The Gambling Law Review: Gambling and European Law
In 1992, the Member States discussed for the first time the issue of gambling in the internal market following a report prepared by Coopers & Lybrand for the EU Commission. At the European Council meeting of 11–12 December in Edinburgh, they agreed not to pursue any harmonisation of gambling activities at European level.2
As a result of this decision, the EU gambling debate shifted to a large extent towards the Court of Justice of the European Union (the Court). The Court has provided rulings in more than 70 cases. New cases are still regularly referred from national courts throughout the EU. The importance of preliminary referrals has even increased given the European Commission's decision of 7 December 2017 to close all infringement procedures and pilot cases, and to reject all complaints in the gambling sector. The Commission considers that complaints in the gambling sector can be handled more efficiently by national courts and encourages the use of national remedies when facing problems with EU law in the gambling sector.
This chapter will address a number of important aspects related to gambling following from the most relevant case law of the Court.
Taxation3 will not be discussed in depth in this chapter, and neither will the existing secondary legislation be reviewed, as in most relevant matters gambling services have explicitly been excluded from the scope of application.4
The competition law aspect in the gambling sector relates to a variety of issues such as state aid but will not be discussed in further detail.5
II Gambling as an economic activity of a peculiar nature
The first landmark gambling case was referred in 1992. A British law imposed a ban on national lotteries, following which lottery tickets for the German lottery sent by mail to citizens living in the United Kingdom were seized by the customs authorities. This was put into question insofar as the law prevented companies established in other Member States from providing such services in the United Kingdom. The Court's ruling in Schindler rendered in 1994 was extremely important for the discussion on gambling in the internal market.6
The Court considered gambling to be an 'economic activity' within the meaning of the EEC Treaty, thus falling under the freedom to provide services, today provided in Article 56 of the Treaty on the Functioning of the European Union (TFEU). Nonetheless, it is an economic activity of a peculiar nature given the particular moral, religious and cultural aspects of lotteries, like other types of gambling, in all the Member States. Lotteries involve a high risk of crime or fraud and are an incitement to spend, which may have damaging individual and social consequences.7
In light of the peculiar nature of gambling, the Court affirmed several times that free, undistorted competition in the market of games of chance can have severely detrimental effects. The general approach, as used for other services on the internal market, of promoting free competition to the benefit of the consumer in terms of quality and price is not maintained when it comes to gambling services. Operators of games of chance would be led to compete with each other in inventiveness to make what they offer more attractive, thereby increasing consumers' expenditure on gaming as well as their risk of addiction.8
III The organisation of gambling in the Member States
i Restrictions and their justifications
As indicated above, gambling services are regulated by the Member States rather than by the EU. In the absence of EU harmonisation in the field, Member States are free to set the objectives of their policy on betting and gaming in accordance with their own scale of values and, where appropriate, to define in detail the level of protection sought. This also holds true for online gambling.9
As a consequence, holding a licence to offer gambling in a Member State will not suffice to be entitled to provide similar services in another Member State. The Court has explicitly denied the application of the principle of mutual recognition in the field of gambling, meaning that a Member State must not recognise the controls and rules set in place by another Member State. The EFTA Court takes the same view.10
However, this does not mean that Member States are not subject to any limitations in how they organise their gambling markets. When a Member State implements legislation restricting the free movement principles, notably the freedom to provide (gambling) services, then this is to be considered a derogation from the general principle and it must meet certain conditions in order to be justified.
Basically, any national measure that creates a framework in which gambling services cannot be offered freely throughout the internal market of the EU, can be considered a restriction of the freedom to provide services enshrined in Article 56 TFEU.
Such limitation to the freedom to provide services can be justified under the following conditions:
- either they are imposed for reasons of public order, public security or public health (Article 62 TFEU iuncto Article 52 TFEU);
- either they are imposed for 'overriding reasons in the public interest',11 which includes consumer protection, combating fraud and crime, but also combating the squandering of money. In this case, the measures in question may not be discriminatory.12
In addition, restrictive measures imposed must be proportionate, meaning they are suitable for the objectives pursued and not go beyond what is strictly necessary. Moreover, national legislation is appropriate only if it genuinely reflects a concern to attain it in a consistent and systematic manner.13 This condition is an assessment also known as the proportionality test.
The proportionality test has been clarified in the abundant case law of the Court, and whether a restrictive measure complies with this proportionality test is generally for the national courts to assess on the basis of the Court's findings.
The mere fact that a Member State has opted for a system of protection that differs from that adopted by another Member State cannot affect the assessment of the need for and proportionality of the relevant provisions. Those provisions must be assessed solely by reference to the objectives pursued by the competent authorities of the Member State concerned and the level of protection that they seek to ensure.14
In Carmen Media the Court held that, in the matter of games of chance, it is, in principle, necessary to examine separately for each of the restrictions imposed by the national legislation whether they comply with the proportionality test.15
When looking at national restrictive measures, it is important to take into account that the Court does not recognise standalone fiscal objectives pursued by Member States in their gambling policy, without a consistent and protective regulatory framework in place.16
Recently, in Gmalieva e.a., the Court confirmed that the mere aim of increasing public (tax) revenue cannot serve as a justification of restrictions on the freedom to provide services.17
Incidentally, a restriction on gambling activities may benefit the budget of the state.18
Moreover, restrictions must also serve to limit betting and gaming activities in a consistent and systematic manner. Member States' authorities cannot invoke public order concerns relating to the need to reduce opportunities for betting in order to justify restrictive measures, while at the same time inciting and encouraging consumers to participate in lotteries, games of chance and betting to the financial benefit of the public purse.19 The Court confirmed this in Berlington Hungary e.a..20 The concern to reduce opportunities for gambling or to fight gambling-related crime must not only be met at the time of its adoption, but also thereafter. National courts must thus adopt a dynamic approach when assessing the proportionality and consistency of a measure.21
It is thereby for the Member State wishing to rely on an objective capable of justifying a restriction to supply the court called on to rule on that question with all the evidence of such a kind as to enable the court to be satisfied that the measure does indeed comply with the requirements deriving from the principle of proportionality.
It has recently been confirmed by the Court that it is for the national courts to carry out a global assessment of the circumstances in which restrictive legislation was adopted and implemented.22 If a Member State is not able to produce studies serving as the basis for the adoption of the legislation at issue, it does not deprive that Member State of the possibility of establishing that an internal restrictive measure satisfies those requirements.23 Within this context of a restrictive market approach, the theory of 'controlled expansion' developed in Placanica came as a correction. The objective of drawing players away from clandestine betting and gaming – and, as such, activities that are prohibited – to activities that are authorised and regulated, may be entirely consistent with a policy of controlled expansion. But, in order to make the operators active in the sector subject to control and channelling the activities of betting and gaming into the systems thus controlled, authorised operators must be able to represent a reliable, and at the same time attractive, alternative to a prohibited activity. This may as such necessitate the offer of an extensive range of games, advertising on a certain scale and the use of new distribution techniques.24 This was later confirmed in Pfleger.25
The Court later confirmed the possibility of controlled expansion with a view to protecting consumers to the extent that there is a large illegal market.26 This was previously also held, but in a slightly different way, by the EFTA Court.27
ii The monopoly and licence systems
Both the conferral of exclusive rights to a single body28 (the monopoly system) and the attribution of licences29 (the licence system) have been recognised by the Court as potentially proportionate measures to reach the objectives of limiting exploitation of the human passion for gambling in order to avoid the risk of crime and fraud related to games of chance.
Limited authorisation of gambling must indeed reflect a concern to bring about a genuine diminution in gambling opportunities.30 Equally, the co-existence of a monopoly for certain games of chance and concessions to private operators for other games of chance can be a proportionate measure in light of the objectives pursued.31
A monopoly system can be in conformity with EU law, as is clear from the following case law of the Court.
The conferral of exclusive rights to operate gambling to a single public body can be a proportionate measure in order to reach the objectives of limiting exploitation of the human passion for gambling and to avoid the risk of crime and fraud related to games of chance.32
It has even been held, both by the EFTA Court33 and the Court,34 that a monopoly system sometimes serves the aim of fighting addiction related to gambling more effectively than would be the case with a system authorising the business of operators that would be permitted to carry on their business in the context of a non-exclusive legislative framework.
When seeking a particularly high level of protection, a Member State is 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, thereby pursuing the objective of preventing incitement to squander money on gambling and combating addiction to gambling with sufficient effectiveness.35 However, when it comes to combating criminality and in order to be consistent with this objective, national legislation establishing a gambling monopoly must be based on a finding that criminal and fraudulent activities linked to gaming and gambling addiction are a problem in the territory of the Member State concerned, which the expansion of authorised and regulated activities would be capable of solving.36 It has been confirmed by the Court that it is for the national courts to carry out a global assessment of the circumstances in which restrictive legislation was adopted and implemented on the basis of the evidence provided by the competent authorities of the Member State, seeking to demonstrate the existence of objectives capable of justifying a restriction of a fundamental freedom guaranteed by the TFEU and its proportionality.
In Dickinger and Ömer, the Court specifically recognised the legality of a monopolistic gambling model with regards to online gambling.37
In Markus Stoss, the Court held that a monopoly will only satisfy the requirement of proportionality, insofar as the said monopoly is accompanied by a legislative framework suitable for ensuring that the holder of the said monopoly will in fact be able to pursue, in a consistent and systematic manner, such an objective by means of a supply that is quantitatively measured and quantitatively planned by reference to the said objective and subject to strict control by the public authorities.38 In Sporting Exchange, the Court elaborated on the notion of strict control, and stated that this can comprise either 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.39
In the same respect, any advertising issued by the holder of a public monopoly must remain measured and strictly limited to what is necessary in order to channel consumers towards authorised gaming networks (policy of 'controlled expansion').40 In Markus Stoss, Carmen Media41 and Winner Wetten,42 the Court further clarified the conditions under which a monopoly system can be compliant with EU law. A monopoly may be considered not suitable for achieving the objective for which it was established when at the same time advertising measures emanating from the holder of such a monopoly and relating to other types of games of chance that it also offers are not limited to what is necessary in order to channel consumers towards the offer emanating from that holder, but are designed to encourage the propensity of consumers to gamble and stimulate their active participation in the latter for purposes of maximising the anticipated revenue from such activities.43
In Gmalieva e.a., the Court relied on the judgment in Pfleger to say that restrictive legislation must actually pursue the objective of protecting gamblers or fighting crime and must genuinely meet the concern to reduce opportunities for gambling or to fight gambling-related crime in a consistent and systematic manner.44 It then gave an important guidance based on its previous case law to assess whether the regime at stake is coherent with EU law. If the national court finds that gambling addiction does not represent a societal problem justifying state intervention, then, after carrying out a global assessment of the circumstances in which restrictive legislation was adopted and implemented, it would have to conclude that the system is incompatible with EU law. It must also be noted that, even if the monopoly system is found to be incompatible with the provisions on free movement, this does not necessarily lead to an obligation for the Member State concerned to liberalise the market in games of chance if it finds that such a liberalisation is incompatible with the level of consumer protection and the preservation of order in society that the Member State intends to uphold. Member States remain free to undertake reforms of existing monopolies in order to make them compatible with the Treaty provisions, inter alia by making them subject to effective and strict controls by the public authorities.45 This has been confirmed by the Court in Ince.46
Licence or concession system
A licensing or concession system can also be in conformity with EU law. A licensing system that restricts the number of operators in the national territory is capable of being justified by general interest objectives.47 This kind of limitation on the freedom to provide services must also comply with the proportionality test as set out above and must reflect a concern to bring about a genuine diminution of gambling opportunities.48
It is consistent case law that national legislation that prohibits operating activities in the betting and gaming sector without a licence or police authorisation issued by the state constitutes a restriction on the freedom of establishment and the freedom to provide services.49 However, the Court confirmed in Biasci and Rainone that Member States are allowed to set out the obligation to be granted a concession and a police permit in order to open betting activities.50
In Engelmann, the Court ruled that a limitation on the number of concessions can be justified as it enables a limitation on gambling opportunities, and thus allows for the attainment of a public interest objective. Limiting the licence duration for a casino to 15 years can also be justified having regard to the concessionaire's need to have a sufficient length of time to recoup the investments required by the setting up of a gaming establishment.51
As regards licensing in a semi-monopolistic system, the Court held in Sporting Exchange that competition in the market of games of chance would be detrimental and therefore limitations can be justified. Restrictions regarding the procedures for the grant of a licence to a single operator, or for the renewal thereof, may be regarded as being justified if the Member State decides to grant a licence to, or renew the licence of, a public operator whose management is subject to direct state supervision of a private operator whose activities are subject to strict control by the public authorities. In this case, the grant or renewal of exclusive rights without any competitive tendering procedure was not disproportionate.52
It is also possible that a Member State subjects certain types of games of chance to a public monopoly, while others are subject to a system of authorisations granted to private operators. This has recently been confirmed by the Court in Stanley International Betting Ltd. The Court stated there that national legislation that allowed a sole concessionaire model for management of the computerised Lotto and other fixed-odds numerical games, whereas for other games, prediction games and betting a multiple concessionaire model applied, is compatible with Articles 49 and 56 TFEU.53
Still, such a system of dual organisation of the market for games of chance may be contrary to Article 56 TFEU if it is found that the competent authorities pursue policies seeking to encourage participation in games of chance other than those covered by the state monopoly, rather than reduce opportunities for gambling and limit activities in that area in a consistent and systematic manner so that the aim of preventing incitement to squander money on gambling and of combating addiction to the latter, which was at the root of the establishment of the said monopoly, can no longer be effectively pursued by means of the monopoly.54
Such a system of dual organisation of the market for games of chance exists in many Member States, where there will often be the coexistence of a monopoly lottery operator with licence holders for other types of games of chance (e.g., casinos or sports betting).
iii The allocation of exclusive rights and licences
The manner in which gambling rights are granted or refused must equally be in line with the rules of the EU. This means, most notably, when issuing gambling licences (or similar authorisations), public authorities are bound to comply with the fundamental rules of the Treaties in general, including Article 56 TFEU and, in particular, the principles of equal treatment and of non-discrimination on the ground of nationality and with the consequent obligation of transparency.55
In Costa and Cifone, the Court held that 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. Without necessarily implying an obligation to call for tenders, that obligation of transparency 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.56
The principle of equal treatment requires that all potential tenderers be afforded equality of opportunity and accordingly implies that all tenderers must be subject to the same conditions. If there is unequal treatment by discriminating certain operators, justification must be based on reasons of public order, public security or public health (see Article 62 TFEU iuncto Article 52 TFEU). It is thereby settled case law that grounds of an economic nature, such as the objective of ensuring continuity, financial stability or a proper return on past investments for operators who obtained licences, cannot be accepted as overriding reasons in the public interest.57
Rules on granting gambling licences apply equally to the renewal of existing licences.58 In the same vein, it was considered that the renewal of old licences without putting them out to tender was not an appropriate means of attaining the objective pursued, going beyond what was necessary in order to preclude operators in the horse-race betting sector from engaging in criminal or fraudulent activities.59
The right to offer gambling services can be granted through a licence, but also by way of a service concession. Until recently, service concessions were not governed by any of the directives by which the EU legislature has regulated the field of public procurement.60 The applicable rules for authorities granting concession were grounded on the above-mentioned principles derived from Article 56 TFEU and the Court's case law on that subject.
Currently, however, the Concession Directive applies to certain gambling service concessions, but not to lotteries.61
Still, the granting of concessions for lottery services should be in accordance with the Court's case law.
In other words, if a Member State opts to grant, for instance, a state-owned or directly controlled company the right to exclusively offer certain gambling services, it is not required to comply with the principles of non-discrimination and transparency. It may simply appoint the service provider of its choice. That question has been recently raised in a new referral for preliminary ruling in Sisal, Case C-721/19 and Stanleybet Malta and Robotech, Case C-722/19. The referring court seeks to know, inter alia, whether the exclusion of concessions relating to the operation of lotteries is justified by the granting of an exclusive right to an economic operator, making a concession procedure inapplicable. The Italian Council of State wishes to know, provided that the Concession Directive is applicable, if the Italian legislation is contrary to Article 3 of that Directive, which provides that the design of the concession award procedure, including the estimate of the value, shall not unduly favour or disadvantage certain economic operators; and whether it complies with specific conditions under which concessions may be modified without a new concession award procedure.
IV Online gambling
In Liga Portuguesa, the Court established the core principles of the Member States' discretionary power in the field of online gambling. A key element in the reasoning of the Court is that games of chance accessible via the internet involve different and more substantial risks of fraud by operators against consumers compared to the traditional markets for such games. This is because of the lack of direct contact between consumer and operator. The Court thus found internet games to be more dangerous than physically offered games, even when regulated and controlled by the competent authorities of the Member State of residence of the consumer. Member States are therefore allowed to impose proportionate restrictions on the offer of online gambling services.
The fact that the principle of mutual recognition does not apply is especially relevant for online gambling. Simply because an operator is licensed in one Member State does not mean that this licence should be recognised in another Member State.62 The consequence is that cross-border services provision, which is notably done via the internet when it comes to gambling, is as such not allowed. Even passive provision of games of chance can be prohibited or restricted, meaning that the mere accessibility of online gambling products from a Member State can be sufficient to be regarded as providing services there.63 Member States are hence allowed to block all unauthorised websites of operators offering online gambling services accessible to its consumers.
In Carmen Media, the Court clearly recognised again the added dangers of games of chance over the internet, which should be taken into account in assessing the proportionality of the measures put in place by the Member States. A stricter approach may be considered required and a prohibition measure covering any offer of games of chance via the internet may, in principle, be regarded as suitable for pursuing the legitimate objectives determined, such as the protection of young persons, even though the offer of such games remains authorised through more traditional channels.64 The responsibility for an effective enforcement system and tackling illegal online gambling lies with the Member States.
In Biasci and Rainone, the Court continued on the notion of 'direct contact'. The fact that an operator must have both a licence and a police authorisation in order to access the market in question is not, per se, disproportionate in the light of the objective pursued by the national legislature, which is to combat criminality linked to betting and gaming. However, precluding all cross-border activity (in particular business-to-business) in the betting and gaming sector, irrespective of the form in which that activity is undertaken and, in particular, in cases where there is the possibility of direct contact between consumer and operator and where physical checks for police purposes can be made of an undertaking's intermediaries who are present on national territory, is contrary to the provisions of Article 49 and 56 TFEU.65
However, recently, the Court ruled in Sporting Odds that in order to link land-based to online gambling, it could in some circumstances be considered disproportionate to reserve the grant of a licence to organise online games of chance exclusively to operators of games of chance holding a concession for a casino situated on national territory. The Court finds that this a discriminatory rule that can only be justified if it is covered by an express derogating provision, such as Article 52 TFEU, namely public policy, public security or public health. It is thus not enough to argue that online gaming, which involves higher risks than traditional games of chance, can only be reserved to trustworthy operators running a casino on national territory that satisfy the requirements of consumer protection and public order.66
V Other issues
The Court has at regular intervals been asked to pronounce on the scope of advertising in the context of a Member State's gambling policy.
In the context of the policy of 'controlled expansion', operators should be allowed to extend their games of chance, advertise on a certain scale and use different kinds of distribution channels in order to compete against illegal operators. This is to be able to offer a reliable alternative to illegal gambling.67
Advertising is allowed when it is necessary to attract players to the controlled channels of games of chance, but it cannot incite players to excessive gambling.68 It must thus remain measured and strictly limited to what is necessary to channel consumers. Stimulating active participation, such as by trivialising gambling or giving it a positive image because of the fact that revenues derived from it are used for activities in the public interest, or by increasing the attractiveness of gambling by means of enticing advertising messages depicting major winnings in glowing colours, is not allowed.69
In HIT LARIX, the Court stated that Member States may prohibit advertising for foreign (land-based) gambling establishments and make an exception only for those operators that can demonstrate that the level of protection in their country of establishment is similar to the level of protection in the Member State where they want to make publicity. However, the Court also added that such a condition could be seen as disproportionate if it would require the rules to be identical (even in the case such rules would have been pursuing the objective of player protection) or alternatively, if the rules were not directly related to risks inherent to gambling (regardless of the objective of the legislation).70
In Sjöberg and Gerdin, the Court found that the freedom to provide services precludes legislation of a Member State subjecting gambling to a system of exclusive rights, according to which the promotion of gambling organised in another Member State is subject to stricter penalties than the promotion of gambling operated on the national territory without the due authorisation. Also here, the Court ruled that advertising to residents of that state can be prohibited if gambling is prohibited and where gambling is organised for the purposes of profit by private operators in other Member States.71
In Gmalieva e.a., the Court ruled that advertising cannot aim to encourage consumers' natural propensity to gamble by stimulating their active participation in it, such as by trivialising gambling or increasing its attractiveness. However, moderate advertising may be consistent with the objective of protecting consumers, provided that it is strictly limited to what is necessary to channel consumers' desire towards controlled gambling networks.72
In Fluctus and Fluentum, the referring court had doubts as to the conformity with EU law of the advertising practices of the holder of the gambling monopoly in Austria. According to the referring court, the advertising policy is not measured and strictly limited to what is necessary to channel consumers to controlled gaming networks. However, by order of 9 January 2019, the case was declared manifestly inadmissible due to the fact that the referring court did not state with the necessary precision and clarity the reasons why it considers the interpretation necessary or useful for the purposes of the resolution of the case.73 On 16 December 2019, the new request for a preliminary ruling was lodged in Fluctus and Fluentum. No further information is yet available.
In Placanica, the Court ruled that it is not compliant with EU law to apply criminal sanctions against the concerned operator for not abiding by the administrative conditions linked to the concession system if such conditions are found to be disproportionate.75 In other words, if an operator did not have the possibility to acquire a licence, and this was a result of a restriction that is not compliant with EU law, this operator cannot be sanctioned for offering gambling services without a licence. This has been confirmed in the Pfleger case.76
Another way in which gambling operators may dodge sanctions for offering gambling services without the necessary licence is by invoking, as the case may be, that the legislation on the basis of which they would be sanctioned was not notified to the European Commission under the Notification Directive77 when this was actually required. If legislation had to be notified, but that did not happen, it is not possible to rely upon the provisions of that legislation against an individual.
iii Notification under Directive 2015/1535
Whether or not provisions of national legislation regarding gambling services constitute 'technical regulations' and fall under the notification obligation of Directive 2015/1535 has been the subject of numerous Court judgments.
In Fortuna, the Court ruled that the prohibition on issuing, renewing or amending authorisations relating to limited-win automated gaming activities outside casinos was likely to directly affect the trade in gaming machines, and therefore their marketing. Provisions that can significantly influence the nature or the marketing of the product are capable of constituting 'technical regulations' within the meaning of then applicable Directive 98/34.78
In M. and S., however, the Court referred to Ince by concluding that provisions of national law that merely lay down conditions governing the establishment or provision of services by undertakings, such as provisions making the exercise of a business activity subject to prior authorisation, do not constitute technical regulations within the meaning of Directive 98/34.79 That was confirmed by the Court in Falbert and Others, where the issue concerned publicity for illegal games and compliance with the free movement principles.
On 25 September 2019, the Austrian Administrative Court referred the question to the Court whether the rules on the levying of a tax on betting terminals constitute 'technical rules' within the meaning of the Directive 2015/1535 and should have been notified to the European Commission. Contrary to the Fortuna case, the measure in question is not, prima facie any prohibition, but simply a taxation measure. However, it remains for the Court to decide on the matter.
In Sportingbet and Internet Opportunity Entrainment, several questions were raised regarding the interpretation of the notion of 'technical regulation'. Since 1926, Santa Casa da Misericordia de Lisboa has had the exclusive right to offer games of chance in the form of lotteries, lottery games and sports betting on Portuguese territory (i.e., offline). The question is, whether not-notified Decree-Law No 282/2003, which confers on Santa Casa exclusive rights for the operation by electronic means (the internet and GSM) of the games, can be consider a 'technical regulation'. The oral hearing in that case was due to take place in the Court on 19 March 2020 but has been delayed for an undetermined period of time.
iv Financial payment mechanisms
In Rasool,80 the Court found that a cash withdrawal service through a cash terminal located in an officially authorised gaming arcade does not constitute a 'payment service' within the meaning of the (first) Payment Services Directive 2007/64/EC.81 Since the main operations are carried out by an external network provider, the service offered by the gaming operator cannot be considered as falling into the scope of the Directive. The latter only applies to payment service providers whose 'main activity' consists of the provision of payment services to payment service users. Operators are therefore not required to obtain a specific authorisation to implement this service.
v Market access and gambling in the post-Brexit era
With Brexit now being a reality, in case of failure to reach an agreement at the end of the transition period on 31 December 2020, WTO law will apply to UK–EU relations. The EU has systematically and coherently excluded market access for third-country gaming services: both in the EU's Schedule of Commitments in the General Agreement on Trade in Services (GATS) and in every trade and partnership agreement that the EU has concluded with a third country. In the event no agreement is reached and where only WTO law would apply, undertakings from the UK will not be able to rely on internal market principles. Apart from no cross-border supply of gambling services, EU companies will be automatically excluded from licence and biding processes in the UK. The same will apply to UK companies willing to operate in or enter the EU market.
When it comes to the position of Gibraltar in its relations with the UK, in the GBGA and Fisher cases, the Court declared that, from an internal market perspective, Gibraltar and the United Kingdom form part of one single Member State, meaning that the free movement provisions of the EU Treaties do not apply to services provided between Gibraltar and the United Kingdom.82
The question of market access may also be addressed by the Court in the Sportingbet and Internet Opportunity Entertainment case. The questions referred for a preliminary ruling were raised by Internet Opportunity Entertainment (IOE), a company with registered offices in Antigua and Barbuda and with no registered office, no activity, no effective management and no permanent establishment in Portugal and no connection in the EU. There are no commitments made by the EU to Antigua and Barbuda under Annex IV of the EU–CARIFORUM economic partnership agreement of 200883 in relation to cross-border provision of services in the gambling sector. Gambling services are completely excluded from market access to the EU. Therefore, the question can be asked whether IOE is allowed to challenge the compatibility of Portugal's national law with EU law, since there is no legal right that would allow IOE to enter the European market. It remains to be seen whether the Court will take this into consideration.
With its decision to close all infringement cases, the Commission uses non-binding or soft law instruments. It had published its recommendation on consumer protection and advertising in the online gambling sector.84 This recommendation was the subject of an annulment proceeding brought by Belgium. The Court ruled here that, following the Order of non-admissibility by the General Court, the recommendation is, in light of the wording, the content and the purpose of the contested recommendation, not intended to have binding legal effects, with the result that it cannot be classified as a challengeable act for the purposes of Article 263 TFEU.85
According to the Court, recommendations are intended to confer on the institutions a 'power to exhort and to persuade', distinct from the power to adopt acts having binding force. The Court further stated that it is not sufficient that an institution adopts a recommendation that allegedly disregards certain principles or procedural rules in order for that recommendation to be amenable to an action for annulment.86
The Commission is also working on a comprehensive policy to address taxation in the digital single market, which may very well affect taxation on online gambling services.87 The proposals contribute to the global discussions on digital taxation within the OECD/G20.88
On 6 November 2018, the Council adopted the revised Audiovisual Media Services Directive.89 Gambling services are not explicitly excluded from the scope of the Directive. The only reference to gambling can be found in the preamble.90 Measures taken by a Member State for reasons of consumer protection, including in relation to gambling advertising, would need to be justified, proportionate to the objective pursued, and necessary as required under the Court's case law.
With advertising restrictions being introduced by several Member States and challenged before the national courts, it may be expected that some of them will soon be the subject of a request for a preliminary ruling from the Court.91
In the supranational risk assessment of money-laundering and terrorist-financing risks published by the European Commission on 24 July 2019,92 the Commission identified certain gambling products as significantly exposed to money-laundering risk. For online gambling, there is a high risk exposure due to very large numbers of transaction flows and the lack of face-to-face interaction. Although casinos present inherently high-risk exposure, their inclusion in the anti-money-laundering and countering the financing of terrorism framework since 2005 has had a mitigating effect, the report concludes. Lotteries and gaming machines (outside casinos) present a moderate level of money-laundering and terrorist-financing risk.
The deadline for Member States to implement the rules of Directive (EU) 2018/843 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the 5th AMLD) was 10 January 2020.93 In an infringement package published by the Commission on 12 February 2020, the Commission urged eight Member States to transpose the 5th AMLD.94 Importantly, on 5 December 2019, the Council adopted conclusions on strategic priorities on anti-money laundering and countering the financing of terrorism. The Council called upon the Commission to explore possible ways forward to enhance the existing AML rules, in particular by considering:
- ways of ensuring a more effective cooperation between the relevant authorities and bodies involved in anti-money laundering and terrorist financing, including exchange of information between them;
- the possibility of setting up an EU supervisory body; and
- whether some aspects could be better addressed through regulation.
The European Commission has been consulting on a roadmap for its future action plan on money laundering, the feedback period for which ended on 11 March 2020.
Moreover, in the upcoming months, a number of existing regulations and directives are subject to review.
While currently not directly relevant for gambling, it has to be noted that a first short-term review of the geo-blocking regulation95 and its scope had been envisaged by 23 March 2020. European Commission officials supposedly call for an extension of scope of the regulation to include new sectors, as well as online content (in particular, non-audiovisual copyright-protected content, such as online music, e-books or games).
A report on the General Data Protection Regulation application is due to be published by 25 May 2020 and its first review is envisaged to take place in 2020.
On 19 February 2020, the European Commission published: (1) 'Communication: Shaping Europe's digital future'; (2) a European strategy for data; (3) a White Paper on artificial intelligence (AI): a European approach to excellence and trust; and (4) a Commission report on the safety and liability implications of AI, the Internet of Things and robotics. Even if not directly applicable to gambling, the proposed initiatives will have a profound impact on all the services. In particular, the Open Data Directive,96 which lays down the legal framework for the re-use of public-sector information, needs to be transposed by 17 July 2021. Even more importantly, a European strategy for data foresees the adoption in 2021 of a Data Act aiming to facilitate the creation of a common data space in the EU. The Data Act will govern the horizontal sharing of data within the economy. Business-to-business data sharing will be encouraged or even, for competition law reasons, compulsory under fair, transparent, reasonable, proportionate and non-discriminatory conditions. This could become very relevant for undertakings controlling significant amounts of data on markets with high entry barriers. The Commission will also look into necessary measures to establish data pools for data analysis and machine learning.
One of the most important piece of upcoming European secondary legislation is a Digital Services Act, which the Commission will present later this year. This will include a revision of the E-Commerce Directive, dating back to 2000. Importantly, the E-Commerce Directive excludes gambling services from its scope. The Digital Services Act, aiming to reinforce the single market for digital services, might, however, include online gambling.
Finally, on 10 March 2020, the European Commission published an industrial package. The proposed initiatives include the implementation of the Single Market Enforcement Action Plan, issuing guidance on the principle of mutual recognition, improving handling of infringement cases and setting up a Single Market Enforcement Task-Force, as well as reviewing and, if necessary, adapting EU competition rules as of 2021, including a fitness check of state aid guidelines. While there are no explicit mentions of gambling, some of the proposals might potentially have an impact on the gambling sector and should thus be monitored closely.
1 Philippe Vlaemminck is a partner, Robbe Verbeke is a senior associate and Lidia Dutkiewicz is an associate at Pharumlegal. References to EU law are references to the current TFEU articles even if at the time of the case the EC Treaties did apply.
2 Point 3 of Annex 2 to Part A of the Conclusions of the Presidency – European Council in Edinburgh 11–12 December 1992.
3 Taxation in the field of gambling services has been subject to few judgments by the Court, for example, judgment of the Court of 13 November 2003 Lindman, Case C-42/02; judgment of the Court of 22 October 2014 Blanco and Fabretti, joined Cases C-344/13 and C-367/13; judgment of the Court of 26 February 2020, Stanleyparma and Stanleybet Malta, Case C-788/18.
4 In the Commission staff working document on 'Online gambling in the Internal Market' accompanying the communication towards a comprehensive framework for online gambling of 23 October 2010, the Commission refers to the long-standing definition that exists for gambling activities in general in EU secondary legislation as being the one relied upon to exclude such services from the Electronic Commerce Directive (2000/31/EC). Also in later secondary legislation gambling is explicitly excluded, namely in the Services Directive (2006/123/EC), as well as in the Regulation 2018/302 on addressing geo-blocking and other forms of discrimination based on customers' nationality, place of residence or place of establishment within the internal market.
5 We refer to, among others, the following cases: Commission Decision of 19 June 2013 on State aid No. SA.30753 which France is planning to implement for horse racing companies; Commission Decision of 2 July 2013 on State aid No. SA.35200 – German – Rennwett- und Lotteriegesetz (RWLG); Commission Decision of 10 August 2016 on State aid No SA.46216 – United Kingdom – Horserace Betting Levy; Commission Decision of 3 January 2017 on State aid No.46556 – Finland – Aid to the central and regional trotting tracks in Finland and Commission Decision of 4 December 2017, SA.48604 – Denmark – aid scheme for the horse racing sector; Commission Decision of 9 August 2018 on the measures to certain Greek casinos SA.28973 – C 16/2010 implemented by Greece; Commission Decision of 9 December 2019 on State aid No SA.53552 on the alleged guarantee for public casinos operators in Germany (Wirtschaftlichkeitsgarantie); Commission Decision of 9 December 2019 on State aid No. SA.44944 on the tax treatment of public casinos operators in Germany.
6 Judgment of the Court of 24 March 1994 Schindler, C-275/92, EU:C:1994:119.
7 ibid., par. 60.
8 Judgment of the Court of 24 January 2013 Stanleybet International e.a., joined cases C-186/11 and C-209/11, EU:C:2013:33, par. 45 and judgment of the Court of 30 April 2014 Pfleger e.a., C-390/12, EU:C:2014:281, par. 46.
9 Judgment of the Court of 8 September 2009 Liga Portuguesa de Futebol Profissional and Bwin International, C-42/07, EU:C:2009:519.
10 EFTA judgment of 30 May 2007, Case E-3/06, Ladbrokes v. Norway, available at www.eftacourt.int/uploads/tx_nvcases/3_06_Judgment_EN.pdf , par. 87. In this case, the EFTA Court was asked to formulate an advisory opinion on the Norwegian sport betting market. An advisory opinion of the EFTA Court is comparable to a preliminary ruling of the Court of Justice of the European Union, except that an advisory opinion is not binding upon the national Court that referred the question concerned to the EFTA Court.
11 Judgment of the Court of 19 July 2012 Garkalns, C-470/11, EU:C:2012:505, par. 39 and the case law cited.
12 See, e.g., Stanleybet International e.a., joined cases C-186/11 and C-209/11, par. 22.
13 Stanleybet International e.a., joined cases C-186/11 and C-209/11, par. 27 and judgment of the Court of 28 February 2018 Sporting Odds, C-3/17, EU:C:2018:130, par. 33.
14 Liga Portuguesa de Futebol Profissional and Bwin International, C-42/07, par. 58.
15 Judgment of the Court of 8 September 2010 Carmen Media, C-46/08, EU:C:2010:505, par. 60 referring to the judgment of 6 March 2017 Placanica, joined cases C-338/04, C-359/04 and C-360/04, EU:C:2007:133, par. 49.
16 Judgment of the Court of 15 September 2011 Dickinger and Ömer, C-347/09, EU:C:2011:582, par. 55 and Pfleger e.a., C-390/12, par. 54.
17 Order of the Court of 6 September 2018 Gmalieva e.a., C-79/17, EU:C:2018:687, par. 25.
18 Judgment of the Court of 11 June 2015 Berlington Hungary e.a., C-98/14, EU:C:2015:386, pars. 60 and 61. This has recently been confirmed in Sporting Odds, C-3/17, par. 28.
19 Judgment of the Court of 6 November 2003 Gambelli, C-243/01, EU:C:2003:597, pars. 67 and 69.
20 Judgment of the Court of 11 June 2015 Berlington Hungary e.a., C-98/14, EU:C:2015:386, par. 61. In the recent reference for a preliminary ruling in Polus Vegas, the referring court asked for the interpretation of Article 56 TFEU, read in the light of the Berlington Hungary e.a. judgment, as well as Article 17 of the Charter of Fundamental Rights of the European Union. The Court decided to give a decision by a reasoned order issued on 4 June 2019. The Court relied on the Berlington Hungary e.a. judgment to say that there is no presumption of the existence of a cross-border element on the ground that the customers would, potentially, be nationals of other Member States. Thus, given the purely internal character of the matter in question, the Court did not find it necessary to answer the preliminary questions asked by the referring court.
21 Judgment of the Court of 30 June 2016 Admiral Casinos, C-464/15, EU:C:2016:500, pars. 34 and 36.
22 Pfleger e.a., C-390/12, pars. 50 to 52 and the case law referred to, Gmalieva e.a., C-79/17, par. 30.
23 Sporting Odds, C-3/17, par. 53. See to that effect also the judgment of the Court of 14 June 2017 Online Games, C-685/15, EU:C:2017:452, par. 67.
24 Placanica, joined cases C-338/04, C-359/05 and C-360/04, par. 55.
25 Pfleger e.a., C-390/12, par. 56.
26 Judgment of the Court of 3 June 2010 Sporting Exchange (Betfair), C-203/08, EU:C:2010:307 and judgment of the Court of 3 June 2010 Ladbrokes, C-258/08, EU:C:2010:308.
27 EFTA judgment of 30 May 2007, Case E-3/06, Ladbrokes v. Norway.
28 Judgment of the Court of 21 September 1999 Läärä, C-124/97, EU:C:1999:435.
29 Judgment of the Court of 31 January 2008 Centro Europa, C-380/05, EU:C:2008:59, par. 100.
30 Judgment of the Court of 21 October 1999 Zenatti, C-67/98, EU:C:1999:514, par. 36.
31 Sporting Odds, C-3/17, par. 33.
32 Läärä, C-124/97, par. 42.
33 EFTA Court Judgment of 14 March 2007, E-1/06, ESA v. Norway, available at www.eftacourt.int/uploads/tx_nvcases/1_06_Judgment_EN.pdf, par. 51. The monopoly on gaming was thus found to be compatible with the free movement provisions as enshrined in the EEA Agreement.
34 Judgment of the Court of 8 September 2010 Markus Stoss and Others, joined cases C-316/07, C-358/07 to C-360/07, C-409/07 and C-410/07, EU:C:2010:504.
35 Ibid., pars. 81 and 83; Dickinger and Ömer, C-347/09, par. 48 and judgment of the Court of 30 June 2011 Zeturf, C-212/08, EU:C:2011:437, par. 41.
36 Zeturf, C-212/08, par. 72.
37 Dickinger and Ömer, C-347/09. See also Liga Portuguesa de Futebol Profissional v. Bwin International, C-42/07.
38 Markus Stoss and Others, joined cases C-316/07, C-358/07, C-359/07, C-360/07, C-409/07 and C-410/07, par. 83.
39 Sporting Exchange (Betfair), C-203/08, par. 59.
40 Markus Stoss and Others, joined cases C-316/07, C-358/07, C-359/07, C-360/07, C-409/07 and C-410/07, par. 103.
41 Carmen Media, C-46/08.
42 Judgment of the Court of 8 September 2010 Winner Wetten, C-409/06, EU:C:2010:503.
43 Markus Stoss and Others, joined cases C-316/07, C-358/07, C-359/07, C-360/07, C-409/07 and C-410/07, par. 107.
44 Gmalieva e.a., C-79/17, par. 22.
45 Stanleybet International e.a., joined cases C-186/11 and C-209/11, par. 46.
46 Judgment of the Court of 4 February 2016 Ince, C-336/14, EU:C:2016:72, par. 54.
47 Centro Europa, C-380/05, par. 100. The Court refers here to Placanica, joined cases C-338/04, C-359/04 and C-360/04, par. 53.
48 Zenatti, C-67/98, pars. 35 and 36.
49 Gambelli e.a., C-243/01, par. 59.
50 Judgment of the Court of 12 September 2013 Biasci and Rainone, C-660/11, EU:C:2013:550, par. 27.
51 Judgment of the Court of 9 September 2010 Engelmann, C-64/08, EU:C:2010:506, pars. 45 and 48.
52 Sporting Exchange (Betfair), C-203/08, par. 60.
53 Judgment of the Court of 19 December 2018 Stanley International Betting Ltd and Stanleybet Malta Ltd v. Ministero dell'Economia e delle Finanze and Agenzia delle Dogane e dei Monopoli, C-375/17, EU:C:2018:1026.
54 Sporting Odds, C-3/17, pars. 23 and 24.
55 See, for example, Sporting Exchange (Betfair), C-203/08, par. 39; Judgment of the Court of 7 December 2000 Telaustria and Telefonadress, C-324/98, EU:C:2000:669, pars. 60 to 62; Judgment of the Court of 10 September 2009 Eurawasser, C-206/08, EU:C:2009:540, par. 44 and judgment of the Court of 13 April 2010 Wall, C-91/08, EU:C:2010:182, par. 33.
56 Judgment of the Court of 16 February 2012 Costa and Cifone, joined cases C-72/10 and C-77/10, EU:C:2012:80, par. 55. The Court refers to the judgment of 13 September 2007 Commission v. Italy, C-260/04, EU:C:2007:508, par. 24 and the case law cited.
57 Costa and Cifone, joined cases C-72/10 and C-77/10, pars. 57 and 59.
58 Engelmann, C-64/08.
59 Commission v. Italy, C-260/04, par. 34.
60 See, for example, Sporting Exchange (Betfair), Case C-203/08, par. 39.
61 Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts, OJ L 94, 28.3.2014, p. 1–64.
62 Liga Portuguesa de Futebol Profissional, C-42/07, pars. 68 to 70.
63 Sporting Exchange (Betfair), C-203/08 and Ladbrokes, C-258/08.
64 Carmen Media, C-46/08, par. 105.
65 Biasci and Rainone, C-660/11, pars. 27 and 37.
66 Sporting Odds, C-3/17, pars. 40 to 44.
67 Placanica, C-338/04, par. 55.
68 Dickinger and Ömer, C-347/09, par. 68.
69 Markus Stoss and Others, joined cases C-316/07, C-358/07 to C-360/07, C-409/07 and C-410/07, par. 103.
70 Judgment of the Court of 12 July 2012 HIT LARIX, C-176/11, EU:C:2012:454, pars. 29 to 32.
71 Judgment of the Court of 8 July 2010 Sjöberg and Gerdin, joined cases C-447/08 and C-448/08, EU:C:2010:415, pars. 46 and 57.
72 Order of the Court of 6 September 2018 Gmalieva e.a., Case C-79/17, EU:C:2018:687.
73 Order of the Court of 9 January 2019 Fluctus and Fluentum, Case C-444/18, EU:C:2019:1.
74 Judgment of the Court of 1 October 2019 Planet49, Case C-673/17, EU:C:2019:801.
75 Placanica, joined cases C-338/04, C-359/04 and C-360/04, par. 71.
76 Pfleger e.a., C-390/12, par. 64.
77 Directive 2015/1535 of 9 September 2015 laying down a procedure for the provision of information in the field of technical regulations and of rules on Information Society services (codification), OJ L 241, 17.9.2015, p. 1–15. Previously: Directive 98/34/EC of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations.
78 Judgment of the Court of 19 July 2012 Fortuna, joined cases C-213/11, C-214/11 and C-217/11, EU:C:2012:495, par. 36.
79 Judgment of the Court of 13 October 2016 M&S, C-303/15, EU:C:2016:721, par. 30.
80 Judgment of the Court of 22 March 2018 Rasool Entertainment GmbH and Staatsanwaltschaft Stuttgart v. Faiz Rasool, C-568/16, EU:C:2018:211.
81 Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC, OJ L 319, 5.12.2007, p. 1–36.
82 Judgment of the Court of 13 June 2017 Gibraltar Betting and Gaming Association Limited (GBGA), C-591/15, EU:C:2017:449 and judgment of the Court of 12 October 2017 Fisher, C-192/16, EU:C:2017:762.
83 OJ L 289 van 30.10.2008, p. 1.
84 Commission Recommendation on principles for the protection of consumers and players of online gambling services and for the prevention of minors from gambling online 2014/478/EU, OJ L 214, 19.7.2014, p. 38–46.
85 Judgment of the Court of 20 February 2018 Belgium v. Commission, C-16/16P, EU:C:2018:79.
86 ibid., pars. 26 and 28.
87 On 21 March 2018, the Commission proposed the following measures: proposal for a Council Directive laying down rules relating to the corporate taxation of a significant digital presence and three Annexes thereto (COM(2018) 147 final); the proposal for a Council Directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services (COM(2018) 148 final); and Commission Recommendation relating to the corporate taxation of a significant digital presence (C(2018) 1650 final).
88 In March 2018, the OECD/G20 Inclusive Framework on BEPS working through its Task Force on the Digital Economy (TFDE), delivered an Interim Report on Tax Challenges Arising from Digitalisation – Interim Report 2018. One of the important conclusions of this report was to review the impact of digitalisation on nexus and profit allocation rules and to continue working towards a final report in 2020 aimed at providing a consensus-based long-term solution, with an update in 2019. As part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS and its Task Force on the Digital Economy, on 13 February 2019, the OECD issued a Public Consultation Document seeking comments on possible solutions to the tax challenges arising from the digitalisation of the economy. The public consultation meeting was scheduled for 13–14 March 2019.
89 Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services (Audiovisual Media Services Directive) OJ L 95, 15.4.2010, p. 1–24.
90 ibid., considerations 10 and 30.
91 See e.g. the Italian Law Decree of 12 July 2018, No. 87; the Bulgarian notification to the European Commission of an Act amending and supplementing the Gambling Act; ongoing discussions on gambling advertising restrictions in the UK, Latvia and Spain.
92 Report from the Commission to the European Parliament and the Council on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities (SWD(2019) 650 final).
93 Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU, OJ L 156, 19.6.2018, p. 43–74.
94 The Commission has sent letters of formal notice to Cyprus, Hungary, the Netherlands, Portugal, Romania, Slovakia, Slovenia and Spain for not having notified any implementation measures for the 5th AMLD.
95 Regulation (EU) 2018/302 of the European Parliament and of the Council of 28 February 2018 on addressing unjustified geo-blocking and other forms of discrimination based on customers' nationality, place of residence or place of establishment within the internal market, OJ L 60I , 2.3.2018, p. 1–15.
96 Directive (EU) 2019/1024 of the European Parliament and of the Council of 20 June 2019 on open data and the re-use of public sector information, PE/28/2019/REV/1, OJ L 172, 26.6.2019, p. 56–83.