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Last 30th June another remarkable judgment on the matter of online gambling was delivered by the European Court of Justice. The case (C-212/08, Zeturf Ltd v. Premier ministre) involved a Maltese company offering gambling services via the Internet. Although Zeturf had been awarded a license to operate in Malta, it was prevented from providing betting services in France due to the local horseracing regulation allegedly in breach of European law. In particular, Zeturf argued that the French law, by granting a monopoly in favour of the PMU (Groupement d’Intérêt Économique Pari Mutuel Urbain) for the management of off-course betting on horseracing, restricted its freedom to provide services. Unlike the Portuguese law considered by the Court in the Liga Portuguesa case, the disputed legislation, having been enacted in 1997, did not draw any distinction between online and offline betting. The case began in 2005, when Zeturf asked for the repeal of the rules in question before a French court. As a consequence, the Conseil d’Etat requested the European Court of Justice to give a preliminary ruling on two questions.
At the outset, the Court recalled the key points of the preceding case law on the matter. First, it pointed out that States are free to determine the desired level of protection within their territory and to establish the most appropriate measures for pursuing objectives such as consumer protection and safeguarding of public order. Such measures, although they restrict the freedom to provide services, may nevertheless be justified to the extent they prove effective for the achievement of the objectives above. In the light of that, conferring the exclusive rights for the management of off-course horseracing betting to an entity subject to control by public authorities, as PMU is, could be a sound way to achieve the overriding general interests underlying the French policy on gambling. As the Court made clear in the Liga Portuguesa case, a monopoly does not automatically imply an unjustified breach of EU law. Rather, the problem becomes to ascertain whether the establishment of that monopoly is consistent with the domestic policy as well as proportionate to the objectives to be achieved. The Court of Justice then focused on two objectives at the root of the French legislation on horseracing betting. The prevention of fraud and money-laundering, Together with the safeguarding of public order and consumer protection could constitute a sound basis for measures affecting the freedom to provide services in the market for gambling. However, it is for the national court to determine whether these restrictions are effective and necessary to achieve the desired level of protection. On the contrary, the Court declined to consider contributing to rural development by the financing of horse breeding as being of overriding public interest: as the Court had pointed out in the long standing case Schindler, the financing of social activities must constitute only an incidental beneficial consequence and not the real justification for the restrictive policy adopted.
A German court has found that the country’s numerous state lottery monopolies are operating in defiance of EU law, emboldening eager private lottery companies seeking to establish a foothold in the lucrative market. The supreme court on Monday struck down a federal law that bars gambling on football, basketball, baseball and other sports in most states, giving states the go-ahead to legalize betting on sports. The EU as regards the consistency of national gambling laws with the internal market freedoms. There is an increasingly long line of cases in which the Court was asked. When it comes to gambling European case law is an ass! The European Commission started to get interested in the gambling (and when I write “gambling” I include betting) industry in 1990 when it commissioned Coopers & Lybrand to write a report on the European industry as part of their 1992 Harmonisation program.
Having said that, the Court examined the characteristics of PMU. The Court recalled the hypocrisy test developed in its decisions (first in Gambelli), requiring that restrictions ON the freedom to provide services must serve to limit betting activities in a consistent and systematic manner; more in detail, as stated in the Markus Stoß and others case, the establishment of a monopoly must be accompanied by a legislative framework adequate for ensuring that the holder of the monopoly will in fact be able to pursue the objectives to be achieved by means of an offering that is quantitatively measured and qualitatively designed by reference to the said objectives and subject to strict control by the public authorities.
The Court reasoned that conflicts of interest could arise when an operator aims on one hand at maximizing its income and on the other at reducing gambling opportunities. Most notably, such a conflict could emerge with respect to a public or a non-profit-making operator. Similar issues were addressed by the Court of Justice in facing the problematic Italian legislation on betting services, which posed restrictions (by limiting the number of licenses issued by the Public Administration and excluding several foreign operators) seemingly intended to increase tax returns instead of actually limiting gambling opportunities. In the Court’s opinion, the holder of the monopoly is in a very favorable position to increase betting activities by organizing more events on which bets can be placed. Accordingly, it is for the national courts to evaluate whether the controls by public authorities over these operators are appropriate for achieving the objectives pursued by domestic legislation.
Further, the Court focused on another aspect connected to the assessment to be carried out by the national court. In addition to the above, the first question referred for preliminary ruling asked the court whether the pursuit of a dynamic commercial policy by the holder of the monopoly with respect to the organization of gambling activities has to be considered in compliance with the EU rules regarding the freedom to provide services. As the Court explained in Placanica, to constitute a valid alternative to illegal gambling, authorized operators must be reliable and, most important, attractive for consumers. Therefore, a controlled expansion in gambling, pursued by offering an extensive range of games, advertising the services on a certain scale and using new distribution techniques may nevertheless be consistent with the objectives underlying the restrictions posed by domestic legislation. Such a controlled expansion becomes in fact an essential condition for channeling consumers into controlled activities. Rather, it is for national courts to determine whether dynamic commercial policies pursued by holders of exclusive rights may be regarded as part of said controlled expansion in the sector or goes instead beyond what is necessary to this end. These assessments have to be carried out in the light of the particular features of each case.
Finally, the Court of Justice addressed the second question raised by the French court. The point at issue concerned whether the assessment of the prejudice to the freedom to provide services must be conducted with respect to the sole market of online betting rather than to the market of gambling (online and offline) as a whole. In the wake of its ruling in the Liga Portuguesa case, the Court pointed out that the characteristics of the Internet makes online transactions a source of greater risks in the area of consumer protection. However, the Internet has to be included among the various channels through which gambling services are provided. Since the French legislation at stake applied to both online and offline betting, in the absence of any distinction between traditional and new channels, the restrictions imposed on the freedom to provide services have to be assessed taking into account the entire sector concerned.
In conclusion, it can be said that also in this case the European Court of Justice found that the law at stake was not in direct violation of the fundamental principles of the European Union; however it is for the national court to evaluate whether it actually complies with the proportionality and suitability test. That is like saying “nothing new under the su
Eu Gambling Case Laws
By Valentina Pop
The EU's top court on Tuesday ruled that national governments can uphold domestic restrictions on online gambling and ban foreign websites if the intention is to stop fraud and crime.
In a case brought by Austrian online betting provider Bwin against the Portuguese state lottery, the European Court of Justice (ECJ) ruled that the state monopoly's restrictions 'may be regarded as justified by the objective of combating fraud and crime.'
Eu Gambling Case Lawyers
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The ruling is a setback for online gambling groups, which have been pushing for an EU-wide open market in this field.
Portugal's gambling authority had fined a subsidiary of Bwin €74,500 for concluding a sponsorship deal with a Portuguese football league, which breached the nation's exclusive gambling rights.
Bwin challenged the fine in court, arguing that Portugal is discriminating against private companies and goes too far in trying to control the risk of gambling addiction.
Stock markets reacted promptly on Tuesday, with shares of Bwin, one of Europe's biggest internet bookmakers, dropping more than five percent on the news.
Its legal ramifications may also impact the European Commission's current policy proposals, as well as ongoing competition cases against member states such as France, Germany and Austria over protective measures towards their domestic monopolies.
'We will study the ruling in detail and adapt the policies accordingly, if necessary,' Oliver Drewes, a spokesman for the commission told this website.
He added that the commission's policy had always been that this was an area which fell under the competence of national governments, provided that the EU principles were respected.
European state lotteries hailed the decision as a 'great victory' and a 'heavy blow for the commercial gambling industry.'
'As of today, there is no longer any hope for an unregulated gambling market that has no borders and is oriented solely towards the profits of illegal providers,' Erwin Horak, head of the Bavarian state lottery said in a statement.
The London-based Remote Gambling Association, representing the world's largest online gambling companies, expressed its 'disappointment' at the ECJ ruling, which allows the Portuguese monopoly to 'eliminate competition and limit consumer choice.'
RGA noted that the ruling was based on the specific situation in Portugal and the regulations in other member states may still violate EU law.
EU parliament against online gambling
Efforts to create a single EU-wide market for online gambling were also rejected by the European Parliament earlier this year. In March, the bloc's legislative voted by a large majority against such a move, while branding the sector a risk factor in fraud and addiction.
'Online gambling provides increased opportunities for corrupt practices such as fraud, match fixing, illegal betting cartels and money-laundering, as online games can be set up and dismantled very rapidly and as a result of the proliferation of offshore operators,' the parliament said.
Between 1996 and 2008, the online gambling industry generated over €15.6 billion in revenue worldwide. European Parliament studies indicate the sector is growing by between eight percent (Austria) and 17 percent (Italy) a year in the EU, even as other industries shrink amid the economic downturn.
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