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EU Court of Justice rules that national gambling monopolies
must be regulated in a consistent and systematic manner and that sanctions
cannot discriminate between local and international providers
September 8, 2010 - The European Court of Justice (“ECJ”) rendered
judgment on 8 September 2010 in a number of preliminary reference
cases in which national judges asked the ECJ for EU law guidance about the
constraints that EU poses on national regulation of games of chance. The cases
concerned a number of proceedings concerning German legislation granting monopolies
on sports betting1 and Swedish legislation on internet advertising for games of
chance organized outside of Sweden2.
The ECJ confirmed in all cases its case law that EU member
states have wide discretion to regulate their local markets by means of
monopolies and to protect their citizens against risks associated with games of
chance. As a consequence, they are not obliged to recognize licenses for the
provision of games of chance granted by other member states. However, if they
regulate games of chance by means of granting monopolies, they must do so in a manner
proportionate to the public policy objectives pursued and in a
non-discriminatory fashion.
That meant for the German cases that a sports betting
monopolist should not be allowed to at the same time
- engage in advertising beyond what is necessary to channel
consumers towards the monopolist’s offer by turning them away from other
channels of unauthorized games, but instead encourage the propensity of
consumers to gamble and to stimulate active participation in the latter for
purposes of maximizing the anticipated revenue from such activities; and
- permit
exploitation of other types of games of chance by private operators holding an
authorization; while
- these privately exploited games present a higher potential
risk of addiction than the games subject to the monopoly, and the authorities
allow that supply to expand with a view to maximizing revenue from these games.
In the Swedish case it meant that authorities are not
allowed to discriminate in the sanctions applied to nationally established and
cross border services for contravention of the prohibition to advertise games
of chance that are not licensed in the member state. In the Swedish case the
defendants alleged that the Swedish law imposed administrative sanctions on
advertising an unlicensed game of chance from within Sweden, while criminal sanctions
applied to advertising such games organized in another EU member state. In both
cases it is now for the national courts to apply these rules to the cases
before them. It is clear however that EU law, although it does not explicitly
harmonize legislation on games of chance, imposes restrictions on the wide
discretion member states think they enjoy to regulate games of chance. In
particular member states will have to closely monitor if their rules are
suitable for ensuring that the holder of the monopoly will in fact be able to pursue,
in a consistent and systematic manner, the public policy objectives by means of
a supply that is quantitatively measured and qualitatively planned by reference
to the said objective and subject to strict control by the public authorities.
These judgments show that although the EU respects national interests to
protect consumers, the proportionality of the regulation to achieve that
objective will be more and more closely scrutinized.
Erik Vollebregt
Greenberg Traurig, Amsterdam
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