An Overview of European Gambling Law: From Schindler to HIT.
In the absence of harmonisation in the field of gambling, the Court of Justice of the EU has laid down a series of guidelines by which individual states may justify restrictions on the freedom to provide services provisions that are outlined in the Treaty.
In Schindler, the Court had held that whilst lotteries were "services" within the meaning of article 60 of the EEC Treaty, given their peculiar nature, the U.K. could restrict or even prohibit lotteries from other EEC Member States, provided those restrictions were not discriminatory on the basis of nationality. Moreover, the Court also laid down the objectives that it was prepared to accept as justifying restrictions on Article 59 of the Treaty.
The Court stated that restrictions that were based on overriding public interest considerations ( "prevent crime and to ensure that gamblers would be treated honestly; to avoid stimulating demand in the gambling sector which has damaging social consequences when taken to excess; and to ensure that lotteries could not be operated for personal and commercial profit but solely for charitable, sporting or cultural purposes") could not be regarded as measures involving an unjustified interference with the freedom to provide services.
In the cases of Läärä and Zenatti the Court stated that the considerations set out in the Schindler were also applicable to other forms of gambling - namely, the provision of slot machines and sports betting.
The Court of Justice issued its decision in the case of Läärä, on 21 September 1999. The case had concerned the legitimacy of the Finnish State monopoly on the operation of slot machines.
The Court held that conferring exclusive rights on a single public body did not constitute a violation of the EC Treaty provisions on free movement of services, providing, that the decision had been reached with regard to some of the following considerations; to limit the promotion of gambling, to reduce the risk of crime and fraud and to ensure that some of the collected funds were used for benevolent purposes. The Court also addressed the issue of whether there were no "less restrictive" means to reach these objectives; such as through the useage of taxation.
In the Zenatti case the Court confirmed the views that had been expressed in Läärä.
In Zenatti, Advocate General Fennelly opined that restrictions on the provision of betting services could be justified on the grounds of public interest concerns; which, he said, should reflect the diverse characteristics of each Member State, including their social and cultural attitudes to gambling (his proposals were followed by the Court):
The raising of funds for socially useful projects was not on its own an acceptable justification for such a restriction, because of its economic character.
The protection of consumers from fraud was an acceptable public interest objective, but only if the national court established that they were not sufficiently protected by the rules applicable to the foreign bookmakers.
It was permissible to restrict the provision of betting services on social policy grounds, in order to counter its harmful moral and financial effects.
The restriction must be proportional to the aim that is to be achieved and must not go beyond what is necessary to achieve that object.
On April 10, 2003, Advocate General Christine Stix-Hackl delivered her opinion in Lindman. The case had revolved around a Finnish national Diane Lindman, who had won £78,000 in a Swedish lottery, whilst in Sweden, and the decision of the Finish Government to tax her on those winnings.
The Advocate General concluded, that in so far as the winnings would have been tax free if they had been won on a Finish Lottery, a decision to tax them in Finland purely on the grounds that they had been won in Sweden, ran contrary to the spirit of the freedom to provide services, and indeed, restricted this fundamental freedom, without any justification.
The Finish Government had argued that the restriction was justified on the grounds that it would assist in the control of both compulsive gambling and money laundering. Stix-Hackl, however, relying upon the proportionality test laid down in Zenatti, concluded that the measure was disproportionate to the objectives being pursued.
In September 2003 the ECJ published its judgment in the case of Associação Nacional de Operadores de Máquinas Recreativas (Anomar) and eight Portuguese companies involved in the marketing and operation of gaming machines (Others) and the Portuguese State
Anomar, the Portuguese national association of operators in the gaming machine sector et al, had challeneged the efficacy of a decree that stated that the right to operate games of chance or gambling in Portugal is reserved to the State. The Court however, upheld the right of the state to operate a monopoly;
"Accordingly, the answer to the 6th, 7th, 9th and 10th questions must be that national legislation, such as the Portuguese legislation, which authorises the operation and playing of games of chance or gambling solely in casinos in permanent or temporary gaming areas created by decree-law and which is applicable without distinction to its own nationals and nationals of other Member States constitutes a barrier to the freedom to provide services. However, Articles 49 EC et seq. do not preclude such national legislation, in view of the concerns of social policy and the prevention of fraud which justify it........(I)n the context of legislation which is compatible with the EC Treaty, the choice of methods for organising and controlling the operation and playing of games of chance or gambling, such as the conclusion with the State of an administrative licensing contract or the restriction of the operation and playing of certain games to places duly licensed for that purpose, falls within the margin of discretion which the national authorities enjoy."
Hopes that the ECJ would adopt a more liberal stance towards the issue of cross-border gambling, were quashed somewhat, when it gave its judgement in the Case of Gambelli in November 2003. The Court stated that;
National legislation which prohibits on pain of criminal penalties the pursuit of the activities of collecting, taking, booking and forwarding offers of bets, in particular bets on sporting events, without a licence or authorisation from the Member State concerned constitutes a restriction on the freedom of establishment and the freedom to provide services provided for in Articles 43 and 49 EC respectively. It is for the national court to determine whether such legislation, taking account of the detailed rules for its application, actually serves the aims which might justify it, and
whether the restrictions it imposes are disproportionate in the light of those objectives.
Gambelli and others had been acting as agents for Stanley International Betting Limited, an arm of Stanley Leisure, the UK betting concern. Criminal sanctions were taken against them, on the grounds that their activities contravened Italian law which forbade concerns that were not licensed in Italy from accepting bets from Italian citizens.
In his defence Gambelli claimed that the Italian Law ran contrary to the spirit of the European Treaty, with regard to
freedom of establishment and freedom to provide services. The Italian Court asked the ECJ to decide upon whether the Italian law was compatible with Italy's obligations under ECJ.
It had been the opinion of Advocate General Siegbert Alber, that in the light of current events, such as Italy's move to liberalise its own gaming market, the Italian law could not be justified and indeed, was, as matters stood, purely discriminatory against bookmakers from other countries. He further dismissed a claim from the Italians that the law was necessary in order to prevent damage to the Italian economy.
However, the Court did not choose to follow the more liberal opinion of the Advocate General, turning instead to its own earlier judgements in Laara, Zenatti and Schindler.
The Court once again stated that public interest considerations may justify limitations on the free movement of services, providing the objectives to be achieved are not disproportionate to the restrictions imposed.
Accordingly, the Court ruled that the Italian government's prohibition of unregulated cross-border sports betting via the internet did not in itself represent a breach of EU law per se, but merely served as a restriction on the European market freedoms of establishment and services - something that was endorsed when certain tests were met ( re: Advocate General Fennelly in Zenatti).
However, the Court did send the case back to the national court to determine whether such legislation, taking account of the detailed rules for its application (as outlined in Laara, Zenatti, Schindler) , actually serves the aims which might justify it, and whether the restrictions it imposes are disproportionate in the light of those objectives. And, whilst not explicity dealing with the issue of cross-border gambling in this judgement, the ECJ did ask the national court to determine whether;
"the imposition of restrictions, accompanied by criminal penalties of up to a year's imprisonment, on intermediaries who facilitate the provision of services by a bookmaker in a Member State other than that in which those services are offered by making an internet connection to that bookmaker available to bettors at their premises is a restriction that goes beyond what is necessary to combat fraud, especially where the supplier of the service is subject in his Member State of establishment to a regulation entailing controls and penalties, where the intermediaries are lawfully constituted, and where, before the statutory amendments effected by Law No 388/00, those intermediaries considered that they were permitted to transmit bets on foreign sporting events."
Subsequent events have shown that Gambelli was not the landmark, ground breaking case that many lawyers made it out to be at the time. . Post-Gambelli, it remained the case that European Member States could still, where they had valid moral or social grounds, restrict directly or indirectly access to foreign based gambling services; providing such restrictions have as their objective the limiting of betting in a consistent and objective manner and that they did not go beyond what was necessary to obtain the objective.
On the 26 November 2003 Ladbrokes was forced to close down its German language internet sites, following a judgement in the German courts in favour of Westdeutsche Lotterie GmbH u. Co. oHG;
"Ladbrokes regret to inform you that as a result of legal action taken against us by Westdeutsche Lotterie GmbH u. Co. oHG, we will no longer be able to accept bets or wagers from German residents. This decision affects every aspect of our site and every location in Germany and therefore, from Wednesday 26th November 2003, action will be taken by us to prevent German residents regardless of their nationality from placing bets either on the Ladbrokes' sportsbook (www.ladbrokes.com), LadbrokesCasino (www.ladbrokescasino.com) and LadbrokesPoker (www.ladbrokespoker.com). We will not maintain a German Language website for customers outside Germany as it is not economically viable."
However, following on from the judgement in Gambelli, and Ladbrokes' retreat from serving German customers, the Hessischer Verwaltungsgerichtshof (Hessian Administrative Court of Appeal) stated on 9th February 2004 that Art. 284 of the German Criminal Code is not applicable to the offering of bets to German consumers, by foreign bookmakers, whether from within Germany or online. Citing extensive marketing by Oddset, to raise funds for the 2006 World Cup, the Court stated that penalising foreign bookmakers would constitute a blatant breach of Article 49.
The Administrative Court of Kassel subsequently declared that the current state licensing provisions on gambling were unconstitutional. The Court stated that the State's exclusive right to operate sports betting was incompatible with German constitutional law, specifically Art. 12 I of the German Constitution concerning the freedom to choose one's profession.
Post-Gambelli, Denmark's gambling monopoly also came under the scrutiny of the European Commission. In March 2004 the Commission warned Copenhagen that it must justify its restrictions on non-Danish bookmakers, or it would face a challenge in the European Court of Justice. The Commission's request, which took the form of a letter of formal notice, formed the first stage in its infringement procedure, under Article 226 of the EC Treaty;
"Danish law restricts in particular the provision of sports betting services. The commission intends to verify the compatibility of the ban in question with the provisions of the EC Treaty".
Denmark was given two months to either assure Brussels that it had or intended to, lift its ban on betting companies, or, to prove that the ban complies with EU law. Suffice to say the Commission must have been satisfied with the Danish response, for the Danes did not subsequently find themselves in front of the European Court of Justice on this matter. The threat, however, as with so many from the European Commission, failed to materialise.
The EU Commission also subsequently ruled that Greek Law Number 3037, which explicitly forbade electronic games with "electronic mechanisms and software" from public and private places, was not compatible with the provisions of the EC Treaty. The law had been introduced in an attempt to stamp out illegal gambling, with offenders facing fines of 5,000 to 75,000 euros and imprisonment of one to 12 months. In October 2004 the European Commission said it had decided to refer Greece to the European Court of Justice for infringing Union regulations on the free movement of goods and services.
In May 2004 the Finnish government said that it had rejected licence applications from European Sports Betting Consultants and Ladbrokes, on the grounds that licences granted to Oy Veikkaus AB and Fintoto Oy were still in force.
On 2 June 2004, the Court of Arnhem, in an interlocutory judgment, made explicit reference to Gambelli, and held that restrictions imposed to prevent Ladbrokes entering the Dutch market were inconsistent with European Law. Specifically citing the commercial bent of the De Lotto organisation (its ? 25m marketing budget) and Holland Casino and their very deliberate attempts to stimulate demand for new gambling products, the Court concluded that the commercial nature of the Dutch gambling market was not compatible with national legislation which placed restrictions on cross-border services.
The Dutch Court's decision fell into line with the European Court of Justice's finding in Gambelli that where participation in lotteries, games of chance and betting are encouraged by a Member State with the aim of deriving a benefit for itself, that State cannot rely on the need to uphold public order in order to justify restrictive measures.
In July 2004, the Italian Supreme Court ruled that Italy's restrictive gambling policies were consistent with her obligations under current European Law. The Court found that as the restrictions justifed a public order interest (keeping gambling free from criminality), they did not constitute a restriction on the freedom of establishment and the freedom to provide services provided for in Articles 43 and 49 EC respectively.
The case, involving a certain Mr. Placanica, an agent for Stanley International (as per Gambelli) was subsequently referred to the European Court of Justice, by the Larino District Court on the following question; "Does the Court of Justice consider Article 4(4a) of Italian Law No401/89 to be compatible with the principles enshrined in Articles 43 et seq. and 49 of the EEC Treaty concerning thefreedom of establishment and the freedom to provide cross-border services, having regard to the difference between the interpretation emerging from the decisions of the European Court of Justice (in particular the judgment in Gambrelli) and the decision of the Corte Suprema di Cassazione, Sezione Unitiin Case No 23271/04? In particular, the Court is requested to rule on the validity of the legislation referred to in the indict-ment and under which Massimiliano Placanica is charged in Italy."
In October 2004 Ladbrokes accused the Swedish Supreme Administrative Court of "running political errands" after it had ruled that the state's gambling monopoly was consistent with her obligations under current European Law. The National Gaming Board of Sweden, however, threatened to close the Swedish offices of Unibet, Ladbrokes, Expect and Betson.
In November 2004 Hungary's Gambling Supervision initiated legal proceedings against the online bookmaker Sportingbet, claiming that its Hungarian-language website contravened Hungarian gaming legislation. They had already fined Provimar Kft, Sportingbet's Hungarian media buyer Ft 500,000 and asked the company to remove Hungarian-language content from the Sportingbet website. (Slightly ironic perhaps, when one reads on the English Language website of Szerencsejáték Rt, the Hungarian Monopolist; "The Company is also prepared for the days after the accession to the European Union, and potential participation in joint European games.").
In April 2004 the EFTA Surveillance Authority sent a letter of formal notice to Norway today regarding the introduction of a monopoly for Norsk Tipping AS on the operation of gaming machines. The Authority said that it was not convinced that the monopoly was necessary in order to prevent gambling addiction or under-age gambling, to control software, to introduce new regulations more quickly, or to combat crime. It said that it appeared that the same effects could be achieved by less restrictive means, e.g. by imposing stricter rules on the private operators. Following this decisiion, on November 2004, a decision by the Oslo's Municipal Court that the planned state monopoly on gambling machines violated European Economic Area (EEA) Agreement regulations, was upheld by a court of appeal. Following the ruling, in early December 2004, Essnet Interactive AB, jointly owned by Boss Media, received a letter from Norsk Tipping in which it requested a pause in the rollout of new Interactive Video Lottery (IVT) terminals.
In January 2005 Ladbrokes asked that three of the four judges set to hear their forthcoming case against the legitimacy of the Swedish betting monopoly be removed, on the grounds that they were not impartial.
In February 2005, the Dutch Supreme Court, as had the Italian Supreme Court before it, refused to interpret Gambelli as providing a green light to cross-border betting in Europe. The Court upheld an earlier ruling, that Ladbrokes, as it did not have a Dutch betting licence could not accept bets from customers based in Holland.
In May 2005, Finland's Supreme Administrative Court overturned the government's recent decision preventing Ladbrokes from operating there. However, by way of contrast, in June 2005, the Swedish Supreme Administrative Court decided not to overturn the Swedish government's decision to reject an application from Ladbrokes to be allowed to set up betting operations in Sweden. After the ruling, Douglas Roos, Ladbrokes' Nordic CEO, told Svenska Dagbladet that the judgement was "made to order for the government, " and that "The judges are totally lacking in integrity."
On Monday July 11 2005, the German daily Handelsblatt carried a report, citing an unnamed European Commission official, to the effect that the Commission will write to Germany, asking it to open its betting market to outside competition.
In a decision of July 8, in repsonse to a submission by the PMU, le tribunal de grande instance de Paris ruled that Zeturf Ltd should stop accepting bets on French horse racing. On July 22 Zeturf Ltd filed an appeal against the interim order, whilst on September 9 the company lodged a complaint against France and PMU with the EU Commission.
"Zeturf doit mettre fin à son activité de prise de paris en ligne sur les courses hippiques organisées en France" a déclaré le président du TGI de Paris. "Une menace comparée à "un parasite"" a déclaré le président du PMU, Bertrand Bélinguier.
In August 2005, it was announced that following a submission from the State owned gambling monopoly, Santa Casa de Misericordia, the Portuguese Attorney General's Office was currently reviewing the legality of BetandWin.com's recent four year sponsorship deal of the country's football league.
On 26 August 2005, the Norwegian Court of Appeal dismissed an earlier ruling by the Oslo Town Court, that the granting of a monopoly on gaming machines to Norsk Tipping, violated European Economic Area (EEA) rules on free movement of services and freedom of establishment. The Court, citing Läära, argued that the granting of a monopoly was a proportionate response to a policy that aimed to decrease the spread of betting.
On 31 August, a Dutch Court also ruled that online gaming restrictions were compatible with EU law and ordered the UK based bookmaker Ladbrokes to stop offering online services to Dutch citizens. The Court imposed a ?10K penalty per day for non compliance.
On the 29th of September the Italian government submitted its draft Finance Act of 2006, Section 66 of which seeks to deny access to the Italian betting market any gambling service provider that is not in possession of a concession to the Italian telecommunications and Internet networks.
On their website, Hambach & Hambach reported a decision of the Chamber of the Administrative Court of Stuttgart on the 8th September 2005, to the effect that where an administrative authority seeks to prohibit a betting firm licensed elsewhere in the EU from operating in its territory, it must be able to prove that the firm poses concrete danger to the common good.
Meanwhile, Olivier Drewes, a spokesperson for the Internal Market and Services Division of the European Commission was recently quoted as saying; "There is a risk that the Commission can be sued for inaction."
In a trip to Sweden in October 2005, the Internal Market Commissioner Charlie McCreevy openly questioned the efficacy of the European gambling monopolies.
However, on November 22, the European Parliament's Committee on the Internal Market and Consumer Protection (and not the European Parliament, as previously stated) adopted the report on the Directive on Services in the Internal Market, maintaining the disputed country-of-origin principle. Parliamentarians voted to introduce limitations that would exclude certain services like health care, social security, public services such as transport and water, broadcasting, banking and gambling from the law.
On the 24th November, the Finish Government once again rejected an application from Ladbrokes for an operating licence. In their defence, the Government cited the Lotteries Act, under which only one company may hold a licence in the areas of the lottery, horse racing and slot machines/casinos. Licences in these areas, which expire at the end of 2006, are currently held by three state owned companies; Veikkaus, Fintoto and the Finish Slot Machine Association.
At the end of November it was reported that Belgium's National Lottery was under scrutiny by the European Commission following a complaint by an unidentified German company. Whilst in December 2005, Justin Franssen, an Attorney-at-law with VMW reported that the Administrative Court of Breda had passed a judgement calling into question the efficacy of the Dutch casino monopoly.
On 23 December 2005 the Italian parliament approved a new Finance Act law, Legge Finanziaria 2006, the result of which will be the establisment of considerable new barriers to foreign gaming providers wishing to access the Italian market.
In a double blow for the Dutch Government, the European Commission also questioned its motivations, as regards fortcoming gambling legislation. The Commission stated that it seemed that the Government's main preoccupation in passing the legislation, was with lost revenues, something that, in the light of the jurispridence of the Court of Justice, could not be regarded as an objective justification for restricting all cross border gaming services. Moreover, the Commission also stated that the prevention of economic crime and money laundering, did not in themselves constitute valid reasons for prohibiting cross border trade. It asked the Dutch Government to consider measures which were less restrictive to intra-community trade.
The year 2006 got off to a lively start, when on 4 January the Appeal Court of Paris, once more found in favour of the Groupment d'Internet Economique Pari Mutuel Urbain (PMU), in its battle against the Maltese based betting site Zeturf. The judgement brought with it an increase of the fine imposed on Zeturf for non-compliance to ?50,000 (Lm21,500) per day.
In January 2006, an official inquiry into the Sweden betting market, concluded that under Swedish law there is no realistic way of stopping offshore online betting companies from targeting Sweish consumers ; "I'm convinced that with today's legislation we'd have trouble with EU law, and we need a plan B for when the cruel winds start blowing from Brussels," said the reports author Jan Francke. The report, was handed over to Sven-Erik Österberg, the Minister for Financial Market Issues, who was quoted as saying; " "I don't want to put my foot down today. What we have to do now is research this proposal further."
On the 2 February 2006, the Regional Court of Cologne passed down its verbal judgement in the case of Westlotto vs. BAW International Ltd. The Court
forbade BAW International Ltd. via its platform www.betandwin.com and all the other betting providers concerned to offer and/or advertise games of chance and/or sports betting in Germany. (This judgement did not cover Betandwin's .de site).
Following the passing of Italy's controversial Finance Act of 2006, under which an Italian service provider would be fined $180,000 a day each time they allowed
Italian internet users to access any online gambling site that appeared on a blacklist, Britain's biggest gambling groups said that they were considering taking legal action against the Italian government.
On March 10 Charlie McCreevy stated that he wanted to start proceedings against Germany, Finland, Sweden, Italy, Holland and Hungary for their policy of continuing to restrict the advertising and promotion of gambling services from other EU member states, whilst continuing to actively promote their own services. "Let's get to court," he said. "If we are ruled against, then so be it, but let's get on with it."
On 13 March 2006 an action against the Kingdom of Norway was brought before the EFTA Court by the EFTA Surveillance Authority, represented by Niels Fenger and Per Andreas Bjørgan, acting as Agents of the EFTA Surveillance Authority. The applicant claims that the Court should: Declare that the Kingdom of Norway, by amending the Norwegian gaming and lottery legislation in Lov av 29. august 2003 om endringer i pengespill- og lotterilovgivningen, which introduces a monopoly with regard to the operation of gaming machines, has infringed Articles 31 and 36 of the EEA Agreement and Order the Kingdom of Norway to bear the costs of the proceedings.
On March 28 the German Constitutional Court upheld the State's right to operate a gambling monopoly, providing that regulations are put in place before December 31 2007, to ensure that the monopoly provider desists from actively stimulating demand for gambling services. In the interim period, the monopoly will continue to operate, and bookmakers that are not licenced in Germany will be prohibited from taking bets from German citizens.
On 4 April 2006 the European Commission sent official requests for information on national legislation restricting the the supply of sport betting services to seven Member States - Denmark, Finland, Germany, Hungary, Italy, the Netherlands and Sweden. The Commission asks whether the measures in question are compatibile with Article 49 of the EC Treaty. This decision relates only to the compatibility of the national measures in question with existing EU law, and only to the field of sports betting. It does not touch upon the existence of monopolies as such, or on the matter of national lotteries. the first step towards launching a legal challenge at the European Court of Justice for violating EU law.
Charlie McCreevy, the EU internal market commissioner whilst acknowleding that there were national "sensitivities" surrounding gambling, was reported as saying; "The Commission has an obligation under [EU] treaties to ensure that member states' legislation is fully compatible with EU law.
On April 19 the Maltese online gaming company, Astrabet was granted the right by the Civil Court in Rome to be allowed to once more take bets from Italian consumers. However, in that the judgement only constitutes an interim decision, no pressure can be brought to bear on the the state regulator to remove the blockade of the company's website until such time that another case of a similar nature is brought and won at the level of an administrative court.
The Swiss Institute of Comparative Law presented its Draft Report on the Study of European Gambling Services to a formal Meeting of Stakeholders on 8th May 2006. On the basis of the Swiss Institute's report the European Commission will examine the need for and scope of a possible new Community initiative in the area of online gambling.
On 16 May 2006 the Advocate General M. Damoso Ruis-Jarabo Colomer delivered a preliminary ruling in the case of Placanica. The Advocate General considered whether the Italian law that forbade companies that were not licenced in Italy from accepting bets from Italian citizens was proportionate in the light of the tests laid down in Gambelli. In the particular instance of Stanley International, which was already strictly regulated in the UK, it was stated that any requirement that Stanley had to also have an Italian betting licence, before it would be in a position to accept bets from Italian citizens was discriminatory.
In June 2005 Sweden's Gaming board reported the editors of the newspapers Expressen and Metro and the magazines Slitz and Spray to the police for publishing adverts from foreign gambling companies. Previous rulings at the district court level against Expressen editor Otto Sjöberg and Nerikes Allehanda editor Krister Linnér had established the illegality of publishing such advertisements. In response to these rulings the Swedish Gaming Board's chief legal officer Håkan Hallstedt had stated; "These rulings mean that doubt is now eradicated....The law applies and we can act more forcefully against those that choose to ignore it."
An announcement by Svenskaspel in July 2006 that it intended to target Baltic States "to export knowledge, games and gaming responsibility" was met by the following comment by the redoubtable Oliver Drewes, spokesperson for the European Commission; "One could question whether the Nordic monopolies should enter into other markets while they are supposedly trying to protect their own monopolist positions."
On August 10, the German state of Saxony announced that it had revoked the betting licence for Austrian online bookmaker bwin.com's German affiliate with immediate effect. "As a result of this, Betandwin will be banned from operating and arranging sports bets and advertising," a statement from the interior ministry said.
On the 15 August 2006 the Italian regulatory authority, Amministrazione Autonoma Monopoli di Stato (AAMS) moved to open up the Italian betting market through the launch of a tender process for the issuance of a wide range of new betting licences.
At the end of August 2006 the Dutch Justice Minister Piet Hein Donner sent a letter to the European Commission, stating that it was his belief that Dutch gambling laws were compatible with European law. He allegedly claimed that the monopoly was justified on the grounds that it had the aim of preventing gambling addiction and countering money laundering (ahmm.._).
On Friday 15 September 2006 Manfred Bodner and Norbert Teufelberger, joint CEO's of the online betting company BWIN were detained by French authorities in Monaco on charges of violating France's internet gaming laws. The pair were released on Monday 18 September on bail of ?300,000 each after a hearing in Nanterre, France. They have been placed under investigation, a preliminary step that could lead to a trial and a possible three year prison sentence.
In the wake of the BWIN arrests, the European Commission was once more aroused from its slumber, with spokesperson Drewes allegedly stating;
"We will perhaps add to the number of countries involved in infringement procedures, during a meeting of the European Commission on October 18 dedicated to the topic....You cannot say to Operator A, which happens to be a state monopoly making a lot of money, 'Yes, you can do this,' and then tell Operator B, which is in the private sector, that it cannot do the same thing....We continue to receive complaints and commissioner McCreevy intends to proceed with these cases and initiate additional cases against other member states, including France.....It is not acceptable to limit the freedom to provide betting services on account of protecting consumers and at the same time allow mono-poly holders to advertise betting services."
Not content with having banged up the joint-CEO's of BWIN for a few nights, the French Government subsequently announced that it would be taking a tougher stance against any online gambling companies that illegally advertised their services to French citizens. French Budget Minister Jean-Francois Cope stated that the new measures, which would be attached to a bill aimed at dealing with childhood delinquency, would raise the fine for illegal advertising from £3000 to around five times the cost of the advertising investment.
"Nous avons decide de renforcer les sanctions financieres contre la publicite pour des offres (de jeux, ndlr) illegales. Ce sera prevu dans le cadre de la loi de prevention de la delinquance. L'objectif est que la sanction aille "jusqu'a cinq fois le montant de l'investissement publicitaire", en ganaral "de l'ordre de 300.000 euros", alors qu'actuellement la sanction pour ce type de publicité "est de 4.500 euros, a-t-il précise."
On 12 October 2006 the European Commission announced that it would send official requests for information on national legislation restricting the supply of certain gambling services to Austria, France and Italy; to verify whether the measures in question are compatible with Article 49 of the EC Treaty, which guarantees the free movement of services. The letters of formal notice are the first step in an infringement procedure under Article 226 of the EC Treaty. The Member States in question have two months in which to respond.
On the 17th of October the Court of Justice at Arnhem today ruled that Dutch gambling law does not contravene European law, and that, accordingly Ladbrokes must immediately desist from offering its gambling services to Dutch citizens via the internet. The Court stated that the restricted licence system currently in place in Holland served the public interest, such as the fight against fraud, money laundering and gambling addicition....
Following the tender application process introduced by the the Italian regulatory authority, Amministrazione Autonoma Monopoli di Stato (AAMS) in August 2006, a number of new betting licences were awarded in December 2006. Ladbrokes was awarded 142 new betting licences, spread geographically across Italy.
William Hill PLC in association with its joint venture partner Codere SA (Codere) was awarded 20 concessions to operate horseracing betting shops, 7 concessions to operate sports betting shops and 28 concessions relating to sports betting points.
The biggest of the British beneficiaries was Gala Coral, which already operates an Italian-language website and a betting shop in Genoa. Gala paid an estimated £30m for 403 licences for general sports betting.
Italy's Lottomatica SpA was awarded a total of 1,644 new betting licences, comprising 1,144 sports betting rights and 500 horse racing betting rights. The company also won an online betting licence. Lottomatica's business model will be based around franchisees. Intralot won 426 new betting licences, whilst Betfair and Unibet won remote betting licences.
In January 2007 Ladbrokes announced that it had formed a joint-venture with Cirsa Slot Corporation SL, a division of CIRSA Corporation, to develop a sports betting business targeting the ?29bn Spanish betting market. The newly formed joint-venture will now apply for the new betting licences that are being offered in Madrid, following the passing of a a new decree in December 2006, to regulate dedicated betting shops, non-dedicated betting kiosks (bars, arcades and bingo halls) and remote betting (telephone and Internet) for the first time. It will also work to secure betting licences in those other areas of Spain that are also considering regulating betting for the first time.
On 9 January 2007 the Maltese court of Appeal refused to enforce the judgment delivered by the French tribunal on 8th July, 2005 and later confirmed by the Paris court of appeal, on behalf of the PMU against Zeturf Ltd.
In "The Future of Gambling" a presentation given to EASG by Prof Peter Collins of the University of Salford, at Olympia, Jan 2007, the author stated that there should be common European laws in relation to gambling problems, gambling and taxation, alongside local options about the types and quantities of gambling that should be permitted, with no discrimination permitted on the grounds of nationality.
Forecasting what would actually happen, Collins said that the EU would continue to exhibit the worst features of democratic government without being a democracy and would remain a federation of competing, self-interested nationalist states united only in their hostility to America and their determination to continue to exploit the developing world through protectionist trade laws;
"Gambling in Europe will remain a shambles for the foreseeable future in which only the lawyers and Eurocrats will prosper and gambling companies must simply seize opportunities as they haphazardly arise.
On 30 January 2007 the EU Internal Market Commissioner Charlie McCreevy told the European Parliament that on the question of European gambling harmonisation;
"It's not my intention to bring forward a harmonised piece of legislation on gambling in the European Union."
On 6 March 2007 the Court of Justice in Placanica ruled that the Italian Crimial penalties for the collecting of bets by intermediaries acting on behalf of foreign companies are contrary to community law;
"A Member State may not apply a criminal penalty for failure to complete an administrative formality where, in breach of Community law, such completion is refused or rendered impossible by that Member State."
The Court of Justice pointed out that legislation which prohibits on pain of criminal penalties the pursuit of activities in the betting and gaming sector without a licence or a police authorisation issued by the State, places restrictions on the freedom of establishment and the freedom to provide services.
Acknowledging that moral, religious or cultural factors, as well as the morally and financially harmful consequences for the individual and for society associated with betting and gaming, may justify such restrictions, the Court said that such restrictions must nevertheless satisfy the conditions concerning their proportionality.
The Court acknowledged that a licensing system may constitute an efficient mechanism enabling the control of operators active in that sector. However, the Court went on to state that the fact that a particular number of licences was considered on the basis of a specific assessment to be 'sufficient' for the whole of the national territory could not of itself justify the obstacles to the freedom of establishment and the freedom to provide services brought about by that limitation.
The Court directed the national courts to determine whether, in limiting the number of operators active in the betting and gaming sector, the national legislation genuinely contributes to the objective invoked by the Italian Government, namely, that of preventing the exploitation of activities in that sector for criminal or fraudulent purposes.
The Court also stated that the blanket exclusion of companies from tender procedures for the award of licences goes beyond what is necessary in order to achieve the objective of preventing operators active in the betting and gaming sector from being involved in criminal or fraudulent activities.
The Court stated that there are other ways of monitoring the accounts and activities of operators which impinge to a lesser extent on the freedom of establishment and the freedom to provide services (for example, the gathering of information on their representatives or their main shareholders).
The Court added, that, in view of the unlawful nature of the exclusion of certain operators from the tender procedures, the Member State has an obligation to lay down detailed procedural rules (for example, for the revocation and redistribution of the old licences) to ensure the protection of the rights which those operators derive by direct effect of Community law. Meanwhile, the lack of a licence cannot be a ground for the application of sanctions to such operators.
In response to the questions referred for a preliminary ruling the Court stated that:
National legislation which prohibits the pursuit of the activities of collecting, taking, booking and forwarding offers of bets, in particular bets on sporting events, without a licence or a police authorisation issued by the Member State concerned, constitutes a restriction on the freedom of establishment and the freedom to provide services provided for in Articles 43 EC and 49 EC respectively.
It is for the national courts to determine whether, in so far as national legislation limits the number of operators active in the betting and gaming sector, it genuinely contributes to the objective of preventing the exploitation of activities in that sector for criminal or fraudulent purposes.
Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which excludes and, moreover, continues to exclude - from the betting and gaming sector operators in the form of companies whose shares are quoted on the regulated markets.
Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which imposes a criminal penalty on persons such as the defendants in the main proceedings for pursuing the organised activity of collecting bets without a licence or a police authorisation as required under the national legislation, where those persons were unable to obtain licences or authorisations because that Member State, in breach of Community law, refused to grant licences or authorisations to such persons.
The European Court in Placanica stated that a Member State may not apply a criminal penalty for failure to complete an administrative formality where, in breach of Community law, such completion is refused or rendered impossible by that Member State. So, where a country's gambling laws are inconsistent with European law, that country may not resort to criminal sanctions against private gambling operators.
Second, the judgement made it clear that where a country's gambling laws do not adhere to the strict guidelines now laid down in EU case law, it is not permitted to prohibit from its betting and gaming sector companies that are listed on Europe's stock markets. So, where a country continues to flaunt EU gambling law, through, for example, the blatant advertising of gambling services, that country is not entitled to exclude the llikes of BWIN, Ladbrokes, Power Leisure, William Hill and Sportingbet from operating in its market.
Subsequent to the ruling in Placanica, with its emphasis upon the "proportionlaity" test there were three Court judgements, which could be said to have gone in favour of the monopolists.
In Case E-1/06, the EFTA Surveillance Authority made an application for a declaration that the Kingdom of Norway, by adopting Act No 90 of 29 August 2003 Relating to Amendments to the Gaming and Lottery Legislation, which introduced a monopoly for the State-owned undertaking Norsk Tipping AS to operate gaming machines in Norway, had infringed Articles 31 and 36 of the EEA Agreement. The Court rejected the Applicant's claim that the contested legislation was contrary to EEA law because it in reality pursued illegitimate aims.
On 13 March, the European Court of Justice rejected a claim by the private internet gambling operator Unibet, that it should be granted immediate access to the Swdeish betting market. Whilst on 15 March, the Dutch Council of State ruled in favour of Holland Casinos monopoly stating that there are "compelling reasons in the general interest that can justify the restriction."
In June 2006 the European Commission formally requested France and Sweden to amend their laws following consideration of their replies to letters of formal notice sent in April and October 2006. These formal requests take the form of "reasoned opinions", the second stage of the infringement procedure laid down in Article 226 of the EC Treaty. If there is no satisfactory reply within two months, the Commission may refer the matter to the European Court of Justice.
The European Commission also decided to send an official request for information on national legislation restricting the supply of sports betting services to Greece. This takes the form of a letter of formal notice, the first step in the Article 226 infringement procedure. Greece has two months in which to respond. In line with the other sports betting cases the Commission wishes to verify whether the national measures in question are compatible with Article 49 of the EC Treaty, which guarantees the free movement of services.
Meanwhile, the Commission also formally reminded the Greek authorities of its obligation to lift its total ban on gaming machines, including computer games.
The European Court of Justice had previously ruled that Greek laws which banned the installation and operation of all gaming machines violated the principles of free movement of goods, freedom of establishment as well as freedom to provide services.
The Commission sent a reasoned opinion to Greece for failing to take the necessary measures to comply with the judgment of the Court of Justice. The Hellenic Republic is now invited to adopt within two months of receipt of this opinion the measures required to comply with the judgement. If Greece fails to do so, the European Commission could in a next step ask the European Court of Justice to impose financial penalties.
At the end of July 2007 the European Commission said that it had also instructed the French government to modify its draft law on online gambling so as to allow foreign gambling companies to operate in France. Ton Van Lierop, a spokesperson for the EU was quoted as saying; "Last week, we sent a detailed opinion to France concerning the draft law, which is aimed at prohibiting foreign operators from operating in the French betting market". It is the Commission's contention that the draft law violates article 49 of the EU treaty; free provision of services. It gave France one month to ammend the draft law; failure to do so, it said, would see it dragged before the European Court.
On July 10 2007, the case of the French monopolist, the PMU, was significantly undermined, when the Cour de Cassation, overturned a ban which had sought to prevent Zeturf from offering online betting on horse races taking place in France.
The case was sent back to the Appeal Court of Paris, which in January 2006 had found in favour of the Groupment d'Internet Economique Pari Mutuel Urbain (PMU), and increased the fine imposed on Zeturf for non-compliance to ?50,000 (Lm21,500) per day. In its judgement, the Cour de Cassation
said that there was some doubt whether the ban on Zeturf was legitimate in the light of the European
Court's rulings in Gambelli and Placanica. Most specifically, the Court said that the onus was on the
Appeal Court to determine whether the French government was infact upholding the PMU's monopoly simply to increase state revenues.
Also in July 2007 the Administrative Court of Stuttgart referred a sports betting case, concerning a German based agent for the Maltese betting company Digibet, directly to the European Court of Justice for a ruling under Article 234 of the EC Treaty. The Court, stated that it believed that German law was incompatible with European law, not least, because private operators were allowed in the gaming machine and casino sectors, but not in the area of sports betting.
On 13 Sepetmeber 2007, the European Court, citing "Gambelli" and "Placanica", once more stated that a member state cannot place restrictions on foreign gambling operators if it is actively expanding its own gambling market. The ECJ ruled that;
"it must be stated that the renewal of UNIRE's old licences without putting them out to tender was not an appropriate means of attaining the objective pursued by the Italian Republic, going beyond what was necessary in order to preclude operators in the horse-race betting sector from engaging in criminal or fraudulent activities. In addition, as regards the grounds of an economic nature put forward by the Italian Government, such as the need to ensure continuity, financial stability and a proper return on past investments for licence holders, suffice it to point out that those cannot be accepted as overriding reasons in the general interest justifying a restriction of a fundamental freedom guaranteed by the Treaty. It follows that none of the overriding reasons in the general interest pleaded by the Italian Government to justify the renewal of the 329 old licences without any competing bids being invited can be accepted. It follows from the above that, by renewing 329 licences for horse-race betting operations without inviting any competing bids, the Italian Republic failed to fulfil its obligations under Articles 43 and 49 EC and, in particular, infringed the general principle of transparency and the obligation to ensure a sufficient degree of advertising."
In August 2007, the Swedish Government stated that it would refuse to bow to demands from the European Commission that it throws open its betting market to non-Swedish companies. In its official response, to a Commission request of June 2007, the Swedish government said that while it has and will consider such demands, it has no intention to implementing changes to Sweden's gambling laws. Moreover, the Swedish government went on to say that it sees those aspects of Swedish law that are deemed to be incompatibe with EU law, as actually being totally acceptable, in as much as they serve their stated purpose of strengthen social security and countering criminal activity?. The Commission may now seek to the take the Swedish Government before the European Court, in the hope of obtaining a judgement that its current laws are indeed incompatibel with EU law. There is no guarnatee, however, that it will succeed in doing so, and, anyway, any Court case is likely to be at least three years away.
In October 2007 the Court of Utrecht ruled against online betting site Unibet, in a case brought by De Lotto. The Court ordered Unibet to stop taking bets from Dutch citizens, whilst also imposing a non-compliance penalty of ?100,000 per day.
On October 22 2007, Petter Nylander, the CEO of online gaming company Unibet, was detained by Dutch authorities after checking in to a flight to the UK. The background for his detention is the proceedings filed in 2006 by the French lottery monopoly Française des Jeux and horse betting monopoly PMU against Unibet, alleging breach of the French national laws from 1836 and 1891 protecting those State-owned monopolies.
On 6 November 2007 the Administrative Court of Appeal for the German state of Hessen said that it had lifted a ban that had prevented BWIN Interactive Entertainment AG, from offering its online gambling services to German citizens. The court said that as it believed that such a ban would be impossible to implement, it was in effect null and void.
On 18 January 2008 the Court of Appeal of Versailles announced that it would request additional information as to whether French gambling laws were compatible with the decisions reached by the European Court in the cases of Gambelli and Placanica. The Court's decision centred around a request by Didier Dewyn, the former chief executive of Mr Bookmaker, to have proceedings against him for organising an "illicit lottery" and "clandestine betting on horse races" thrown out.
On 31 January 2008 the European Commission announced that it had decided to send an official request for information on national legislation restricting the supply and promotion of certain gambling services to Sweden and Germany.
In the case of Sweden, the Commission wishes to verify whether all national measures relating to poker games and tournaments are consistent and therefore compatible with Article 49 of the EC Treaty, which guarantees the free movement of services.
The Commission said that its decision does not touch upon the existence of monopolies as such, or on national lotteries. Nor does it have any implications for the liberalisation of the market for gambling services generally, or for the entitlement of Member States to seek to protect the general interest, so long as this is done in a manner consistent with EU law i.e. that any measures are necessary, proportionate and non-discriminatory.
The Commission said that a Member State cannot invoke the need to restrict its citizens? access to betting services if at the same time it incites and encourages them to participate in state lotteries, games of chance or betting which benefits the state?s finances.
In the case of Germany, the new inquiry focuses on a number of provisions of the new legislation which entered into force on 1.1.2008.
Some of the key restrictions that are questioned in terms of their compatibility with the EC Treaty's Internal Market provisions are as follows: the total prohibition of games of chance on the Internet; notably sports betting, on which the Commission sent to Germany in March 2007 a detailed opinion; advertising restrictions on TV, on the Internet or on jerseys or billboards; and the prohibition on financial institutions to process and execute payments relating to unauthorised games of chance. In addition, questions are raised regarding the authorisation regime to be granted to intermediaries as well as the criminal sanctions or administrative fines provided for in cases of organisation, advertising and participation in on-line games of chance.
In September 2004, Westdeutsche Lotterie sought a judgement against bwin International Ltd to prevent it from operating in Germany. In February 2006 the Regional Court of Cologne ruled in favour of Westlotto at the first instance, whilst in September 2007, the Higher Regional Court of Cologne confirmed the judgement, declaring it to be enforceable. Bwin subsequently lodged an appeal with the Federal Court of Justice. Although the Federal Court of Justice is not expected to pass a final ruling on the merit of the case for the next 12 to 18 months, Westlotto instituted enforcement proceedings against bwin in November 2007. bwin filed a motion to the Federal Court of Justice requesting the court to suspend enforcement proceedings until the court has passed a final ruling on the merits. In a decision served on 14 March 2008, the Federal Court of Justice rejected the motion filed by bwin International Ltd. on procedural grounds.
On March 19 2008 a provisional judge in Utrecht ordered that Unibet must cease taking bets from Dutch citizens.
And on 1 April the upper house of the Dutch parliament voted against a bill that would have allowed the state monopolist company Holland Casino to offer internet betting on a trial basis. The bill which had been passed by the lower house of the Dutch parliament in 2006, was narrowly defeated by 37-35.
In June 2008 France's Budget Minister Eric Woerth said that France would move to partially open up its betting market; "Proceedings against France regarding our online betting market monopoly have been open since June 2007. In these circumstances, either we dig in our heels or we change our position. We have settled upon a controlled opening up of our online betting market, which we have presented to the European Commission." Regarding horse racing, he said that only parimutuel betting would be allowed." Regarding other forms of sports betting, he said that discussions would now be held with leagues and federations, but that it was most likley that fixed odds betting would be allowed.
Also, in June 2008, Ladbrokes claimed a victory in its long drawn out battle against the Dutch gambling monopolist De Lotto, after the Dutch Supreme Court referred its case to the European Court of Justice. The ruling comes two weeks before the European Commission rules on whether it will issue proceedings against ten countries at the European Court of Justice. However, it should be noted that the European Court of Justice is unlikely to rule on Ladbrokes' case for at least a year, and in the interim period Ladbrokes is still forbidden to take bets from Dutch citizens.
In October 2008 Ladbrokes fared no better in its legal challenge against the Norwegian State monopoly. Ladbrokes had sought to argue that the continuation of the monopoly constituted a breach of the Treaty of Rome and the European Fair Trade Agreement. The court in Olso strongly disagreed and ruled that the Norwegian state had acted in complaince with European Law when it moved to decline a licence applaiction from Ladbrokes. Ladbrokes was asked to pay ?130,000 in legal costs.
Meanwhile, the Swedish Court of Appeal has sought clarification from the European Court of Justice as to the legitimacy of the Swedish gambling monopoly. The questions essentially cover old ground, and touch on such matters, as under what circumstances a state may discriminate against betting operators from other countries; and can a gambling operator from one European state market his products in another European state, without first having obtained a gambling licence from that state. The submission of the questions is seen by many as a ruse to buy the Sweish gambling monopolist Svenskaspel some time.
On 14 October 2008 Advocate General Bot give his opinion in Case C-42/07 "Liga Portuguesa de Futebol Profissional (CA/LPFP) and Baw International Ltd v Departamento de Jogos de Santa Casa da Misericórdia de Lisboa."
In the first instance, Bot stated that the aim of Community law is not to open up the market in gambling and games of chance . He argued that a Member State should be only be required to open up this activity to the free market if it can be seen to be trating games of chance and gambling as true economic activities intended to yield maximum profits.
Bot reaffirmed that a restriction on gambling services conforms with Community law, if it can be established that it fulfils certain conditions; "that it is justified by an overriding reason relating to the public interest, it is appropriate for ensuring the attainment of the aim which it pursues and it does not exceed what is necessary for attaining it. Furthermore, and in any event, the restriction must not be applied in a discriminatory way."
According to Bot, Portuguese legislation conferring on Santa Casa a monopoly for mutual betting on the internet may comply with community law if certain conditions are met; such as, a genuine desire to protect consumers and maintain public order. He stated that it would be for the national court to carry out a twofold test to determine whether the Portuguese legislation is appropriate for providing effective protection for consumers and for maintaining public order.
Bot also stated that the grant of an exclusive right to a single entity enables objectives such as those of the Portuguese legislation to be attained only in situations where that entity is shown to be under the control of the State. He also said that;
"the national court must also assess whether, in the course of implementing the Portuguese legislation in question, Portugal is not manifestly distorting its purpose in seeking to obtain the maximum profit. As regards the additional games created by the Portuguese Government in the field of lotteries and off-course betting and the accompanying advertising, the Advocate General observes that the Court has permitted a Member State to act in such a way as to draw players away from prohibited gaming activities to activities which are authorised. He goes on to state, however, that it will be for the national court to decide whether the extended range of games and the scale on which they have been advertised manifestly exceeded what was necessary in order to pursue the objectives on which Santa Casa?s monopoly is based. As regards the policy of increasing the level of gaming taking place in casinos which, according to the applicants, the Portuguese authorities have pursued, the Advocate General considers that a Member State has a right to provide for different methods of organisation, which are more or less restrictive, for different games".
On 8 September 2009 the European Court of Justice ruled in the case of "Liga Portuguesa de Futebol Profissional (CA/LPFP) and Baw International Ltd v Departamento de Jogos de Santa Casa da Misericórdia de Lisboa."
("Bwin Liga"). The ruling represented an unequivocal victory as regards the right of state monopolies to exist in the field of gambling, and, moreover, it strengthened the rights of said monopolists vis a vis online betting.
The Court noted that the legislation on games of chance is one of the areas in which there are significant moral, religious and cultural differences between the Member States.
It said that in the absence of Community harmonisation in the field, it is for each Member State to determine in those areas, in accordance with its own scale of values, what is required in order to ensure that the interests in question are protected (see, inter alia, Case 34/79 Henn and Darby  ECR 3795, paragraph 15; Case C-275/92 Schindler  ECR I-1039, paragraph 32; Case C-268/99 Jany and Others  ECR I-8615, paragraphs 56 and 60, and Placanica and Others, paragraph 47).
"The mere fact that a Member State has opted for a system of protection which differs from that adopted by another Member State cannot affect the assessment of the need for, and proportionality of, the provisions enacted to that end. Those provisions must be assessed solely by reference to the objectives pursued by the competent authorities of the Member State concerned and the degree of protection which they seek to ensure (Case C-124/97 Läärä and Others  ECR I-6067, paragraph 36, and Case C-67/98 Zenatti  ECR I-7289, paragraph 34)."
The Portuguese Government and Santa Casa submitted that the main objective pursued by the national legislation is the fight against crime, more specifically the protection of consumers of games of chance against fraud on the part of operators;
"In that connection, it should be noted that the fight against crime may constitute an overriding reason in the public interest that is capable of justifying restrictions in respect of operators authorised to offer services in the games-of-chance sector. Games of chance involve a high risk of crime or fraud, given the scale of the earnings and the potential winnings on offer to gamblers. The Court has also recognised that limited authorisation of games on an exclusive basis has the advantage of confining the operation of gambling within controlled channels and of preventing the risk of fraud or crime in the context of such operation (see Läärä and Others, paragraph 37, and Zenatti, paragraph 35). "
The Court ruled that it was apparent that the organisation and functioning of Santa Casa was governed by considerations and requirements relating to the pursuit of objectives in the public interest.
"In that connection, it must be acknowledged that the grant of exclusive rights to operate games of chance via the internet to a single operator, such as Santa Casa, which is subject to strict control by the public authorities, may, in circumstances such as those in the main proceedings, confine the operation of gambling within controlled channels and be regarded as appropriate for the purpose of protecting consumers against fraud on the part of operators.
In a very significant departure, the Court said that as internet betting had not been harmonised in Europe, individual Member States were entitled to conclude that just because an operator like Bwin lawfully offered its services via the internet in another Member State, "in which it is established and where it is in principle already subject to statutory conditions and controls on the part of the competent authorities in that State", this did not amount to a sufficient assurance that national consumers would be protected against the risks of fraud and crime "in the light of the difficulties liable to be encountered in such a context by the authorities of the Member State of establishment in assessing the professional qualities and integrity of operators".
The Court noted that the lack of direct contact between consumer and operator, games of chance accessible via the internet involve different and more substantial risks of fraud by operators against consumers compared with the traditional markets for such games.
Interestingly, the Court also said that "the possibility cannot be ruled out that an operator which sponsors some of the sporting competitions on which it accepts bets and some of the teams taking part in those competitions may be in a position to influence their outcome directly or indirectly, and thus increase its profits".
The Court ruled that in the light of the specific features associated with the provision of games of chance via the internet, the restriction at issue in the main proceedings could be regarded as justified by the objective of combating fraud and crime;
"Consequently, the answer to the question referred is that Article 49 EC does not preclude legislation of a Member State, such as that at issue in the main proceedings, which prohibits operators such as Bwin, which are established in other Member States, in which they lawfully provide similar services, from offering games of chance via the internet within the territory of that Member State.
The ramifications from the European Court of Justice's ruling in the case of "Bwin Liga" are now being felt, with Ladbrokes withdrawning its legal action against the Norwegian State concerning its recent application for a licence, after Norway said it would rely on "Bwin Liga" in its defence.
On 17 December 2009, The Attorney General of the European Court, Yves Bot, give a not unexpected ruling in the case of Betfair and Ladbrokes gainst the Dutch state monopoly De Lotto.
Bot essentially reconfirmed (again) that providing a State's gambling policy is designed to protect consumers through the prevention of fraud, and providing that the measures taken to achieve this are proportional, then the state is entitled to pursue a monopoly solution. Moreover, he concluded that the monopoly provider may introduce new games and enage in the advertising of them, providng that measures were put in place that took account of the potential for gambling addiction.
Bot also said that a member state was not obligated to recognise licences which betting operators had acquired in other European countries, regardless of the merit of such licences. Bot also said that whilst in principle there should be a competitive tender procedure when gaming licences were being extended, the national court has the right to overrule this stipulation, with an eye on such matter as public order, the protection of consumers or the prevention of fraud.
2010 saw little change in the tone and sentiment adopted by the European Court. On 4 March 2010 Advocate General Mengozzi
gave his opinion in the joined Cases C-316/07, C-358/07, C-359/07, C-360/07, C-409/07 and C-410/07 Markus Stoß and Others v Wetteraukreis
Kulpa Automatenservice Asperg GmbH and Others v Land Baden-Württemberg, and in Case C-46/08 Carmen Media Group Ltd v Land Schleswig Holstein and Others. (A number of German courts had asked the Court of Justice to rule on whether the State Treaty on Games of Chance in Germany (Glücksspielstaatsvertrag)was compatible with Union law).
Advocate General Mengozzi opined that mutual recognition of national licences for games of chance was not viable as European Union law currently stands. He said that a Member State may prohibit, under certain conditions, online betting and that it may provide for a state monopoly on sports betting even if those games are actively promoted and if games involving a greater risk of addiction may be offered by private operators. He said that national restrictions were acceptable providing that they did not lead to discrimination based on nationality or country of establishment, and where they pursue a public-interest objective, such as reducing gambling opportunities or the fight against fraud and crime, and where they are proportionate and consistent in relation to the objective pursued.
In relation to the criterion of the consistency of a Member State's gaming policy, he considers that the assessment ought not to be carried out as a whole, but individually for each form of gaming. However, consistency must always be examined from a national viewpoint, with the result that regional differences within a Member State might render the system inconsistent. On the other hand, the mere fact that powers in relation to games of chance are distributed among a number of territorial entities in a Member State, does not, in itself, jeopardise the consistency of its policy.
Approaching the thorny question of whether a monopolist is entitled to advertise its betting offerings, Advocate General Mengozzi said that the fact that monopoly-holders may induce people to participate in betting, was not by itself sufficient to rule that the legislation concerned was inconsistent, if the promotion was deemed to be moderate and was genuinely intended to limit or prevent crime or to channel the propensity for gaming into a regulated and controlled system, as compared with seeking solely to increase the revenue of the public purse.
Advocate General Mengozzi also said that the allowing of private operators to offer betting services that involve a risk of addiction equal or greater than those games subject to a monopoly control, was not in itself, inconsistent with regrard to public-interest objectives and accordingly did not make the decision to bring betting and lotteries under a State monopoly disproportionate, provided that the public authorities ensured sufficient supervision of the private operators and the forms of betting that are on offer under the auspices of the monopoly are fewer than those which might exist with a private provider.
The Advocate General also took the view that European Union law, as it currently stands, does not oblige Member States mutually to recognise national gaming licences. He said that neither the freedom of establishment nor the freedom to provide services confers on the holder of such a licence the right to offer gambling on the territory of other Member States. He said that this was even more the case in relation to purely 'off-shore' licences.
As regards the prohibition of the organisation and brokering of online betting, the Advocate General considered that such a measure is consistent with the freedom to provide services, where the measure is proportionate and consistent with the public-interest objective that is being pursued, and notwithstanding the fact that there are, "on the basis of fairness, well-established temporary exceptions for the benefit of underakings which were operating hitherto exclusively over the internet" (whatever that actually means ...(ed).
On 3 June 2010 the European Court of Justice passed judgement in the case of Ladbrokes and Betfair versus the Dutch State (etc). The second Chamber of the Court upheld the right of the Dutch Gambling monopolist to exclude both companies from Dutch territory, on the grounds that their exclusion correctly formed part of a broader range of legislation deisgned to curtail problem gambling. On those grounds, the Court (Second Chamber) ruled:
"National legislation, such as that at issue in the main proceedings, which seeks to curb addiction to games of chance and to combat fraud, and which in fact contributes to the achievement of those objectives, can be regarded as limiting betting activities in a consistent and systematic manner even where the holder(s) of an exclusive licence are entitled to make what they are offering on the market attractive by introducing new games and by means of advertising. It is for the national court to determine whether unlawful gaming activities constitute a problem in the Member State concerned which might be solved by the expansion of authorised and regulated activities, and whether that expansion is on such a scale as to make it impossible to reconcile with the objective of curbing such addiction. For the purpose of applying legislation of a Member State on games of chance which is compatible with Article 49 EC, the national courts are not required to determine, in each case, whether the implementing measure intended to ensure compliance with that legislation is suitable for achieving the objective of that legislation and is compatible with the principle of proportionality, in so far as that measure is necessary to ensure the effectiveness of that legislation and does not include any additional restriction over and above that which arises from the legislation itself. Whether that implementing measure was adopted as a result of action by the public authorities to ensure compliance with national legislation or of an application by an individual in the context of a civil action to protect his rights under that legislation has no bearing on the outcome of the dispute before the national court. Article 49 EC must be interpreted as not precluding legislation of a Member State, such as the legislation at issue in the main proceedings, under which exclusive rights to organise and promote games of chance are conferred on a single operator, and which prohibits any other operator, including an operator established in another Member State, from offering via the internet services within the scope of that regime in the territory of the first Member State." (European Court of Justice judgement in the case of Sporting Exchange Ltd, trading as Betfair v Dutch Minister van Justitie (intervening party) Stichting de Nationale Sporttotalisator. European Court of Justice Judgement in the case of Ladbrokes International Ltd v Stichting de Nationale Sporttotalisator.)
July 08 2010 saw the Court provide a ruling in Joined Cases C-447/08 and C-448/08, "REFERENCES for a preliminary ruling under Article 234 EC from the Svea hovrätt (Sweden), made by decisions of 8 October 2008, received at the Court on 13 October 2008, in criminal proceedings against Otto Sjöberg (C-447/08) and Anders Gerdin (C-448/08)."
At the material time, Mr Sjöberg was the editor-in-chief and the publisher of the Expressen newspaper. In that capacity, he had sole responsibility for the publication by that newspaper, between November 2003 and August 2004, of advertisements for gambling organised abroad by the companies Expekt, Unibet, Ladbrokes and Centrebet. Mr Gerdin, for his part, was, at the material time, the editor-in-chief and publisher of the Aftonbladet newspaper. In that capacity, he had sole responsibility for the publication by that newspaper, between November 2003 and June 2004, of advertisements for gambling organised abroad by those companies.
The Åklagaren (Public Prosecutor?s Office) subsequently took proceedings against Mr Sjöberg and Mr Gerdin for infringement of Paragraph 54(2) of the Loterrilagen, for having promoted, unlawfully and for profit, the participation of Swedish residents in gambling organised abroad. On 21 June and 6 September 2005, Mr Sjöberg and Mr Gerdin were each ordered by the Stockholms tingsrätt (District Court, Stockholm) to pay a criminal penalty of SEK 50 000 in respect of infringement of the Lotterilag. Mr Sjöberg and Mr Gerdin both appealed against the judgment concerning them before the Svea hovrätt (Court of Appeal)and the Svea hovrätt decided to stay the proceedings and to refer to the Court.
The Court in this instance ruled that Article 49 EC must be interpreted as not precluding legislation of a Member State, such as that at issue in the main actions, which prohibits the advertising to residents of that State of gambling organised for the purposes of profit by private operators in other Member States. However, the Court also said that if it is true that persons carrying out the promotion of gambling organised in Sweden without a licence incur penalties which are less strict than those imposed on the persons who advertise gambling organised in other Member States, then those arrangements are discriminatory and the provisions of Paragraph 54(2) of the Lotterilag are contrary to Article 49 EC and, consequently, unenforceable against the persons being prosecuted in the main actions; "Article 49 EC must be interpreted as precluding legislation of a Member State subjecting gambling to a system of exclusive rights, according to which the promotion of gambling organised in another Member State is subject to stricter penalties than the promotion of gambling operated on national territory without a licence. It is for the referring court to ascertain whether that is true of the national legislation at issue in the main actions."
A notable feature of this judgement was that the Court went so far as to refer to gambling as a social evil;
"Considerations of a cultural, moral or religious nature can justify restrictions on the freedom of gambling operators to provide services, in particular in so far as it might be considered unacceptable to allow private profit to be drawn from the exploitation of a social evil or the weakness of players and their misfortune. According to the scale of values held by each of the Member States and having regard to the discretion available to them, a Member State may restrict the operation of gambling by entrusting it to public or charitable bodies."
In Carmen Media Group Ltd v Land Schleswig-Holstein the European Court (Grand Chamber)ruled on 8 September 2010, that where, as in the case of Germany, a regional public monopoly on sporting bets and lotteries had been established with the "objective of preventing incitement to squander money on gambling and of combating gambling addiction", and yet a national court had establishes at the same time that other types of games of chance may be exploited by private operators, "that national court may legitimately be led to consider that such a monopoly is not suitable for ensuring the achievement of the objective for which it was established by contributing to reducing the opportunities for gambling and to limiting activities within that area in a consistent and systematic manner".
In Case C-409/06, Winner Wetten GmbH the Court also ruled in 2010 that; "national legislation concerning a public monopoly on bets on sporting competitions which, according to the findings of a national court, comprises restrictions that are incompatible with the freedom of establishment and the freedom to provide services, because those restrictions do not contribute to limiting betting activities in a consistent and systematic manner, cannot continue to apply during a transitional period".
Also on 18 September 2010 the Court gave its decision in the joined Cases Markus Stoß (C-316/07), Avalon Service-Online-Dienste GmbH (C-409/07), Olaf Amadeus Wilhelm Happel (C-410/07) v Wetteraukreis, and Kulpa Automatenservice Asperg GmbH (C-358/07), SOBO Sport & Entertainment GmbH (C-359/07), Andreas Kunert (C-360/07). The Court held that:
(i)In order to justify a public monopoly on bets on sporting competitions and lotteries, such as those at issue in the cases in the main proceedings, by an objective of preventing incitement to squander money on gambling and combating addiction to the latter, the national authorities concerned do not necessarily have to be able to produce a study establishing the proportionality of the said measure which is prior to the adoption of the latter;
(ii) A Member States choice to use such a monopoly rather than a system authorising the business of private operators which would be permitted to carry on their business in the context of a non-exclusive legislative framework is capable of satisfying the requirement of proportionality, in so far as, as regards the objective concerning a high level of consumer protection, the establishment of the said monopoly is accompanied by a legislative framework suitable for ensuring that the holder of the said monopoly will in fact be able to pursue, in a consistent and systematic manner, such an objective by means of a supply that is quantitatively measured and qualitatively planned by reference to the said objective and subject to strict control by the public authorities;
(iii)The fact that the competent authorities of a Member State might be confronted with certain difficulties in ensuring compliance with such a monopoly by organisers of games and bets established outside that Member State, who, via the internet and in breach of the said monopoly, conclude bets with persons within the territorial area of the said authorities, is not capable, as such, of affecting the potential conformity of such a monopoly with the said provisions of the Treaty;
(iv)In a situation where a national court finds, at the same time: that advertising measures emanating from the holder of such a monopoly and relating to other types of games of chance which it also offers are not limited to what is necessary in order to channel consumers towards the offer emanating from that holder by turning them away from other channels of unauthorised games, but are designed to encourage the propensity of consumers to gamble and to stimulate their active participation in the latter for purposes of maximising the anticipated revenue from such activities, that other types of games of chance may be exploited by private operators holding an authorisation, and
that, in relation to other types of games of chance not covered by the said monopoly, and which, moreover, present a higher potential risk of addiction than the games subject to that monopoly, the competent authorities are conducting or tolerating policies of expanding supply, of such a kind as to develop and stimulate gaming activities, in particular with a view to maximising revenue from the latter, the said national court may legitimately be led to consider that such a monopoly is not suitable for guaranteeing achievement of the objective for which it was established, of preventing incitement to squander money on gambling and combating addiction to the latter, by contributing to reducing opportunities for gambling and limiting activities in that area in a consistent and systematic manner.
One day after it called into question the legality of the German betting monopoly, the European Court also seemed to put the boot into Austria, regarding its gambling regulations. (C-64/08 Engelmann). The Austrian Government had claimed that the purpose of an obligation imposed on holders of betting licences to have their headquarters based in Austria, was designed to permit effective control of said operators in the gaming sector with a view to preventing those activities from being carried out for criminal or fraudulent purposes.
The court ruled that the categorical exclusion of operators whose seat is in another Member State appeared disproportionate, as it went beyond what was necessary to combat crime. Noting that there are various other measures available to monitor the activities and accounts of said operators, the Court said that Article 43 EC must be interpreted as precluding legislation of a Member State under which games of chance may be operated in gaming establishments only by operators whose seat is in the territory of that Member State.
The Court then went on to deal with the fact that no tendering procedure had been organised and there had ben no transparency with regard to the grant to Casinos Austria AG, with effect from 1 January 1998 and 1 January 2001 respectively, of the 12 concessions which existed at the material time. The Court said that; "the obligation of transparency flowing from Articles 43 EC and 49 EC and from the principle of equal treatment and the prohibition of discrimination on grounds of nationality precludes the grant without any competitive procedure of all the concessions to operate gaming establishments in the territory of a Member State."
On these grounds, the Court (Fourth Chamber) ruled that; Firstly; Article 43 EC must be interpreted as precluding legislation of a Member State under which games of chance may be operated in gaming establishments only by operators whose seat is in the territory of that Member State. Secondly; The obligation of transparency flowing from Articles 43 EC and 49 EC and from the principle of equal treatment and the prohibition of discrimination on grounds of nationality precludes the grant without any competitive procedure of all the concessions to operate gaming establishments in the territory of a Member State.
In September 2011 the Court gave its reading in the case of Jochen Dickinger and Franz Omer, the founders of the online betting website bet-at-home.com. The Court stated that a monopoly on games of chance can be justified "by overriding
resons in the public interest, such as the objective of ensuring a particularly high level of consumer protection." The European Court provided the Austrian Court that had referred the case to it, with some guidance, as to how best to assess the proportionality of those measures that were being pursued in the public interest.
The Court said that where the holder of the monopoly is allowed to pursue an expansionist policy, it must be clearly shown that said policy can be shown to be reducing fraud and crime (presumably through the monopolist winning market share from unlicenced websites...). As regarding advertising, the Court said that only advertisng that was moderate and stricitly
"limited to what was necessary to channel consumers towards controlled gaming networks" was permissable.
Finally, the Court looked at whether the Austrian authorities must take into account the merit of licencing in other jurisdictions (in this case Malta). The Court said that in that there was no harmoniastion at European level in the area of games of chance, there was accordingly "no duty of mutual recognition of authorisations issued by other Member states."
Moreover the Court said that; "A member state may legitimately wish to monitor an economic activity which is carried on its territory, and that would be impossible if it had to rely on checks made by the authorities of another Member State using regulatory systems outside its
Perhaps, most importantly of all, the Court noted that in the area of games of chance,
"Member States have a wide discretion in relation to the objectives they wish to pursue
and the level of protection they seek."
On 12 July 2012 the Court of Justice of the EU, pronounced judgment in the case C-176/11 HIT and HIT LARIX. The Court noted, with reference to its judgements in Carmen Media and Bwin Liga, that it was established in case-law that restrictions on gaming activities may be justified by overriding reasons in the public interest, such as consumer protection and the prevention of both fraud and incitement to squander money on gambling;
" the Court has repeatedly held that legislation on games of chance is one of the areas in which there are significant moral, religious and cultural differences between the Member States. In the absence of harmonisation in the field, it is for each Member State to determine in those areas, in accordance with its own scale of values, what is required to protect the interests in question."
The Court also said that any and all such restrictions should be proportional and applied in a consistent and systematic manner, without discrimination.
In a series of judgements, the Court of Justice of the EU has provided guidelines to individual states,
regarding the manner and extent to which they may justify restrictions on the freedom to provide services provisions contained within the Treaty.
At the European Parliament conference "How to Regulate Betting and Gambling in Europe – Track record and future perspectives", held in Brussels on the 27 June 2012, Michel Barnier, the Member of the European Commission responsible for Internal Market and Services said the following;
"The European Parliament has rightly called on the Commission to continue to investigate
situations of non-compliance with the Treaty or the case law of the Court of Justice. I will therefore
ask my department to contact all the Member States concerned by ongoing cases or complaints in order to remind them of the applicable rules and suggest that any problematic situations are rectified in line
with current case law. If blatant infringements persist, I will not hesitate to propose to my colleagues that the appropriate proceedings be taken or relaunched. The development of a more proactive policy to support the Member States must be matched by a firm determination on the part of the Commission to enforce common rules once they have been clearly established."
On 20 Sepetmber 2012 Attorney General Mazak of the ECJ gave an opinion in the joined cases of C-186/11 and C-209/11 Stanleybet International Ltd, William Hill and Sportingbet Plc v OPAP.
Mazak went over the old ground, stating that; "Articles 49 and 56 TFEU must be interpreted as meaning that national legislation, which grants the exclusive right to run, manage, organise and operate games of chance to a single undertaking which has the form of a public limited company and is listed on the stock exchange, may be justified to the extent that that legislation actually pursues the objective of restricting the supply of games of chance or the objective of combating criminality related to gambling by channelling players into controlled systems and that it genuinely reflects a concern to attain those objectives in a consistent and systematic manner."
Mazak questioned the efficacy of the Greek betting monopoly, on the grounds that Greek legislation
as currently applied, did not meet its stated aim of reducing gambling opportunities and limiting activities in that area in a consistent and systematic manner.
Moreover, noting that OPAP continued to pursue a strategy of expanding its portfolio of games of chance, whilst continuing to advertise them, Mazak said that it was imperative that the pursuit of such a strategy by a monopolist provider remained measured and "strictly limited to what was necessary in order to channel consumers towards controlled gaming networks."
In the opinion of Mazak; "the activities of OPAP are neither subject to strict control by the public authorities nor effectively limited by the legislative framework applicable to it."
Mazak went on to say that where the combatting of criminality was identified as the sole objective
behind an expansionist gaming policy, that policy must be "considered as consistent to the extent that there is actually a problem of criminal and fraudulent activities on a significant scale linked to gambling in Greece which could be dealt with by the expansion of authorised and regulated activities".
The final part of Mazak's opinion, was perhaps the most contentious, in that were it to be followed by the Court it may serve to undermine the Greek government's plans to sell off its stake in OPAP.
Mazak said that because OPAP does not contribute to limiting betting activities or to channelling players into controlled systems in a systematic and consistent manner, Greek legislation governing the monopoly provider could not continue to apply during a transitional period.
A slight question mark could be raised regarding Mazak's assertion that where the combatting of criminality was identified at the sole objective behind an expansionist gaming policy, then it would have to be shown that there was actually a problem of criminal and fraudulent activities on a significant scale linked to gambling. In that the majority of crime is by its nature covert and secretive, this requirement may represent something of a tall order. Accordingly, it would be no great surprise were the Court simply to ignore it.
To cite this article: Niall O'Connor; "An overview of European Gambling Law: From Schindler to HIT." (Published on Bettingmarket.Com, 2017). All Rights Reserved.
Copyright Betting Market 1997 - 2017. All Rights Reserved.