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Strict state control of online gambling in EU

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Euro2004OpeningCeremony

The CJEU has ruled that a Member State seeking to ensure a particularly high level of protection of consumers or of society may be entitled to take the view that it is only by granting exclusive rights to a single entity which is subject to strict control by the public authorities that it can tackle the risks connected with the gambling sector and pursue the objective of preventing incitement to squander money on gambling and combating addiction to gambling with sufficient effectiveness.94

The public authorities of a Member State may legitimately consider that the fact that, in their capacity as overseers of the entity holding the monopoly, they will have additional means of influencing its conduct, outside the statutory regulating and monitoring mechanisms, is likely to secure for them a better command over the supply of games of chance and better guarantees that their policy will be implemented more effectively than in the case where those activities are carried out by private operators in a competitive environment. This is the case even if private operators are subject to a system of authorisation and a regime of supervision and penalties.95 The choice between granting exclusive rights to a public body whose management is subject to direct State supervision or to a private operator over whose activities the public authorities are able to exercise tight control falls within the margin of discretion which Member States enjoy in the context of games of chance.96

With respect to the objective of fighting gambling addiction caused by gaming machines, the EFTA Court admitted in the Gaming machines case that “it is reasonable to assume that a monopoly operator in the field of gaming machines subject to effective control by the competent public authorities will tend to accommodate legitimate concerns of fighting gambling addictions better than a commercial operator or organisations whose humanitarian or socially beneficial activities partly rely on revenues of gaming machines. Furthermore, it is plausible to assume that in principle the State can more easily control and direct a wholly State-owned operator than private operators. Through its ownership role, the State has additional ways of influencing the behaviour of the operator besides public law regulations and surveillance.”97

The condition of strict state control has been elaborated on in Liga Portuguesa. This case concerned the granting of exclusive rights to organise online lotteries, lotto games and sports betting to Santa Casa, a “legal person, in the public administrative interest”. It was submitted that the main objective pursued by the national legislation was the fight against crime, more specifically the protection of consumers of games of chance against fraud on the part of the operators.

The Portuguese Government argued that the grant of exclusive rights to Santa Casa would ensure that the system would function in a secure and controlled way. The CJEU analysed the national legal framework and acknowledged that Santa Casa operates under the strict control by the public authorities.98 The Court concluded that, in circumstances such as those in the main proceedings, the granting of exclusive rights to operate games of chance via the internet to a single operator may 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 view of the specific features associated with the provisions of games of chance via the internet (see chapter 5.5.1), the CJEU also considered the restrictive measure to be necessary.99

In Zeturf, the CJEU assessed a national system conferring an exclusive right to a single operator to organise off-course betting on horseracing. It concluded that national legislation is appropriate to ensure the objective of combating the criminal and fraudulent activities linked to gambling, as well as that of protecting society, having regard to the effects of gambling on individuals and on society, in the situation where there appears to be particularly strict State control over the organisation of betting on horseracing. Thus, “the State exercises direct control over the functioning of the exclusive operator, the organisation of the events on which bets are placed, the types of bet authorised and their channels of distribution, including the proportion of the winnings to the stakes and the conduct and supervision of the regulated activities”.100

94 See Dickinger and Ömer, par. 48, and case-law cited.

95 See Dickinger and Ömer, par. 49 and cited case-law.

96 Stoß and Others, par. 81-82.

97 Par. 51 of the judgment.

98 This was for example illustrated by the government’s involvement in appointing the members of its administrative organs and by the powers of the Gaming Department of Santa Casa – the licence holder – to open, institute and prosecute proceedings involving offences of illegal operation of games of chance to which Santa Casa had the exclusive rights.

99 Liga Portuguesa, par. 62-72.

100 Par. 56 of the judgment.

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