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Restricted licenses for online gambling in European Union

Online gambling in EU

Reserving the grant of licenses to non-profit entities

The CJEU assessed in Sjöberg and Gerdin the compatibility with EU law of national legislation which makes the award of a licence to organise gambling activities subject to the condition of the applicant being a public or a non-profit organisation. The Swedish law in question prohibited the promotion of gambling legally organised in other Member States and the promotion of unlicensed gambling in Sweden.

The Court underlined that the purpose of the national law was “to ensure that those consumers take part in gambling only in the context of the system licensed at national level, thereby in particular ensuring that private profit-making interests are excluded from that sector”, which is a restriction to the free movement of services. It then ruled that “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” and consequently that “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”. Moreover, the Court considered that the prohibition on the promotion of services of private gaming operators run for profit, who would never be entitled to obtain national licences for the operation of gambling, may be regarded as necessary to meet such an objective.

In Ladbrokes, the EFTA Court recalled that the aim of preventing gambling of being a source of private profit may in principle justify restrictions on the right of establishment and the free movement of services. As an aim in itself, it must be based on a general resentment of games of chance for reasons of morality, in particular if it relates to non-addictive games. Thus, the aim of preventing gambling from being a source of private profit can serve as a justification only if the restrictive measure (such as the introduction of a State-owned monopoly offering a range of gambling opportunities) reflects that moral concern. However, national authorities cannot be required to oppress all games of chance offered by socially beneficial organisations.

The acceptance of certain games of chance of a limited volume offered by such organisations, typically in local communities, constitutes a reasonable use of statutory prohibitions which does not fatally undermine the moral position on which the aim is based.

Limited number of licences

Some Member States limit the number of licences, for example to a maximum for a certain category of gambling. In Placanica, the national (Italian) law at issue limited the number of licenses for the management of sport bets on competitive events not involving horses (to 1000), and also the number of licences for the acceptance of bets on competitive horse events. Similarly to the case-law on exclusive rights/monopolies, the CJEU made clear that limits on the number of operators are restrictions to the fundamental freedoms which are in principle capable of being justified. (Case Placanica, par. 52 et seq. In this context, the Court ruled in Zeturf that the mere fact that the authorisation and control of a certain number of private operators may prove more burdensome for the national authorities than supervision of a single operator is irrelevant. It is apparent from the case-law of the CJEU that administrative inconvenience does not constitute a ground that can justify a restriction on a fundamental freedom guaranteed by EU law. (par. 48 of the judgment))

Under the specific circumstances of Placanica, the Court first analysed the general interest objective of “reducing gambling opportunities”. It ruled that the restrictions on the number of operators “must in any event reflect a concern to bring about a genuine diminution of gambling opportunities and to limit the activities in that sector in a consistent and systematic manner”. In that case it was however common ground, according to the national court, that “the Italian legislature is pursuing a policy of expanding activity in the betting and gaming sector, with the aim of increasing tax revenue, and that no justification for the Italian legislation is to be found in the objectives of limiting the propensity of consumers to gamble or of curtailing the availability of gambling”.

The CJEU turned then to the objective of “combating criminality”, which was identified as the true goal of Italian legislation at stake. In this context, it underlined that it is possible that a policy of controlled expansion may be entirely consistent with the objective of drawing players away from clandestine betting and gaming to activities which are authorised and regulated. A licensing system may, in those circumstances, constitute an efficient mechanism enabling operators active in the betting sector to be controlled with a view to preventing the exploitation of those activities for criminal or fraudulent purposes. It must nevertheless be ascertained whether the imposed limitations satisfy the conditions laid down by the CJEU case-law as regards their proportionality.

Restriction on advertising of licence holders established in another Member State

In its recent case HIT and HIT LARIX, the CJEU assessed the rejection of a permit to carry out advertising in Austria for gaming establishments located in Slovenia, in particular for casinos. In order for such permit to be granted, the Austrian legislation required that the level of protection of gamblers in the Member State of origin should be comparable to the level in Austria. It was not in dispute that such national legislation pursues the objective of protecting consumers against the risks connected with games of chance.

The CJEU ruled that such authorisation is in principle capable of fulfilling the condition of proportionality if it is limited to making authorisations to carry out advertising for gaming operators established in other Member States conditional upon the legislation of the latter providing guarantees that are in essence equivalent to those of the national legislation. Such a condition does not appear to constitute an excessive burden for operators given the objective of protecting the population against the risks inherent in games of chance. The legislation would however have to be regarded as disproportionate, if it required the rules in the other Member States to be identical or if it imposed rules not directly related to protection against the risks of gaming.

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