is not
used as a promotional tool, and assuming that Enron have objective means of
determining who can and cannot become an online customer).  The Polish
lawyers would like me to confirm this latter point to them - I await this
confirmation (requested from Mark Taylor).
2 List of countries where there are risks involved if Enron's
customers can play the game and be awarded prizes:
 Belgium
 It is unclear whether the game is a lottery (these require special
authorisation in order not to be unlawful) or a contest (usually allowable)
under Belgium law.  The game has been submitted to the Belgium regulators
(who decide this classification) but a response has not yet been received.
There seems quite a low risk that the game would be classified as a lottery
because an element of skill is involved, but there is still a risk that the
authorities would be of the opinion that the element of skill was not
adequate to "move" the game from a lottery classification to a contest
classification.  It does not matter that there is no charge - the scheme
could still be classified as a lottery.
 Organising an unauthorised lotteries may give rise to criminal,
civil and administrative sanctions, including imprisonment from 8 days to 3
months and a fine of BEF 10,000 to BEF 600,000 (approximately EU 250 to EU
15,000).
 Netherlands
 Under the Dutch Games of Chance, games of chance are generally
prohibited, even if participation is free.  It is not clear whether or not
the Dutch Games of Chance Act applies to internet games or whether the Dutch
authorities would consider that they had jurisdiction over the game, because
the server is based in the US and the site is in English.  Contravention of
the Dutch Games of Chance Act can have criminal sanctions - maximum fine of
NLG 25,000.
 Norway
 The outstanding issue (providing the game is not a promotional tool)
is tax.  If a Norwegian resident wins a prize, Enron would need to pay
social security contributions of 14.1% (plus an extra 12.5% if the employee
concerned earns more than NOK 750,000).  Enron will be responsible for
reporting the prize to the tax authorities and to withold the tax from the
payment to the winner.
 Sweden
 It is possible that the game could be considered a lottery in Sweden
- it doesn't matter that there is no fee to enter, all that is needed is for
the public to be offered the chance to win prizes based on chance.
Authorisation to run a lottery is virtually never given unless the lottery
is for a charitable purpose.
 The Swedish lottery board consider that the target number in
deciding whether a lottery is public or not is 250.  However, the courts are
apparantly not bound to accept this figure, and case law suggests that it is
the relationship between the participants that is key - games that have not
been found to be lotteries are those organised amongst a private
circle/"apparent community" i.e. a fan club.  Our Swedish lawyers believe
that there is at least a chance that being employees of [presumably various]
Swedish customers of Enron would not constitute an "apparent community" in
the opinion of the court.  Arranging an unlawful lottery can be considered a
criminal offence, punishable by a fine or a maximum of 6 months
imprisonment.
 Denmark
 On line competitions are subject to the Danish Marketing Practices
Act and effectively require authorisation from the Danish Consumer Ombudsman
to ensure that they meet the standard of "good marketing practice".  Our
Danish lawyers have contacted the Ombudsman, but have not yet received a
response.
 Italy
 The game is more than likely an advertising contest under Italian
law and therefore needs approval of the Italian Ministry of Finance.
Approval has not yet been requested (because I do not have the complete name
and address of any of the Italian subsidiaries of Enron who the application
would need to be made on behalf of).  It is uncertain that the Italian
authorities would consider themselves to have jurisdiction over the game
because the server is in the US and the site is in English.  We are also
advised that the Italian Ministry of Finance does not routinely undertake
regular or thorough searches of the internet to identify potentially
unlawful advertising contests.  There is a fine of approx. 7,500 USD for
failure to obtain authorisation, and continuing an unauthorised game can
result in a fine of up to 50,000 USD.
 Spain
 The preliminary opinion of our Spanish lawyers was that the game may
raise issues under consumer protection law in Spain. I have not yet received
a more substantive opinion from them.
 France
 The game more than likely contravenes French lottery law because
spending additional time on the internet can constitute a charge (this has
been confirmed by the appropriate authority).  There was a possibility that
the game could run if ISP costs were reimbursed to the participants, but
Leslie Hansen has already indicated to me that this is not feasible.


3 List of countries where employees of Enron's customers can play the
game provided they are excluded from being awarded a prizes.
 Belgium (please note the comments given in the context of the Euro
2000 game that there is an evidential risk that "internet disclaimers" may
not be effective because they do not constitute  written proof of the terms
of a contract).
 Netherlands
 Norway
 Sweden
 Italy
 I have still not received conclusive advice as to whether it is just
residents of these jurisdictions that need to be excluded from winning
prizes or whether anyone playing the game from terminals in these
jurisdictions who isn't necessarily resident in that country (for example,
whilst they are at work at the site of an Enron customer) needs to be
excluded as well.  For safety, I would suggest that it is a condition of the
game that participants who reside in a country where prizes can be awarded
are told that they need to access the game only from that jurisdiction, (or
from another of the "approved jurisdictions").  It should be made clear that
participants forfeit their right to a prize if they do not abide by this
rule.
 In all these countries, the fact that residents etc of these
countries cannot be awarded prizes should be stated clearly and specifically
in the rules so as to avoid accusations that Enron is misleading
participants into believing that they can win a prize.
4 List of countries where there are doubts that even excluding
residents of that country from winning prizes would make the game lawful
 Spain - we have not received advice on this point
 Denmark - because it is consumer legislation, and not lotteries
legislation, that is at issue, preventing participants from winning prizes
may well not be enough to avoid liability under Danish law.
 France - our French lawyers were particularly concerned about how
people could be prevented from playing the game from France - and I have not
yet heard back from them that the measures I set out in paragraph 3 above
satisfy their concerns.
 In these countries, we have been advised that a disclaimer stating
that residents of that country are ineligible to play the game, coupled with
a registration process preventing residents of those countries from
participating, should be enough to prevent Enron from being liable for
breach of the relevant laws.
5 Miscellaneous issues
 Germany - if employees of Enron are allowed to play the game in
Germany (regardless of whether or not they are able to win prizes) then the
works council of Enron's German subsidiary will need to be informed about
the intended game and will need expressly to grant their consent.





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