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Together is powerful

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On March 17th Adv. Micky Barnea delivered a lecture for start-ups and entrepreneurs at the Azrieli College of Engineering, Jerusalem. The event was sponsored by Atobe Accelerator. The lecture dealt with the use of options as a tool to encourage employees and service providers of start-ups. Various issues were discussed, including the differences between shares and options and the differences in the expectations and perspectives of entrepreneurs, investors and employees of a start-up venture. During the lecture Micky explained the basic terms of options (vesting dates, exercise price etc.) and the benefits to the company of adopting a stock option plan. https://www.youtube.com/watch?v=c6vSY5NluhE&feature=youtu.be  
adv. Maya Zisser
Buying an apartment is usually the biggest purchase of one’s life, and for most of us it represents a significant financial outlay. Therefore, once we’ve found an apartment we like but before we’ve signed a contract, it’s very important to check out several angles.   The surroundings: We recommend wandering around the neighborhood, both during the day and at night, and to speak with the neighbors and the co-op board (va’ad habayit in Hebrew) to find out if there are any problems with the building or its residents. Also, are there plans to renovate the building? What are the municipality’s plans for the immediate surroundings? Are there cell phone towers or high voltage power lines near the apartment and/or the building? What public institutions (schools, preschools, community centers, playgrounds, libraries, houses of worship, shopping centers, clinics, etc.) are nearby? Is there convenient public transportation?  It is especially important to find out if construction is planned for the immediate vicinity. Contact the local Planning and Construction Committee, a fixed feature of every local government, to gather this information.   The apartment: The physical condition: It is important to check the apartment’s physical condition. We recommend that an engineer do this to make sure there are no serious construction flaws. The state of planning: It is also important to check that the building and apartment were built with all the legal permits and there are no building code violations. This can be ascertained by looking at the building’s file kept at the Local Planning and Construction Committee. We recommend that an assessor or engineer do the check. If there are building code violations, the purchase agreement must contain a written clause that clarifies the understanding between the buyer and the seller about who bears responsibility for redressing these violations. The legal standing: It is important to ascertain that the apartment is registered to the seller in the relevant rolls at the Land Registration Office (commonly referred to as tabu in Israel), the Israel Land Authority, the housing company, and other similar sources. It is also critical to see if the seller’s rights to the apartment are in any way attached or mortgaged, and if there are any other obligations vis-à-vis the sellers rights to the apartment (such as liens, tenants’ rights, caution notes, etc.). This check is usually carried out by the real estate lawyer representing you. Make sure that, as part of the purchase agreement, the seller commits to removing all obligations and attachments related to the rights to the apartment, such that you take over the property only after its rights are free and clear of any third-party rights or obligations.   Purchase tax Anyone purchasing an apartment is obligated to pay a purchase tax. The difference between the purchase tax for a buyer who owns only this property and the purchase tax for a buyer who owns another apartment is quite significant. Therefore, we recommend you consult with your real estate lawyer to see what purchase tax you may have to pay for buying this apartment.   Mortgage: If you intend to finance part of the payment for the apartment with a mortgage loan, we recommend you ask the mortgage bank you intend to borrow from to preapprove you before you get to the contract stage. By all means, compare the terms offered by the various mortgage banks and choose the bank making the offer most attractive to your own personal circumstances. Furthermore, it is quite customary to negotiate with the banks over the terms they offer, and doing so can save you a significant amount of money.   Important points in the purchase agreement: The seller’s declaration: It is important to incorporate a seller declaration in which s/he declares that the apartment and its systems are in good repair, that there are no building code violations associated with the apartment, and that there are no conflicting rights and/or registrations associated with the property. Transfer of ownership and property rights: It is important that the document state that the apartment must change hands empty and clear of people and objects, with all systems fully functional and operating as they did when the buyer saw them. Payments: It is important that the first payment be held in trust until a caution note in your favor is entered into the Land Registration Office and only then handed over to the seller. Similarly, it is important that the last payment be made only in return for transferring ownership and property rights and taking delivery of the keys, with the rights of the seller to the apartment free and clear of any third-party rights or obligations. It is important to leave a certain sum of money in trust to ensure you receive all the approvals the seller has to provide in order to register the property rights in your name (the lawyer representing you can advise you on how large a sum to deposit). Registering the property rights in your name: It is important the seller has a deadline by which s/he must provide all relevant documents for you to complete the process of registering the property rights in your name. Mortgage: It is important to get the seller’s commitment to sign all relevant documents that the mortgage bank will demand before granting you a mortgage loan.   Given the importance and complexity of buying a home, we recommend you be represented by a lawyer specializing in real estate to represent your interests alone (rather than those of the seller too) in order to safeguard your interests and rights.
adv. Liat Keisary Yahalomi
So you posted on Facebook that you’re looking for a place to live. You read the fine print of every ad on yad2.co.il. You asked everyone – from your grandmother to your elementary school bestie – for help, and you were probably one of 50 people who showed up to see the place. And now the place is yours for the asking! But before you commit, make sure to check these tips so that in the future you don’t regret signing the lease: Working with a realtor: Before signing a letter of engagement with a real estate agent, make sure that: The realtor holds a valid real estate license. The letter of engagement you sign specifies the rent (i.e., monthly payment), the lessor (i.e., the property owner) and the term (i.e., time period) of the lease. The tenant pays the realtor’s fee only after s/he has signed a binding lease with the lessor. If the lease depends on certain conditions being fulfilled, it is important that you demand that your obligation to the realtor be binding only if those conditions are met and that you pay the realtor’s fee only after the conditions have been met in a timely fashion and the term of the lease has begun. Inspecting the property and its surroundings: Before signing the lease, we strongly recommend that you, the prospective tenant, inspect the property thoroughly. This includes checking all systems, such as the AC, water heater, the electrical system, electric blinds, and so on. It is also important that you make sure there are no water stains or drips and leaks. We recommend you bring another person to the inspection so that you can hear a second opinion about the property. It is also important to find out about ambient noise levels, determine if renovations or construction are planned in the immediate neighborhood, and check for cross ventilation. Also, talk to the neighbors and see if any of them is planning or is in the midst of renovations, including enhancing the building’s earthquake resistance (National Construction Guideline 38, abbreviated in Hebrew as TAMA 38). The lease: We recommend the lease includes the following: The lessor’s information and his/her rights to the property (it is important to make sure the lessor actually owns the property and is therefore entitled to rent it to you). The term of the lease as well as an option to extend or renew it. It is important to make sure that the option is solely in your hands, rather than jointly or solely in the lessor’s hands, otherwise it’s pointless. The rent for the term of the lease (including any annual escalations) and for the extension option if offered to the tenant. The possibility of leaving before the term of the lease is over and/or the possibility of sub-letting the property and/or finding an alternativ tenant to take over the lease in every way. It is important that the lease includes the lessor’s agreement to allow the tenant to terminate the lease without any penalty should the need to renovate and/or participate in a TAMA 38 project suddenly arise. When the term of the lease begins and the tenant receives the keys, the parties should sign a memorandum in which the tenant states the flaws and/or damage to the property that the lessor is obligated to repair. Lease guarantee: It is necessary to come to an agreement on the nature of the guarantee the tenant must provide. In most cases, this involves a deposit or bank guarantee equal to three months’ rent, or, alternately, a promissory note equal to six month’s rent. It is necessary to make it clear in the lease that the lessor may use the guarantee only if the tenant has breached the lease and the lessor has informed the tenant of this in writing and has also provided a window of a few days to redress the breach. It is important to note that the demand for a guarantee is negotiable between the parties and it is important to clarify the terms up front. Insurance: It is important to make sure the lessor has purchased a structure insurance policy. It is customary for the tenant to purchase a third party and house contents insurance policy. We recommend checking the cost of purchasing such a policy. Contents: Find out ahead of time if the property is being rented together with any contents. If it is, a list of the contents and its condition should be drawn up. It is important to clarify this point during the negotiations so that the tenant can plan accordingly (i.e., demand that the contents be removed once the term of the lease starts or, alternately, inspect its condition). Reasonable wear and tear: It is important that the lease include the lessor’s obligation to undertake repairs to the property needed as the result of reasonable wear and tear that occurred despite the tenant’s reasonable use, as well as the time frame in which such repairs can be expected. It is also important to make sure the lease includes a clause stating that the lessor’s failure to fulfill this obligation entitles the tenant to choose a service person to make those repairs and to demand the lessor provide a full refund for the expense incurred. Lease breach: It is important that the lease contain a clause stating that a claim that the tenant has breached the lease must be submitted in writing by the lessor who must also provide several days for the tenant to redress his/her breach. Tip: Before signing a long-term lease involving a significant monetary commitment, it is important to consult an attorney specializing in this field. Such an attorney can draw up the contract, conduct the negotiations, and ensure that your interests are safeguarded
"Funding your organization" - a lecture in Hebrew by Micky Barnea given to the program of the Executive U.S. Embassy Alumni. The lecture took place at the Tel Aviv-Yafo Municipality's Center for Young Adults, with the participation of William Grant, Deputy chief of Mission at the US Embassy.     https://youtu.be/xosL4R7umnA
adv. Liat Keisary Yahalomi
In recent years, more and more couples are opting to live together without getting married, for a variety of reasons. The State of Israel has enacted clear laws addressing the division of property for instances when couples who are legally married decide to separate; however, if a couple decides to not be formally married, they are deemed a “common law couple,” and then matters become more complicated.   Property rights of common law couples, in the event of a separation or, heaven forbid, if one of them dies, are anchored mainly in case law and not in legislation. In Israel, unlike in many other countries, the term “common law couple” is neither defined nor uniformly regulated in legislation.   In Israel, the definition of a “ common law marriage” has evolved over the years within the scope of court rulings, which prescribed two main criteria for recognizing a common law marriage: (a) intimate conjugal relations as a husband and wife, in a manner that shows that the couple indeed consider themselves a married couple for all intents and purposes; (b) cohabitation – the intention is not co-running of a household that derives from some need (financial, personal, convenience, etc.), but rather, a full domestic partnership as the natural outcome of two people who choose to join their destinies. Furthermore, the duration of the couple’s cohabitation is irrelevant; the couple’s intention is what matters.   It is important to keep in mind that the court will deliberate each case on its merits according to its specific circumstances, analyzing the entire set of facts with the aim of understanding how the couple categorized their relationship. The courts take a flexible approach when ascertaining whether the couple should be deemed in a common law marriage, since the court is cognizant of the fact that no two relationships are alike and each couple’s shared domestic lives have unique characteristics.   Have you separated? It is important to know that, when it comes to transferring rights in a shared residential apartment between spouses after they separate, common law couples benefit from the same reliefs as those that apply to a legally married couple. The salient point here is that a transfer of these rights is not deemed a real-estate transaction and therefore, is not subject to tax.   Section 55 of the Inheritance Law expressly refers to common law couples and prescribes that the testator is deemed as having bequeathed to the surviving (common-law) spouse whatever the surviving (common-law) spouse would have received as an inheritance by law had they been legally married to each other. Also, the surviving spouse may sue for alimony from the deceased spouse’s estate.   Sharing of assets – beyond the rights pursuant to inheritance laws, common law couples are exposed to a situation whereby one of the two attempts to apply the ‘presumption of sharing’ to their relationship when the couple separates, claiming that the assets accumulated during their cohabitation should be deemed the couple’s ‘common property’ for all intents and purposes. The intention here, when referring to “accumulated assets” during the period of their common law marriage, is the real-estate assets, corporate stocks, options and any other property.   About two years ago, a judgment was handed down by the Family Court in Haifa, which recognized a woman as the common-law spouse of the deceased for the purposes of section 55 of the Inheritance Law, despite the fact that they had not been living together on a permanent basis and, prima facie, failed to satisfy the second criterion: co-running of a domestic household. The woman succeeded in proving that the couple had regularly maintained family life and that their intention had been to formalize their relations. The court ruled that that the concrete case must be considered after examining the couple’s subjective intention regarding the formalization of their relationship and the steadiness of the relationship and, therefore, the court recognized the woman as the deceased’s common law wife for the purposes of the rights to the inheritance. We clarify that at issue is the ruling of the court of first instance and an appeal has not yet been filed.   If you are a common law couple and want to avoid disputes and disagreements that end up in court, we recommend drawing up and signing a non-marital conjugal cohabitation agreement to keep assets separate and to regulate and anchor your rights and obligations as a couple in a common law marriage during the period of your relationship and in the event of a later separation. It is also recommended to have this agreement ratified by a family court.   We also recommend that both spouses prepare a last will and testament to regulate the division of each of their estates.
Adv. Dotan Baruch
You have tirelessly invested time, money and significant efforts in order to create a business and to grow it, and you finally see the fruits of your labor and maybe even begin to profit.   Yet all of this can disappear with the stroke of a pen (or a tap on the “enter” key). One unsatisfied customer uploads a hostile post about your business to a forum or a social network, and it goes viral and spreads throughout the internet like wildfire. Such a post can cause the near immediate collapse of a business. These posts can include a broad variety of claims - the service/product was deficient, prices are too high, opinions of the business owner are to the right/left of the political spectrum, the business owner promotes liberal/conservative legislation, the business employs someone who was (allegedly) convicted in the past of a crime, etc.   Unfortunately what often underlies these claims and this phenomenon (let us call it of business shaming) is competitors seeking to harm their competition.   So, how can business shaming be dealt with? What should you do with a harmful post published about your business?   It is important to be prepared in advance in order to deal with business shaming - both in a practical and a legal sense. In practical terms it is important to invest the time and effort required to locate the source of the incriminating post before it spreads across the internet, and to thwart it.  Once the shaming appears on countless websites, the ability to deal with it practically is nil. Therefore it is crucial that you continuously employ someone to follow and monitor internet websites and social networks in order to locate a shaming post immediately after it is uploaded. Once a shaming post is identified, you must immediately present counter claims or proof to counterbalance the shaming.  It is not necessary at this stage to present the entirety of your defense, but rather to present that one point, precisely and briefly, that has the capacity to convince internet or social network users that the shaming has no basis.   From a legal aspect, it is possible to engage with the website or social network on which the business shaming was published, and request that they remove the harmful post as soon as possible. You should clarify that you are speaking of a libelous publication (assuming this is the case) and that such post has devastating potential for your business, which could cause significant damages and create a cause of legal action.  At the same time, you should attempt to try to locate the author of the harmful content and consider submitting a libel action against him personally. However, it is important to note that currently there is no law that can be used to compel internet service providers and website owners / operators to furnish you the details of the author of such post.   The best remedy for business shaming is a quick and decisive response intended to block or prevent the continued spread of the harmful post. A delayed reaction, after the virtual horse has left the stables and is galloping across the internet, will not rectify the damage done. Time is, as always, of the essence.   
Adv. Marie Tsion
The year 2015 was characterized by legislative initiatives and interesting rulings relating to the labor market in Israel –employers became obligated to send written notices to job candidates about whether or not they have been accepted for employment, the issue of soccer games on Saturday and more. Here are a few salient points to remember from 2015:   Biometric clocks may not be used without consent – the State Attorney General, Mr. Yehuda Weinstein, submitted an opinion in principle to the national labor court, whereby employers desiring to install a biometric (fingerprint) attendance clock should be required to obtain the consent of the employees or of the representative labor union. The opinion also stated that, besides constituting an infringement on employees’ privacy by way of exposing biometric information in general, it also poses a danger that biometric information might be abused or unlawfully used, particularly due to the fact that such information may not be altered, unlike any other electronic means for recording attendance (such as by card or password).   Extension order for integrating people with disabilities in the labor market – the order, which was promulgated in October 2014, prescribed that, one year after the promulgation of the validated order, any employer with more than 100 employees is required to ensure that at least 2% of its employees are people with disabilities (this ratio shall be increased to 3% in October 2016). It is important to note that the definition of “people with disabilities” is broad and includes various types of disabilities (physical, mental or cognitive deficiencies, whether permanent or temporary). The committee charged with monitoring the advancement of integration of disabled persons in the labor market issued a directive in October that defined a “person with a disability” as anyone recognized by the National Insurance Institute as having a disability ratio of 40%, or anyone who has been deemed disabled by the rehabilitation committee of one of the authorities (Ministry of Defense, National Insurance Institute), or who has been defined as a disabled IDF soldier.   In order to comply with the obligation of fair representation, employers must count the number of people with disabilities who are employed in their businesses. For this purpose, employers may ask all employees to report voluntarily, while explaining that the information is needed in order to comply with the provisions of the extension order.   Employees subject to a collective bargaining agreement and to a labor union may file a class action against an employer on the grounds of deprivation of rights - In August 2015, a precedent ruling was handed down by the High Court of Justice that clarified that the Class Actions Law does not prevent the filing of class actions against employers, even if a collective bargaining agreement applies.   Up until August, the Class Actions Law prescribed that a class action may not be filed in a workplace operating under a collective bargaining agreement. This exclusion had been based on the assumption that a labor union would adequately represent the interests of all employees and that therefore, it is unwarranted to allow class actions to be filed in such workplaces.   This ruling by the High Court of Justice changed the practice of the national labor court of customarily assuming that labor unions adequately protect employees’ rights, making the filing of class actions superfluous.   Update to the minimum wage – in the beginning of the year 2015, an update to the Minimum Wage Law was published in the official gazette, which is to apply in four stages. The minimum wage was first updated in April 2015, so that currently, after the first update, the monthly minimum wage is NIS 4,650, while the hourly minimum wage is NIS 25. At the fourth stage, on January 1, 2017, the monthly minimum wage will reach NIS 5,000.   It is important for employers to keep track of the dates of the statutory rise in the minimum wage, and to ensure that the pay slips of employees who are earning more than the minimum wage are also updated, as required by law, to reflect the statutory minimum wage in effect on the date of issue of the pay slips.   The Obligation to Provide Notifications to Job Candidates -  Effective from 2015, potential employers (with some exceptions prescribed by law) require to inform candidates with respect to the screening process which applies to the position applied for within the employer's organization.    According to the Amendment an employer will be required to inform a candidate of this process on an on-going basis, as follows: give notice in writing every 2 months to the candidate about the progress of the selection procedure starting from the beginning of the candidate’s screening process and to provide written notice of to the candidate that another person has been appointed to the relevant position no later than 14 days after such appointment.   It is important to note that the screening process definition is broad, and includes any interview or test completed by the candidate. Therefore, the new obligations will apply in every case of recruitment and screening procedures, even when it is not a long screening process, including screening tests and involvement of outside institutions.     Notice Period where Employee is transferred to another Entity- As part of a decision given this year, the National Labor Court determined that in the case of the transfer of employees from one corporation to another corporation,  the first employer has the obligation to give employees an advanced notice period.   If the first employer does not give the required notice, the relevant employees are entitled to receive a salary from both employers in respect of the notice period which should have been given.    
Adv.Hanania Isaac
Trends In The TMT Industry
December 24, 2015 / by Isaac Hanania
The Technology, Media & Telecommunications area is changing. We are now seeing new products, new services and innovation at a faster rate than ever before.   The Israeli government identifies TMT as one of the most robust areas of the Israeli economy today and it encourages multinational companies to develop their IP within Israel. The government provides tax benefits, funds and grants to companies who develop their IP in Israel, under domestic and international programs, agreements, treaties and collaborations. Programs are directed and funded via the Office of the Chief Scientist (“OCS”). The applicable legislation is the Encouragement of Industrial Research and Development Law. However, there was one aspect of this Law which, in fact, had the effect of discouraging international companies from moving their IP research activities to Israel. The Law restricted the transfer of know-how developed by companies under the program in Israel outside its borders, by setting a redemption fee which was very often undefined, thereby alienating international buyers from a potential investment or M&A.   Recent regulatory changes have reformed this contentious issue and it is now legally possible for know-how developed in Israel to be transferred outside of Israel, after receiving the approval of the OCS and the making of the payment of a predetermined transfer fee. Thus, more certainty has been introduced for interested parties.   Further reforms were introduced on January 20, 2014, when the Israeli Parliament amended the Patents Act, revising the patent term extension, and in March of 2014, the U.S. Trade Representative's office removed Israel from the agency's watch list for IP violations, which originally had occurred following pressure from the research based international pharmaceutical industry which was competing on the global stage with the local generic drugs based pharmaceutical industry.   The “cherry on the cake” in so far as reforms are concerned is that, as of 2014, under Israeli legislation, high-tech companies may pay as little as 9% tax instead of the current 26.5%. This constitutes a very attractive benefit for participating companies.   Israel is known to be one of the leaders in the ever-popular and continuously growing 3D printing sector. A new 2015 initiative funded by the OCS aims at using 3D printers designed to print metal components such as titanium for the aerospace industry, dental implants, bone substitutes, and more. This may effectively place Israel at the leadership of a new coming revolution of "self-manufacturing".   Legislators will need to quickly adapt to these technological innovations. The major legal issues related to 3D printing not only revolve around intellectual property, but also with safety, product liability and data protection issues. Digital blueprints will most likely be re-created and disseminated in order to print 3D replicas of protected products, or fabricate enhanced creations of existing designs and works of art. Law enforcement will also face new forms of crime involving the use of 3D printing of illegal, regulated or banned products.   As for wearable tech, companies which will allow their employees to use such wearables will be faced with issues related to trade secrets, data security and corporate espionage. Strict internal policies and guidelines will need to be put in place. Many companies find themselves having to deal with patent and IP disputes, which of course can be damaging and costly for a company. So, proper planning should precede business activity. It is therefore critical for a company to decide whether to protect its IP with a patent, and if so, where to register the patent. Once it is approved, the patent allows the company to have an advantage in its field of business endeavour. Patent litigation can be very expensive and time consuming. Before filing a patent infringement lawsuit, it is advisable to try to amicably resolve the matter by mediation and reconciliation, no matter where it may be initiated. An experienced, expert lawyer should be retained to represent the aggrieved company. However, if it is not possible to amicably solve the dispute, the company should seek a jurisdiction which is most favourable to it. The jurisdiction is usually determined by the defendant’s domicile, or where the infringement activity takes place, or if the result of the infringement activity will have an effect on a specific territory.   As regards Israeli companies, most of the sales and marketing efforts are typically focused in the USA, as would the protection of their IP. In the event of an infringement, it will most likely be litigated in the USA. Sometimes, the infringement may give rise to multi-jurisdictional litigation, thereby requiring claimants to seek favourable judgements capable of being enforced in other jurisdictions. The Israeli telecommunication industry has been a major player in the technology development global arena. WiMAX, VoIP and TDMoIP, are shining examples of Israeli innovation.   Currently, the telecom market is rather concentrated and very competitive and opportunities are few. Any new joint venture, acquisition or merger will have to overcome the scrutiny of the Israeli Antitrust Authority and the Ministry of Communication. We should be expecting to see market convergence in the cellular sector with a drop to four operators in the coming years, as well as the continued dominance of the 2 existing TV operators despite the alternatives.   As a result of regulatory changes, broadband reform, and intense competition in the market, Israeli companies must seek wider markets abroad. Israeli companies are highly technical, yet they lack international sales distribution channels and marketing capabilities. Successful partnerships with global vendors and service providers lead to better performance, which is the reason why many Israeli companies seek such partnerships outside its borders.   Additionally, the rapid digitization of industries has led to the emergence of new telecoms services, such as cloud computing and mobile payment platforms. This has led to a significant change of focus by operators from vertically integrated business models to horizontally integrated business models. The objective is to create value by combining different segments and markets and replicating the features and capabilities of each market to the others. Further, operators will aim to digitize the core of their businesses thereby enhancing customer satisfaction, revenues and cost savings.
A founders’ agreement is the first encounter between entrepreneurs who are embarking on a joint venture to establish a successful start-up company. A founders’ agreement reflects the relationship between the entrepreneurs inter se and between each of them and the joint venture.   The importance of this agreement should not be underestimated. This comprehensive agreement, which is tailored to the nature, needs and aspirations of each of the entrepreneurs, and particularly those of the new venture, provides a strong foundation for a healthy and successful company.   Frequently, the drafting of a founders’ agreement requires the parties to address topics that many founders fail to address, either due to a lack of experience, a desire to avoid friction, or simply because they are looking at the venture through rose-colored glasses. Meticulous, professional handling of these issues will provide creative solutions which, with the mutual agreement and commitment of the parties, will help navigate the venture along the optimal route to success.   Barnea & Co. provides, inter alia, valuable assistance to entrepreneurs and start-up ventures and works with them to draft a founders’ agreement that prepares fertile ground from which the venture can grow and prosper.   Micky Barnea is an expert in advising start-up entrepreneurs – watch Micky lecturing on the important issue of Founders’ Agreements:  
Adv. Dotan Baruch
The online gambling industry generates billions of dollars annually and is one of the burgeoning industries on the internet today. The growth of this industry spurred online gambling operators to search for additional operating channels, besides PCs and laptops, such as applications customized for mobile phones and handheld devices that may be used on membership-based websites (such as online casinos). Thus, the mobile channel is becoming a primary channel in the online gambling industry. Considering the heightened use of mobile phones in general, online gambling operators are also seeking to offer their products via this channel – similarly to any other electronic commerce. Additionally, the opportunity being given to online gamblers to continue gambling when they shift from their PC platform to their mobile phone platform while using that same operator and a single electronic wallet (which is synchronized with the operator’s internet version and mobile version), increases customer loyalty to a particular gambling operator and to its brand. Furthermore, the expansion of access to gambling products also via the mobile channel lures customers to spend more time gambling, thus enabling online gambling operators to generate revenues from customers at a faster pace (than prior to the advent of the mobile application) and increases the “value” of these customers and the revenues generated from them. A similar channel exists in handheld devices, which enable customers who are visiting real casinos to continue gambling during their stay at the casino, even when they are outside of the casino halls, but still on the grounds of the casino complex (such as in the casino’s hotel rooms and public spaces, for example, at the pool, in one of the restaurants, etc.). This possibility, which is available in some casinos in the United States, also offers casinos potential growth in revenues and profits by providing access to gambling outside of the actual casino halls, while avoiding regulatory constraints and capital expenditures on physical expansions of their casino halls. That being the case, the use of the mobile channel undoubtedly offers significant potential for the online gambling industry. However, concurrently, this channel also poses significant constraints, mainly in terms of regulations. Firstly, the fact that this is a virtual channel raises the question of the law and regulatory regime applicable to online gambling via the mobile channel – whether the particular regime permits or prohibits online gambling. For example, let us assume that a Spanish citizen and resident, who has a gambling account with a Spanish licensed gambling operator, wants to use the said operator’s mobile application while he is staying in Holland. Will Spanish law, Dutch law or some other law apply in this case? Prima facie, the Spanish customer is “carrying” his gambling account with the Spanish operator in his mobile device, but, on the other hand, he is seeking to gamble while he is in Holland (which bans online gambling), using the Dutch communications network. These issues also exist generally in the general online gambling industry, but the mobile channels highlight the salience of the aforesaid regulatory issue, mainly because it has become a far more widespread issue. The more extensive the use of mobile channels in the online gambling industry, the closer the world gets to the point where it will become essential to find a satisfactory solution to this issue. Furthermore, the expansion of the online gambling industry into mobile channels could serve as ammunition for the most ardent opponents of this industry. One of the strongest arguments being made in the battle against online gambling is that the evolution of this industry will turn every computer into a casino in a way that substantially facilitates access to gambling, since mobile phones are ubiquitous among the general population. – and thus serves to promote an inconceivable increase in gambling addicts (one extreme scenario that is repeatedly mentioned is that of teenagers – who, as minors, are banned from entering physical casinos – who become rampant secret gamblers via online gambling websites up in their attics). Considering the incessant battle between the opponents to the online gambling industry due to the inherent phenomena involved (or at the very least, due to the phenomena that online gambling opponents claim are inherent in this industry) and proponents of online gambling, who are seeking to regulate the industry through legislation, any development, even merely of a technological nature, could impact the regulatory regime that will eventually be instituted. Even in the United States, where gambling is firmly established, there is a persistent battle at the federal level over whether or not all kinds of online gambling should be prohibited by law. Considering the Republicans’ control over the U.S. Congress, and the support of legislation banning online gambling by the casino magnate, Sheldon Adelson, one cannot rule out the possibility that the expansion of the online gambling industry to mobile channels might, in the final analysis, be the last straw that leads to its downfall.
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