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A system of gambling licensing in European Union – The principles of transparency, equal treatment and legal certainty

Online gambling in EU

Licensing systems for certain categories of offline gambling are common in many countries. A growing number of Member States is introducing licensing systems for the provision of online gambling services. These licenses may be issued on the basis of a call for tender which sets out the eligibility requirements. Once awarded the licence, its holder will be subject to the national gambling laws and supervisory structure.

According to consistent case-law of the CJEU, a prior administrative authorisation scheme, even though it derogates from a fundamental freedom, may be justified on the basis of objective, non-discriminatory criteria known in advance, in such a way as to circumscribe the exercise of the authorities´ discretion so that it is not used arbitrarily. Also, any person affected by a restrictive measure based on such derogation must have a judicial remedy available to them. In order to enable the impartiality of the authorisation procedures to be monitored, it is also necessary for the competent authorities to base each of their decisions on reasoning which is accessible to the public, stating precisely the reasons for which, as the case may be, authorisation has been refused.

Case-law has developed as regards the procedure to grant such licences. The principles of transparency, equal treatment and legal certainty appear to apply both in the situation where a Member State opts for an “open” system of licences in which access to a certain gambling activity is granted to every operator which fulfils the requirements provided by the relevant national law (such as a bank guarantee, absence of previous offences, etc.), and in the situation where a Member State establishes a “closed” system of licenses under which only one or several licences are granted by the national authorities in respect of each of the games of chance authorised.

The principles of transparency, equal treatment and legal certainty

The case-law of the CJEU states that public authorities which grant betting and gaming licences have a duty to comply with the fundamental rules of the Treaties and, in particular, with Articles 49 and 56 TFEU, the principles of equal treatment and of non-discrimination on grounds of nationality and the consequent obligation of transparency.

The obligation of transparency applies if the licence in question may be of interest to an undertaking located in a Member State other than that in which the licence is granted. It requires the licensing authority to ensure, for the benefit of any potential tenderer, a degree of publicity sufficient to enable the licence to be opened up to competition and the impartiality of the award procedures to be reviewed, without necessarily implying an obligation to launch an invitation to tender. The award of such licences must therefore be based on objective, nondiscriminatory criteria which are known in advance, in such a way as to circumscribe the exercise of the national authorities’ discretion.

The purpose underlying the principle of transparency, which is a corollary of the principle of equality, is essentially to ensure that any interested operator may take the decision to tender for contracts on the basis of all the relevant information and to preclude any risk of favouritism or arbitrariness on the part of the licensing authority. It implies that all the conditions and detailed rules of the award procedure must be drawn up in a clear, precise and unequivocal manner, to make it possible for all reasonably informed tenderers exercising ordinary care to understand their exact significance and interpret them in the same way, and to circumscribe the contracting authority’s discretion and enable it to ascertain effectively whether the tenders submitted satisfy the criteria applying to the relevant procedure.

The principle of equal treatment requires moreover that all potential tenderers be afforded equality of opportunity and accordingly implies that all tenderers must be subject to the same conditions.

The principle of legal certainty also requires that rules of law be clear, precise and predictable as regards their effects, in particular where they may have unfavourable consequences for individuals and undertakings.

The CJEU ruled in Costa that the effect of an obligation for new licence holders to observe a minimum distance between their establishments and those already in existence is to protect the market positions acquired by the operators who are already established. This is to the detriment of new licence holders, who are compelled to open premises in less commercially attractive locations than those occupied by the former. Consequently, any such measure entails an unequal treatment which could not be justified on the basis of the general interest objectives. As regards the objective of combating of criminality by making the operators active in the sector subject to control and channelling betting and gaming into the systems thus controlled, the Court observed that the rules on minimum distances were imposed exclusively on new licence holders and not on those already established. It ruled that even if a system of minimum distances between outlets were in itself justifiable, it could not be acceptable for such restrictions to be applied in circumstances such as those of the cases pending before the national court, in which the only operators to be placed at a disadvantage would be the new licence holders entering the market.

In Sporting Exchange, the CJEU elaborated the case-law on the principle of transparency. It had to rule on the validity of the renewal of a licence to operate games of chance granted to a single operator without a competitive tendering procedure.

The Court recalled that the obligations of equal treatment and transparency is also applicable in the situation of such “closed” systems of licences. It accepted however an exception to the compliance with that obligation in so far as the operator in question is a public operator whose management is subject to direct State supervision or a private operator whose activities are subject to strict control by the public authorities”. In such situations, granting an operator with exclusive rights to operate games of chance, or renewing such rights, without any competitive tendering procedure would not appear to be disproportionate in the light of the objectives pursued by the national legislation in question (protection of consumers and combating both crime and gambling addiction).

© European Union

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