Articles 49 and 56 Treaties of the European Union (TFEU) require the abolition of all restrictions on freedom of establishment and freedom to provide services – even if those restrictions apply without distinction to national providers of services and to those from other Member States – if they are liable to prohibit, impede or render less attractive the activities of a service provider established in another Member State in which it lawfully provides similar services.
National rules in the area of gambling constitute an obstacle to the freedoms guaranteed by the internal market freedoms if they:
• ban the exercise of an economic activity in the area of gambling;
• confer exclusive rights to organise and promote games of chance on a single operator;
• make the exercise of an economic activity subject to a licensing requirement.
The freedom to provide services involves the freedom of the provider to offer and supply services to recipients in a Member State other than that in which the provider is established, and also the freedom to receive or to benefit as recipient from the services offered by a provider in another Member State. The freedom to provide services therefore is for the benefit of both providers and recipients of services.
Restrictions on freedom of establishment for nationals of a Member State in the territory of another Member State are prohibited by Article 49 TFEU, including restrictions on the setting-up of agencies, branches or subsidiaries.
As regards the delimitation of the scope, respectively, of the principles of freedom to provide services and freedom of establishment, it is necessary to establish whether or not the economic operator is established in the Member State in which it offers the service in question.
According to the Court´s case-law, for there to be “establishment” within the meaning of the Treaty, a commercial relationship entered into by an operator established in a Member State with operators or intermediaries established in the host Member State must make it possible for the operator to participate, on a stable and continuous basis, in the economic life of the host Member State and must thus be such as to enable customers to take advantage of the services offered through a permanent presence in the host Member State, which may be done simply by means of an office managed by a person who is independent but authorised to act on a permanent basis for the operator, as would be the case with an agency.
On the other hand, every provision of services which are not offered on a stable and continuous basis from an establishment in the Member States of destination constitutes a “provision of services” for the purposes of Article 56 TFEU. In this context, the Court has ruled that no provision of the Treaty affords a means of determining, in an abstract manner, the duration or frequency beyond which the supplier of a service or of a certain type of service can no longer be regarded as the provision of services. Accordingly, “services” for the purposes of the Treaty may cover services varying widely in nature, including services which are provided over an extended period, even over several years.
The CJEU has recognised that that “any restriction concerning the supply of games of chance over the internet is more of an obstacle to operators established outside the Member State concerned, in which the recipients benefit from the services, those operators, as compared with operators established in that Member State, would thus be denied a means of marketing that is particularly effective for directly accessing that market”.
In Dickinger and Ömer, the Court clarified which fundamental freedoms may apply in a situation where gaming services are marketed over the internet in the territory of a host Member State by an operator established in another Member State but with a certain infrastructure in the host Member State. It ruled that the mere fact that a provider of games of chance marketing over the internet makes use of material means of communication (such as a server, a helpdesk) supplied by another undertaking established in the host State is not in itself capable of showing that the provider has, in that Member State, a fixed establishment similar to an agency, which would have the consequence that the Treaty provisions on freedom of establishment would apply. The Court answered the questions of the referring court under the provision of Article 56 TFEU on the free movement of services.
In practice, in the area of gambling, the importance of the difference between the application of the Treaty provisions governing the free movement of services or the provisions on the freedom of establishment is rather limited. Under both Articles 49 and 56 TFEU, the case-law provides for a similar interpretation of whether there is a restriction to the free movement and whether such a restriction can be justified on the basis of a general interest.
Concrete examples of national rules in the gambling sector which constitute a restriction on the freedom to provide services and/or the freedom of establishment, as interpreted by the courts, are:
• the ban on the importation of lottery advertisements and tickets into a Member State with a view to the participation by residents of that State in a lottery operated in other Member States;
• the prohibition of promoting gambling organised legally in other Member States and of unlicensed gambling nationally thus ensuring that national consumers only take part in gambling in the context of the national licensing system;
• where a company established in a Member State pursues the activity of collecting bets through the intermediary of an organisation of agencies established in another Member State, any restrictions of the activities of those agencies would constitute such an a obstacle
• the conferral of exclusive rights on a single operator (set up either under public or private law) to organise and promote games of chance, and whereby all other operators, including operators established in another Member State, are prohibited from offering, over the internet, services falling within the scope of that regime in the territory of the first Member State;
• the prohibition on individuals to connect by internet from their home to a bookmaker established in another Member State;
• the limitation of the number of licences or operators;
• the prohibition of activities in the betting and gaming sector without prior authorisation from the administrative authorities;
• restricting the right to operate games of chance or gambling solely to casinos in permanent or temporary gaming areas created by decree-law;
• treating foreign lotteries differently for tax purposes from national lotteries;
• the obligation that persons wishing to operate gaming establishments must adopt the legal form of a public limited company, which prevents, inter alia, operators who are natural persons and undertakings which, in the country in which they are established, have chosen another corporate form, from setting up a secondary establishment;
• the obligation on persons holding concessions to operate gaming establishments to have their seat in the national territory.
Finally, the CJEU has made clear that restrictions which are incompatible with the freedom of establishment and the freedom to provide services, because they do not contribute to limiting betting activities in a consistent and systematic manner, cannot continue to apply, not even during a transitional period.