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Online Gambling under EU Law: Strolling Between Controlled Expansion and Genuine Diminution of Gambling Opportunities

Vol. 10, No. 2, pp. 67-102, December 2018
Online Gambling under EU Law: Strolling Between
Controlled Expansion and Genuine Diminution of
Gambling Opportunities
Abstract This article outlines some of the ambiguities arising from the
endeavours of the EU Court to offer the national courts sufficiently
clear interpretation of EU rules on free movement of services in
respect of various national restrictions of online gambling that would
enable them to make rulings in increasingly high numbers of cases in
which foreign providers are restricted from accessing markets of EU
Member States. It is submitted that this casuistic approach by the
Court should not be considered as satisfying and that harmonising
instruments should be adopted by the EU legislators, instead. Yet
however, this is less realistic than ever before, as the Commission in
situation of a total lack of the Member States« consensus stepped away
from its efforts to pave the way to at least minimum standards of
gambling offerings and provision of customers« protection, leaving it
further to the EU and national courts to balance between controlled
expansion and genuine diminution of gambling opportunities so as to
weigh between free movement of services and opposing legitimate
aims of the Member States.
Keywords: digital market online betting free movement of
services public interest justifying restrictions on foreign provision
of gambling •
CORRESPONDENCE ADDRESS: Janja Hojnik, PhD, Full Professor, University of Maribor,
Faculty of Law, Mladinska ulica 9, 2000 Maribor, Slovenia, e-mail:
DOI 10.18690/lexonomica.10.2.67-102.2018 UDC: 351.762+004.738.5:061.1EU
ISSN 1855-7147 Print / 1855-7155 On-line
© 2018 University of Maribor Press; Available at
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
»At one moment I must have had in my hands
gathered there within a space of five minutes about
4000 gulden. That, of course, was the proper
moment for me to have departed, but there arose in
me a strange sensation as of a challenge to Fate as
of a wish to deal her a blow on the cheek, and to put
out my tongue at her. Accordingly, I set down the
largest stake allowed by the rules namely, 4000
gulden and lost. Fired by this mishap, I pulled out
all the money left to me, staked it all on the same
venture, and again lost! Then I rose from the table,
feeling as though I were stupefied. What had
happened to me I did not know.«
F. M. Dostoyevsky, Gambler, chapter IV, 1866
1 Introduction
Why people gamble is one of the great unanswered questions. We all know very
well that, in the long term, the gamblers« financial outcome from gambling will
always be negative. There is more to gambling than mere pursuit of money and there
are far too few aberrant and abusive gamblers who are overwhelmed by their losses
to explain gambling as a social phenomenon. If games of chance did not satisfy
some of the deepest, basic or even »original« human needs, people would not bet.
Gambling is also among the hottest potatoes in terms of its regulation at the EU
level. This is the case because regulations unfortunately are strongly influenced by
both economic and political interests, which cause that nobody dares to call a spade
a spade, when dealing with clearly protectionist state measures, shrouded in a thinly
disguised public interest veil.
In 1994, the Court of Justice of the EU declared that games of chance relate »to a
»service« within the meaning of Article (57) of the Treaty and accordingly fall
within the scope of Article (56) of the Treaty«
It is nevertheless widely accepted
that these are by far not an ordinary kind of services. The positive sides of gambling
are reflected in lower unemployment in the local community, the development of
tourism and an increase in tax income (Grinols, 1996: 711; Thompson, 2012: 115;
Walker, 2001: 177183). However, the negative impacts of gambling, as described
in the literature, include an increase in criminal activity, an increased number of
divorces and family breakups, gambling addiction and changed values in the local
community (Frank, 1991: 249254). These pernicious effects of gambling have been
thoroughly described by Dostoyevsky in his novel »The Gambler« (1866).
Dostoyevsky would know as in the 1860«s he gambled away much of his fortune,
leaving him unable to pay his bills or afford proper meals. It is thus understandable
Case C-275/92, Her Majesty«s Customs and Excise v Gerhart Schindler and Jörg Schindler,
ECLI:EU:C:1994:119, para. 37.
that gambling authorities, responsible both to fill the public coffers and to protect the
people, try to maximise the economic benefits of gambling while simultaneously
attempting to minimize its injurious aspects.
With the rise of online gambling, however, new challenges arise, both for national
and EU regulators in the field (Laffeym, 2016). The Internet is very convenient in
this respect as gambling is almost always dependent upon a large group of
participants, who put their stakes into the game. The larger the group, the larger the
prize and vice versa the larger the prize, the more people will participate in the
group. The Internet makes it significantly easier to bring together more people, who
participate in lotteries, betting etc. and since the Internet is not burdened by
territorial frontiers, EU-wide games of chance are a very logical consequence for
gambling providers to offer. Online gambling is thus a fast growing service activity
in the EU. According to the EGBA recent figures, online gambling had a 20.7%
share of the total EU gambling market activity, while 79.3% was land-based,
including lotteries, casinos and bookmaker shops. The online share of the gambling
market is expected to grow to 24.9% in 2020. Sports betting (40.3%) was the most
popular form of online gambling in Europe, followed by casino games (32.1%),
lottery (13.3%), poker (6.1%), bingo (4.6%), and other games (3.6%). The economic
size (or gross profit) of the EU online sector is expected to rise from 19.6 billion
euro in 2017 to 24.7 billion euro in 2020 (EGBA Publishes EU Online Gambling
Key Figures For 2017, 27 November 2018, Press Release).
H2 Gambling Capital (gaming and betting consultancy). The economic significance
of the sector is also manifested both by the high level of innovation of the EU
industry and the increasing amount of tax revenues generated in the Member States.
The fast pace of online technologies development in recent years has facilitated the
provision of gambling services through diverse remote distribution channels.
Consumers in Europe also search across borders for online gambling services.
These foreign companies providing gambling services are not, however, fully
embraced by the authorities (and competitors) on the host Member States markets.
In an attempt to both protect the domestic providers and ensure that tax revenues
from the stakes provided by their residents are not siphoned from the domestic
budget, Member States try to restrict foreign providers from online gambling. These
efforts are, however, only conditionally acceptable from the perspective of the single
EU market. The present paper explores the admittedly difficult demarcation line
between permissible restrictions on online gambling and the ones that are overly
protectionist and restrictive. As this paper will demonstrate, this demarcation line
remains frustratingly ambiguous, and that the EU Court«s casuistic approach is
therefore not the best one to set legal certainty in the field.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
2 Organisation of games of change an unwelcome occupation
Although the gambling industry argues that its products are simply a form of
entertainment, like going to a cinema or football games, many researchers argue that
gambling is fundamentally different from other forms of entertainment. Gaming is a
specific economic sector as it presents a mixture of economic benefits and social
costs unlike any other sector (Walker, Barnett, 1999: 181212; Wynne, Shaffer,
2003: 111121; Abott et al., 2004).
A clear list of economic benefits and social
costs gaming brings for a local community was made by Grinols (2004). According
to him, the positive effects of gaming can be divided into the following categories:
Economic development one of the main arguments for gaming is that it
has a beneficial influence on economic development. Economic
development means an increase in income and welfare that leads to
increased utility of all the members of society.
Lower unemployment Grinols claims that in the short run casinos have a
beneficial effect on economic development, mainly through increased
Increased profits and taxes besides the profits and taxes of the casinos
themselves we have to take into account benefits bestowed upon nearby
businesses. Casinos give business to lots of other companies their
suppliers and thus increase their profits. Consequently, the taxes the state
and local authorities collect are also higher. The more the business goes to
local companies, the better off the local community is.
Benefits of closeness the benefits of closeness are greatest when the first
casino is opened in a certain area. The benefits accrue to individuals that
wish to gamble (Walker:2001).
Other benefits including promotion of local community (especially in the
case of export-oriented gambling), increased real estate values, and
increased quality of life (higher income, closeness). Increased revenue from
tourism is mentioned as a possible benefit (Grinols, 2004; Grinols and
Omorov, 1996; Thompson, 2012).
Markandya and Pearce (1989: 11381150) divide the costs and benefits that gambling brings to a local
community into costs and benefits, that accrue to an individual and costs and benefits of the society (total
costs (benefits) = private costs (benefits) + social costs (benefits)). Private costs and benefits are the costs
that accrue to an individual and are covered by an individual. The social costs on the other hand have to
be covered by all members of the society.
On the other hand, Grinols classifies social costs as follows:
Crime criminal activity is mostly connected to problem and pathological
gambling and consequent debts.
Gaming is connected with different
criminal activities, mostly violence (murders, robbery, rape, etc.), property
damage (theft, thievery, etc.), economic crime (forgery, fraud, tax evasion,
etc.) and prostitution (see also Meyer, Hayer and Griffiths, 2009).
Treatment of problem and pathological gamblers it is estimated that
problem and pathological gamblers tend to get sick more often than the
general population. It is also estimated that the costs of mental treatment of
a problem gambler are more or less equal to the costs of treating an
alcoholic; the difference is in the probability of getting treated (more in
Griffiths, 1996 and 2000; Meyer and Stadler, 1999).
Family breakups Grinols argues that the divorce rate between problem
gamblers is much higher than in general population.
Suicides empirical studies show that the suicide rate between problem
gamblers is much higher than in the general population (Lesieur, 1998;
Frank, Leister, Wexler, 1991: 249254).
Personal bankruptcies Grinols states that personal bankruptcies cause
direct costs as well as legal ones. Stitt et al. (2001) argue that the
bankruptcy rate is connected to gambling.
Business costs among business costs associated with gaming studies show
that problem gamblers cause their employers to lose money due to their
lower productivity and higher absenteeism (Collins, Lapsley, 2003: 123
Other costs here Grinols refers to the costs of diminished disposable
income of the population of gamblers. Other authors mention the costs of
gaming regulations, increased costs of living, diminished quality of life,
For reasons of these broad negative implications of gambling, both for the
individual gambler as well as for the society as whole, gambling (or maisir) is
prohibited in Islam.
Although it is not strictly prohibited in Christianity or
Catholicism, these religions argue that one should gamble with money they can
afford to lose, and not view it as a source of income.
It is not just religions that consider gambling with suspicion; legal systems do as
well. In the EU, organisation of games of chance is in principle prohibited by the
legal systems of all of its Member States. At the same time, most legal systems in
Lesieur (2002) argues that players with a gambling problem spend 17 times as much money as players
without a problem, while Grinols (2004) states that income from problem and pathological gamblers
represents one third of the total revenue of a casino.
It is stated in the Quran, the holly book of Islam, that intoxicants and games of chance, including maisir,
were »abominations of Satan«s handiwork,« intended to turn people away from God and forget about
prayer, thus Muslims were ordered to abstain from them - Qur«an, Sura 5: 9091.
Catechism of the Catholic Church, The Seventh Commandment, para. 2413 (19 November 2018).
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
Europe permit certain derogations to this a priori prohibition. The central historical
reason for this is that complete prohibition has proven ineffective and has led to
illegal and completely uncontrolled organisation of games of chance (more in
McMillen, 2007). EU Member States have thus realised that it is better to have strict
state control over organization of the games. (more on this in Spindler, Hambach,
Berberich, 2011). In 2001 the German Federal Constitutional Court concluded that
»the work of a casino on the whole is an unwelcome occupation that is nonetheless
permitted by the government to check illegal gambling, to provide state-supervised
opportunities for the human gaming instinct which cannot be restrained, and
thereby to protect the natural passion for gambling from punishable exploitation«
(ruling of 19 July 2001, cited in Meyer et al.: 2009: 86). Furthermore, Advocate
General Bot stressed in Liga Portuguesa
that the advantages of free competition for
the consumers »do not arise in the area of games of chance and gambling. (…)
Games of chance and gambling, for their part, can only function and continue if the
great majority of players lose more than they win. Opening the market in that field,
which would increase the share of household budgets spent on gaming, would only
have the inevitable consequence, for most of them, of reducing their resources.«
At the EU summit in Edinburgh in 1992, the European Council decided not to
regulate gambling at the EU level, as it found that gambling, given the principle of
subsidiarity, is unsuitable for community legislation and is better, or at least easier,
dealt with at a national level. Based on this conclusion, the European Commission
withdrew its plans to regulate gambling at the EU level and gambling remained a
quasi-exclusive competence of the Member States, subject however to the full
respect and observance of the fundamental principles of EU law (European
Lotteries, Position Paper, 2004). Gambling is therefore not regulated at the EU level,
but at the national level. All of the Member States have imposed strict limitations on
gambling activities. In addition to the illegality of gambling activities that are
offered in the EU, but which have not received a license in that country, Member
States have the right to prohibit or restrict games offered from other EU Member
States, even if provided by means of information society (Internet, interactive
television, mobile betting).
From the perspective of free movement of services, three cross-border situations
arise in respect of gambling:
a) situations where gamblers physically move to the Member State of the
provider of games of chance, e.g. when they visit a casino in another EU
Member State, either as part of a longer stay or only with the purpose of
visiting the casino. In this situations, their home Member States have
practically no possibilities of restricting their participation in gambling in
the host Member State;
b) situations where providers of games of chance try to penetrate into another
EU Member State market for offline provision of gambling. Almost all EU
Member States have tried to avoid this by way of strict concession regimes
Case C-42/07, Liga Portuguesa de Futebol Profissional and Bwin International Ltd v Departamento de
Jogos da Santa Casa da Misericórdia de Lisboa, ECLI:EU:C:2008:560, para. 245–249.
that lead to the exclusion of foreign gambling providers. Case law of the
EU Court of Justice is intertwined with questions in respect of this line of
c) situations where neither the gamblers, nor gambling providers physically
move to another EU Member State, but still engage in gambling activities
with the assistance of the Internet. Although EU Member States treat such
gambling opportunities that address their citizens in the same way as offline
providers, borderless Internet challenges such regulatory attempts in many
ways, both in respect of inventiveness of the gambling providers, as well as
gamblers, whose physical location is nowadays hard to be determined.
Various approaches by the Member States and the lack of harmonisation at the EU
level in this field lead to regulatory competition between the Member States and to a
race for gambling market shares. In the recent years, however, Member States have
been under strict scrutiny of the European Commission and the Court of Justice of
the EU as regards the consistency of national gambling laws with the internal market
freedoms. There is an increasingly long line of cases in which the Court was asked
to consider the legitimacy of the national measures restricting import of gaming into
the Member States. This case law does not strictly distinguish between the three
cross-border situations of gambling mentioned above, as for all of them Article 56
TFEU applies in equal terms, so that it is usually irrelevant, whether it was about
online or offline gambling. Nevertheless, considering that restricting gamblers from
physically going to another Member State for purpose of gambling is practically
impossible, that concessions are mostly already awarded to the domestic gambling
providers so that new providers hardly enter new markets for offline gambling, the
Internet paves the way for new forms of gathering gamblers from a broader territory
together. Consequently, the case law of the Court mostly concerns online gambling.
As this form of gambling also brings important new challenges in respect of
consumer protection, it is at the heart of the concerns in this field.
As EGBA figures show, over 12 million Europeans had an active online account for
gambling. The average return to player/pay-out rate was 93.06% to the customers,
which means that an average customer received 9.30 euro return for every 10 euro
they bet. Customers placed a bet on average every 17 days with EGBA companies
and an average customer spent 10 euro each time they placed a sports bet (EGBA
Publishes EU Online Gambling Key Figures For 2017, 27 November 2018, Press
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
3 Balancing approach of the Court
Despite the European Council«s decision to withdraw EU«s competences in the field
of gambling the Court nevertheless has often intervened in the area. In its gambling
case law, the Court has investigated to what extent national authorities may impose
restrictions on the cross-border provision of gambling services and whether these
restrictions are compatible with the Treaties.
3.1 Reserved beginnings
3.1.1 Cross-border games of chance are services within the meaning of the
The first relevant case on gambling concerns Gerhart and Jörg Schindler,
were independent agents of the German Lottery. They were dispatching envelopes
containing lottery tickets from the Netherlands to the United Kingdom, which were
confiscated by the authorities of the latter. Their activities breached British
legislation prohibiting the import of objects related to drawing, lottery etc. The
Schindlers argued that this national legislation breached Articles 34 and 56 TFEU.
When questions for preliminary rulings were referred to the Court, several Member
States expressed their position in support of the UK, stating that the legislation at
hand was in line with EU law. The Court held that lottery activities are »services«
within the meaning of Article 57 TFEU, considering that they are normally provided
for remuneration (price of the ticket). This conclusion was not compromised by the
chance character of the lotteries; nor by the fact that participation in them may be
recreational only; nor even by the fact that profits arising from a lottery may
generally be allocated in the public interest. The Court disagreed that rules on free
movement of goods should be applied, as the case included cross-border sending and
distribution of material objects necessary for their organization. The movement of
goods was thus only of an ancillary nature to the provision of services, which were
provided by the lottery operator, and which enabled the purchasers of tickets to
participate in a game of chance with the hope of winning (para. 27). The Court
admitted that games of chance are subject to strict regulation and close control by
the public authorities in the various Member States. However, they are not totally
prohibited (even in the UK small-scale lotteries for charitable and similar purposes
were permitted) and are not by their nature the type of illegal products (e.g. drugs),
needing such prohibition at the EU level.
3.1.2 Restrictions on cross-border gambling may be justified
While lotteries are services within the meaning of Article 57 TFEU, given their
peculiar nature, Member States could nevertheless restrict or even prohibit lotteries
from other Member States, provided those restrictions are not discriminatory on the
basis of nationality. Moreover, the Court also laid down the objectives that it was
prepared to accept as justifying restrictions on Article 56 TFEU. The Member States
Case C-275/92, Her Majesty«s Customs and Excise v Gerhart Schindler and Jörg Schindler,
submitted to the Court various arguments about overriding goals in public interest,
which are protected by the restrictive legislation on games of chance. The Court
admitted in Schindler that there are general moral, religious or cultural aspects of
lotteries, which require national restrictions; it has confirmed the high risk of fraud
and other forms of criminal activities that are associated with gambling activities
given the size of the amounts which can be staked (para. 60; see also Meyer and
Stadler, 1999 and Marionneau, 2015). Lotteries are also an incitement to spend,
which may have damaging individual and social consequences and finally, despite
being an economic reason and thus not an objective justification, the Court
nevertheless emphasised that lotteries may make a significant contribution to the
financing of benevolent activities such as social works, charitable works, sport or
culture. The Court therefore stated that restrictions that were based on overriding
public interest considerations (Schindler, para. 57)
»prevent crime and to ensure that gamblers would be treated honestly; to
avoid stimulating demand in the gambling sector which has damaging social
consequences when taken to excess; and to ensure that lotteries could not be
operated for personal and commercial profit but solely for charitable,
sporting or cultural purposes« could not be regarded as measures involving
an unjustified interference with the freedom to provide services. These
restrictions namely concern the protection of the recipients of the service and,
more generally, of consumers as well as the maintenance of order in society
(Schindler, para. 58).
Despite the fact that the Schindler case specifically concerned a lottery, the Court
soon recognised that the established rules were applicable also to other types of
games of chance slot machines, bets etc. In this sense there is, however, one case,
which stands out i.e. Familiapress v Bauer Verlag,
where the Court declined to
treat certain games in the same manner as the lotteries that were at the heart of the
case in Schindler. The Familiapress case concerned competition among magazines,
which included crosswords and other types of puzzles, where the readers sending
in the correct solution were entitled to be entered in a drawing for prizes. The
Court decided that such drawings do not significantly impact the public order,
considering their small scale, which (quite surprisingly perhaps) according to the
Court excludes their economic nature. Instead, they are merely one aspect of the
broader editorial content of a magazine, which is protected by the freedom of
expression (Familiapress, para. 23). This conclusion is rather unusual, since various
kinds of raffles or tombolas are often not of a large scale. Nevertheless, the
distinction the Court drew regarding prize winnings resulting from crosswords and
other similar puzzles, on the one hand, and other types of gaming activities, is still
understandable: the former primarily stimulate the search for answers on various
questions and usually do not lead to detrimental addiction of players, which would
lead to excessive spending and consequently threaten their and their families«
existence. For this legitimate reason, these much less vulnerable games do not need
Case C-368/95, Vereinigte Familiapress Zeitungsverlags- und vertriebs GmbH v Heinrich Bauer Verlag,
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
such strict state control as other forms of games of chance (for a more detailed
commentary on the Schindler ruling see Hatzopoulos, 1999: 841).
After the renowned Schindler case the Court of Justice received several more cases
requiring clarification of the rules on legal status of games of chance in the
Community. We turn to these cases in the following sections.
3.1.3 Restricted licences to protect individuals and the society
In the case Läärä,
the Court interpreted EU law in light of questions of the
legitimacy of the Finnish State monopoly on the operation of slot machines (more
on this in Örnberg, Tammi, 2011). Mr Läärä was prosecuted for providing slot
machines deriving from a British company without a licence in Finland. Contrary to
the Schindler case, the Court recognised in this case that the slot machines
constituted goods, which may be imported and exported. Therefore, EU rules on free
movement of goods had to be interpreted.
In this regard, the Court concluded that granting a licence to manage slot machines
only to one operator in fact hinders the free movement of goods between the
Member States. Nevertheless, the Court accepted the argument that a closed
licensing system, which grants only one or a limited number of State owned and
State controlled licensee(s), fulfil(s) all the requirements necessary in order to obtain
an exception to the Community freedoms. The Court also pointed out that »given the
risk of crime and fraud« there are no alternatives (such as taxation, to ensure that the
funds collected are used for the public good) to a non-profit making approach that
are equally effective to ensure »that strict limits are set to the lucrative nature of
such activities«.
The Court also emphasised, regarding the manner in which lotteries are operated,
that the national authorities have a sufficient degree of latitude to determine what is
required not only to protect the players« interests but also to maintain order in
society. The Court declined to assess the issues of whether it is necessary to restrict
the activities of lotteries and also whether they should be prohibited. These questions
are therefore for the Member States to decide, provided that those restrictions are not
The Court added that the mere fact that an EU Member State has opted for a system
of protection which differs from that adopted by another Member State cannot affect
the assessment of the need for, and proportionality of, the provisions enacted to that
end. Those provisions must be assessed solely by reference to the objectives pursued
by the national authorities of the Member State concerned and the level of protection
which they want to provide.
Case C-124/97, Markku Juhani Läärä, Cotswold Microsystems Ltd and Oy Transatlantic Software Ltd v
Kihlakunnansyyttäjä, ECLI:EU:C:1999:435.
Läärä, para. 41.
Läärä, para. 14.
Nevertheless, it may be deducted from more recent case law, that the States may not
give or renew gambling licences without inviting any competitive bids (more in
Straetmans: 2000). The Court namely stated that »the complete failure to invite
competing bids for the purposes of granting licences for horse-race betting
operations does not accord with Articles (49) and (56 TFEU), and, in particular,
infringes the general principle of transparency and the obligation to ensure a
sufficient degree of advertising« (Commission v Italy
3.1.4 Italian gambling legislation first time
Italian legislation on games of chance has become the cornerstone of the Court of
Justice«s analytical framework when establishing EU rules on cross-border
gambling. There is a whole series of cases where the Italian authorities referred for
preliminary rulings on gambling issues. The first case in this series was Zenatti.
According to the material Italian legislation, taking bets was prohibited, with the
exception of bets on races, regattas, ball games and other similar contests where the
taking of bets is essential for the proper conduct of the competitive event. The
Financial Act of 2000 expressly provided that the organisation of bets was in the
exclusive competence of those possessing a licence or those having the permission
of a ministry. Under the Financial Act, Bets could only be placed on the outcome of
sporting events taking place under the supervision of the Italian Olympic Committee
or on the results of horse races organised though the National Union for Horse
Breeds (UNIRE). Accordingly, it was prohibited for foreign bets operators to accept
the bets of Italian consumers.
Mr. Zenatti has acted as an intermediary in Italy for the London company SSP
Overseas Betting Ltd. He ran an information exchange for the Italian customers of
SSP in relation to bets on foreign sports events. He sent to London, by fax or
Internet, forms which were filled in by customers, together with bank transfer forms,
and received faxes from SSP for transmission to the same customers. In 1997,
however, the Questore di Verona ordered Mr. Zenatti to cease that activity on the
ground that it breached Italian legislation.
The Court has emphasised that freedom of establishment was potentially breached
by the relevant Italian law;
nevertheless, the Court then concentrated on free
movement of services, which was prima facie hindered. However, both the
Advocate General and the Court recognised that restrictions on the provision of
betting services could be justified on the grounds of public interest concerns, which
should reflect the diverse characteristics of each Member State, including their
social and cultural attitudes towards gambling. They found the Italian legislation
endorsed objectives similar to the British legislation, which were considered in
Schindler. However, the Italian legislation pursued these goals in a different manner
than the British legislation did. The latter namely involved a total prohibition of
Case C-260/04, ECLI:EU:C:2007:508.
Case C-67/98, Questore di Verona v Diego Zenatti, ECLI:EU:C:1999:514.
Zenatti, para. 22.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
large lotteries, whereas the legislation at issue in Zenatti did not totally prohibit the
taking of bets but instead reserved to certain bodies the right to organise betting
under certain circumstances.
This distinction among the two cases, however, had no legally relevant
consequences. The Court namely concluded that »determination of the scope of the
protection which a Member State intends providing in its territory in relation to (…)
gambling falls within the margin of appreciation enjoyed by the national
In this sense, a decision for a different system of protecting the public
interest, as might be in place in another Member State, does not affect the appraisal
of the need for, and proportionality of, the restrictive measure.
The Court added, however, that such a limitation is acceptable only if it reflects an
actual concern of bringing about a genuine diminution in gambling opportunities
and if the financing of social activities constitutes only an incidental beneficial
consequence and is not the real justification for the restrictive policy adopted.
aspect of the Court«s decision was further explained in the following case-law.
Hopes that the Court would adopt a more liberal stance towards the issue of cross-
border gambling were again raised when the case of Gambelli
came before the
3.2 Quasi-liberal continuation
3.2.1 Italian gambling legislation second time
Gambelli and others had been acting as agents for Stanley International Betting
Limited, an arm of a UK betting concern.
Criminal sanctions were taken against
them, on the grounds that their activities contravened Italian law, which forbade
concerns that were not licensed in Italy from accepting bets from Italian citizens. In
Zenatti, para. 33.
Zenatti, para. 33-34. Also in a Portuguese case Anomar (case C-6/01, Associação Nacional de
Operadores de Máquinas Recreativas (Anomar) and Others v Estado português, ECLI:EU:C:2003:446,
para. 80) the Court found that »the mere fact that a Member State has chosen a system of protection
different from that adopted by another Member State cannot affect the appraisal as to the need for and
proportionality of the provisions adopted. They must be assessed solely in the light of the objectives
pursued by the national authorities of the Member State concerned and of the level of protection which
they seek to ensure«. Anomar, the Portuguese national association of operators in the gaming machine
sector et al, had challenged the efficacy of a decree that stated that the right to operate games of chance or
gambling in Portugal is reserved to the State. The Court, however, upheld the right of the state to operate
a monopoly.
Zenatti, para. 36.
Case C-243/01, Criminal proceedings against Piergiorgio Gambelli and Others, ECLI:EU:C:2003:597.
The bets were performed as follows: the bettor notifies the person in charge of the Italian agency of the
events on which he wishes to bet and how much he intends to bet; the agency sends the application for
acceptance to the bookmaker by internet, indicating the national football games in question and the bet;
the bookmaker confirms acceptance of the bet in real time by internet; the confirmation is transmitted by
the Italian agency to the bettor and the bettor pays the sum due to the agency, which sum is then
transferred to the bookmaker into a foreign account.
his defence, Gambelli and others claimed that the Italian law contravened both the
freedom of establishment and the freedom to provide services.
The most important support for their assertions derived from parliamentary materials
for a new (more restrictive) legislation of 2000, which substantiated that the purpose
of the new legislation was to protect a category of private sector undertakings
Totoricevitori and not public interest goals. In addition, the national court could
not ignore the extent of the apparent discrepancy between national legislation
severely restricting the acceptance of bets on sporting events by foreign Community
undertakings on the one hand, and the considerable expansion of betting and gaming
which the Italian State is pursuing at national level for the purpose of collecting
taxation revenues, on the other. For this reason, a reference for preliminary ruling
was made.
The Advocate General Alber issued, according to many, a surprising opinion. The
main aspect of the opinion concerns an assessment of whether the Italian legislation
genuinely tries to limit gambling passion. In this regard, the Advocate General
considered it unacceptable that sports betting operators trading under a concession
make themselves known by means of aggressive advertising, which is intended to
instil and foster a desire to gamble. In addition to this, the Italian State not only has
made it possible to substantially extend the range of gambling opportunities
available on the Italian market but also has made it easier to collect bets. On the
basis of this, he said there can no longer be any talk of a coherent policy to limit
gambling opportunities. Thus, he concluded that the objectives professed, but not in
reality pursued, are not adequate justifications for the restrictions placed upon the
freedom to provide services.
Italy`s move to liberalise its own gaming market has
therefore led the Advocate General to a conclusion that the Italian law could not be
justified and was purely discriminatory against bookmakers from other countries.
This opinion was considered by many as revolutionary in the EU law, despite being
completely in line with the established case law of the Court. The only novelty in
this regard lies in the fact that the Advocate General has not left it to the national
court to appraise, whether public interest goals, asserted by the Italian legislation,
were genuine.
The Court has supported the Advocate General in his practically more realistic
approach and has emphasised that
»In so far as the authorities of a Member State incite and encourage consumers
to participate in lotteries, games of chance and betting to the financial benefit
of the public purse, the authorities of that State cannot invoke public order
concerns relating to the need to reduce opportunities for betting in order to
justify measures (…).«
Opinion of the Advocate General in Gambelli, para. 122.
Gambelli, para. 69.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
In contrast to the Advocate General`s conclusions, however, the Court left it to the
national court to decide whether the conditions for objective justification of free
movement barriers are met. Nevertheless, the national courts are bound by the
guidelines of the Court. In this sense the Court stated that where a criminal penalty
is imposed on any person who, from his home in a Member State, connects by
Internet to a bookmaker established in another Member State, the national court
must consider whether this constitutes a disproportionate penalty. Moreover, the
Court has already signalled its own conclusion on this issue, by stressing that there
is a restriction on free movement in place, accompanied by criminal penalties of up
to one year`s imprisonment and that on the other hand we have a supplier of the
service, who is subject in his Member State of establishment to a regulation entailing
controls and penalties, and intermediaries, who are lawfully constituted and their
activities being permitted before the last statutory amendments (para. 73). Despite
these instructions, the national courts are in the unenviable position of carrying out a
detailed (economic) assessment in the light of national political objectives and the
principle of proportionality, which they are unlikely to feel comfortable in doing
(Straetmans, 2004).
In a wave of approvals as regards the limitations of state discretion in the field of
gambling expressed by European federal lawyers, one week after the Gambelli
ruling the Court issued a new judgement in a taxation case, where it confirmed its
conclusions in Gambelli.
3.2.2 National tax autonomy and cross-border gambling
The Lindman decision
is an important precedent in the harmonisation of taxation
rules for gambling businesses within the EU. The case had revolved around a
Finnish national Diane Lindman, who had won a million of Swedish Krons in a
Swedish lottery, whilst in Sweden, and the decision of the Finish Government to tax
her on those winnings.
The Advocate General Stix-Hackl concluded, that in so far as the winnings would
have been tax free if they had been won on a Finish Lottery, a decision to tax them
in Finland purely on the grounds that they had been won in Sweden, ran contrary to
the spirit of the freedom to provide services, and indeed, restricted this fundamental
freedom, without any justification. The Finish Government had argued that the
restriction was justified on the grounds that it would assist in the control of both
compulsive gambling and money laundering. Stix-Hackl, however, relying upon the
proportionality test, concluded that the measure was disproportionate to the
objectives being pursued.
The Court was relatively brief in its judgment, emphasising the established principle
of national tax autonomy, which is, however, limited by the fundamental economic
freedoms. It was evident that the Finnish tax legislation was discriminatory towards
foreign games of chance in comparison to the domestic ones. The Government`s
Case C-42/02, Diana Elisabeth Lindman, ECLI:EU:C:2003:613.
defence, that gaming providers established in Finland are nevertheless subject to tax
as organisers of gambling, did not change the Court`s finding of (manifest)
discrimination, since that tax is not analogous to the income tax charged on
winnings from taxpayer`s participation in lotteries held in other Member States.
As regards justifications for such discriminatory tax legislation, the Court agreed
that it is legitimate to take into consideration the damaging consequences of
gambling addiction, which is a matter of public health (need for rehabilitation
centres and social problems, such as depriving of resources the families of gambling
addicts, divorce, and suicide). However, the Court emphasised that these stated
objectives must be accompanied by an analysis of the appropriateness and
proportionality of the restrictive measure adopted by that State (in line with the
Court`s decision in Oteiza Olazabal
). In this regard, the Court asked for statistical
or other evidence which would lend objective, verifiable support to any conclusion
as to the gravity of the risks connected to playing games of chance or, a fortiori, the
existence of a particular causal relationship between such risks and participation by
nationals of the Member State concerned in lotteries organised in other Member
Since no such was evidence submitted, the Court adhered to the Advocate
General`s conclusion that legislation under which winnings from games of chance
organised in other Member States are taxed, whereas winnings from games of
chance conducted in the Member State in question are not taxable, breaches Article
56 TFEU (Straetmans, 2004).
Even after the Lindman judgment, some Member States continue to grant
preferential tax treatments to domestic lottery winnings over prizes won on foreign
games. For example, the Spanish tax legislation is being closely monitored by the
Commission, which is able to rely on a strong precedent set by the Court in any
infringement proceedings it initiates.
3.3 Diverse national responses to the judgments in Gambelli and Lindman
Analyses of the national jurisprudence in the field of gambling after the Gambelli
and Lindman judgments of the Court have shown that the requirements of those two
judgments were applied in a very diverging manner (Keuleers, 2005):
the German Bundesgerichtshof (BGH) held that the editor of an online
newspaper could not be held liable for inserting a link to an Austrian
licensed bookmaker; furthermore, the BGH explicitly questioned whether
the current German gaming policy could be reconciled with the
requirements of the EU law;
in the Netherlands certain lower courts required proof of a consistent
gaming policy, whereas on the other hand in the so-called Betfair appeal
Lindman, para. 22.
Case C-100/01, Ministre de l«Intérieur v Aitor Oteiza Olazabal, ECLI:EU:C:2002:712.
Lindman, para. 26.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
case it was insinuated that Gambelli was not relevant (the case was later
referred to the Court Sporting Exchange (Betfair
in Spain, the Loterías y Apuestas del Estado (LAE) maintained its position
that it has the exclusive right to offer and promote games on the Internet;
in Italy, the Supreme Court`s April 2004 ruling in Gesualdi went directly
against the Cour`s Gambelli decision: the Supreme Court found that as the
restrictions justified a public order interest (keeping gambling free from
criminality), they did not constitute a restriction on the freedom of
establishment and the freedom to provide services, despite the restriction`s
obvious purpose of promoting a policy of expansion in the betting and
gaming sector with the manifest aim of increasing tax revenue of the Italian
3.4 Balance making
3.4.1 Italian gambling legislation third time
In view of the manifest contradiction between the Court of Justice case-law and the
Italian Supreme Court`s decision, the Tribunale di Larino referred the case to the
former. In a case identical to Gambelli (only this time Mr Placanica was
), the Larino District Court questioned whether the Italian gaming
restrictions as interpreted by the Supreme Court can be reconciled with the single
market principles as interpreted by the Court. The Court`s judgment in Placanica
represents a further step on the road towards the full liberalisation of the cross-
border gambling in the EU, especially as betting is concerned. Nevertheless, to a
large, extent the Court still follows its previous rulings in Schindler, Läärä, Zenatti
and Gambelli. However, the judgment is stricter towards the Member States in
certain respects (Littler, 2007; Littler, 2011; Del Ninno, 2007; Keuleers, 2005).
The Court expressly stated that a Member State may not apply a criminal penalty for
failure to complete an administrative formality where, in breach of community law,
such completion is refused or rendered impossible by that Member State.
means that where national gambling laws contravene with the EU law, that State
may not resort to criminal sanctions against private gambling operators. Therefore,
where a Member State continues to flaunt EU gambling law, through e.g. the blatant
advertising of gambling services, that State is not entitled to exclude multinational
companies (like BWIN, Ladbrokes and Sportingbet) from operating in its market.
In contrast to the Gambelli judgment, where the Court left it to the national court to
decide issues of proportionality, the Court in Placanica simply decided that,
independent of the question of discrimination, the blanket exclusion of companies
quoted on the regulated markets goes beyond what is necessary in order to achieve,
what the Court considered to be, the legitimate objective of preventing operators
Case C-203/08, Sporting Exchange Ltd v Minister van Justitie, ECLI:EU:C:2010:307.
Joined cases C-338/04, Criminal proceedings against Massimiliano Placanica, C-359/04, Christian
Palazzese, and C-360/04, Angelo Sorricchio, ECLI:EU:C:2007:133 (Placanica).
Placanica, para. 69.
active in the betting and gaming sector from being involved in criminal or fraudulent
The Court`s approach clearly provides support to operators looking to
challenge national concession regimes.
However, as regards justification for restrictive legislation, the Court re-affirmed its
rulings in Zenatti and Gambelli, namely that restrictions on the number of operators
can in principle be justified, to the extent those restrictions in fact (objectively)
reflect a concern to bring about a genuine reduction of gambling opportunities and to
limit the activities in that sector in a consistent and systematic manner. The Court,
however, noted that the principal aim of the Italian legislation instead was merely to
increase the State`s tax revenue and the Court confirmed its consistent jurisprudence
that this aim in and of itself cannot justify a restriction to the freedom of
establishment/to provide services. Nevertheless, the Court recognised another
legitimate objective that of preventing the use of betting and gambling activities
for criminal or fraudulent purposes by channelling them into controllable systems. In
that respect the Court remarked that (Placanica, para. 55)
»it is possible that a policy of controlled expansion in the betting and gaming
sector may be entirely consistent with the objective of drawing players away
from clandestine betting and gaming« and that »(t)his may as such
necessitate the offer of an extensive range of games, advertising on a certain
scale and the use of new distribution techniques«.
It is indeed difficult to reconcile controlled expansion with a diminution in gambling
opportunities; the former is namely in fact merely a protectionist measure pursuing
economic purposes (revenue raising) and by the latter the Court is giving the States
necessary words to disguise the former (Bogaert, Cuyvers, 2011). It is probably a
question of degree, which will be judged on a case-by-case basis, when inciting and
encouraging consumers to participate in games of chance will be in line and when
contrary to (legitimate) public interest concerns.
3.4.2 A broad margin of discretion to Member States to restrict provision of
One can certainly form an impression that the Court is offering a helping hand to the
Member States currently defending their restrictive regulatory systems or at least
making balance in positions between Member States (looking to isolate their
national markets from competition) and gaming operators (looking to expand across
the EU) (more on this in Azoulai, 2011).
And while some commentators are of the opinion that in the Placanica the Court put
the »final nail in the coffin of the state-monopoly model in the gambling sector«
(European Gaming and Betting Association, 2007), subsequent to this ruling there
were new judgments of the Court that favour the monopolists. For example, the
Placanica, para. 62.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
Court rejected a claim by the private online gambling operator Unibet,
that it
should be granted immediate access to the Swedish betting market.
Also, Advocate General Bot has stressed in Liga Portuguesa
that »Community law
does not aim to subject games of chance and gambling to the laws of the market.«
He stressed that competition is a source of progress and development. However,
these advantages do not arise in the area of games of chance and gambling, which
can only function and continue if the great majority of players lose more than they
win. He concluded by saying that:
»limiting the powers of the Member States in the field of games of chance and
gambling does not have the aim of establishing a common market and the
liberalisation of that area of activity (and therefore) the Member States have
a broad discretion in determining the degree of protection to be provided in
relation to games of chance and gambling«.
The case concerned Portuguese legislation conferring on Santa Casa a monopoly for
mutual betting on the Internet. Bwin, an on-line gambling undertaking established in
Gibraltar, and the Liga Portuguesa de Futebol Profissional, had been fined for
having offered games of chance via the Internet and having advertised them. These
fines were based on Portuguese legislation which confers a monopoly on the
institution called »Santa Casa« to manage such games within Portugal. The criminal
court in Porto, before which Bwin and the Liga challenged these fines, referred
questions to the Court on the interpretation of Article 56 TFEUC on the freedom to
provide services. The Court found that national legislation which prohibits operators
such as Bwin, which are established in other Member States, in which they lawfully
provide similar services, from offering games of chance via the Internet, restricts the
freedom to provide services. Nevertheless, such a restriction may be justified for
overriding reasons in the public interest, such as the objectives of consumer
protection, the prevention of both fraud and incitement to citizens to squander
money on gambling, as well as the general need to preserve public order.
Following the reasoning of the Advocate General, the Court also emphasised that the
legislation on games of chance is one of the areas in which there are significant
moral, religious and cultural differences between the Member States (see more in
Euchner, 2013). Games of chance involve substantial risks of crime and fraud, given
the scale of the earnings and the potential winnings on offer to gamblers. In this
light, and in the absence of Community harmonisation in the field, the Court pointed
out that it is for each Member State to determine, in accordance with its own scale of
values, what is required in order to ensure that the interests in question are protected.
Member States therefore have a degree of freedom to set their policy objectives on
betting and gambling and, where appropriate, to define in detail the level of
protection sought. However, the restrictive measures that they seek to impose must
Case C-432/05, Unibet (London) Ltd and Unibet (International) Ltd v Justitiekanslern,
Case C-42/07, ECLI:EU:C:2008:560.
Opinion of Advocate General Bot in Liga Portuguesa, paras. 245-249 and 265.
be both necessary and proportionate to achieve the objectives pursued and must also
be applied without discrimination. The Court recalled that the objective of
combating crime invoked by Portugal may constitute an overriding reason in the
public interest that is capable of justifying the restrictions in question. Granting
exclusive rights to operate games of chance via the Internet to an operator such as
Santa Casa may confine the operation of gambling to controlled channels and was
regarded by the Court as appropriate for the purpose of protecting consumers against
fraud on the part of operators. Moreover, the Court added that because of the lack of
direct contact between consumer and operator, games of chance accessible via the
Internet involve more substantial risks of fraud by operators against consumers,
compared with the traditional markets for such games.
Despite this judgment by the Grand Chamber of the Court, in the last ten years many
more cases had been referred to the Court by the national courts to get advice on
appropriate balance between free movement of services and protected aims in public
interest that justify restrictions on games of chance offerings from other EU Member
The Court, in a series of cases, has issued judgments that provide Member States
with broad discretion regarding legislation in the gaming field. By way of example,
in Sporting Exchange (Betfair
) and in Ladbrokes International
the Court
confirmed the measure of discretion allowed to Member States with regard to
legislation constituting a restriction on freedom of establishment or the freedom to
provide services, in the specific field of games of chance, subject to the consistency
of the legislation in question. In these two cases, which related to the compatibility
of Dutch legislation on games of chance with Union law, the Court confirmed that
national legislation prohibiting the offer of games of chance via the Internet to
operators established in other Member States, where they lawfully provide similar
services, restricts the freedom to provide services (more on this in Kingma, 2008).
Nevertheless, such a restriction may be justified by overriding reasons in the public
interest, such as consumer protection and the prevention of both fraud and
incitement to squander money on gambling, as well as the general need to preserve
public order. According to the Court, it is the duty of the national court in this
capacity to check whether the illegal gaming activities may constitute a problem in
the Member State concerned and whether expansion of the authorised, regulated
activities could resolve this problem. This therefore implies that the objective
invoked by the national authorities is real and of a scale which justifies recourse to a
controlled expansion policy. The national court must also examine the existence of
effective control of this »expansion« by the authorities of the Member State, which
must not be excessive and compromise the objective generally sought of combating
gambling addiction.
Case C-203/08, Sporting Exchange Ltd v Minister van Justitie, ECLI:EU:C:2010:307.
Case C-258/08, Ladbrokes Betting & Gaming Ltd and Ladbrokes International Ltd v Stichting de
Nationale Sporttotalisator, ECLI:EU:C:2010:308.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
The same line of reasoning was also adopted in SIA Garkalns v Rīgas dome.
the Court decided that Article 56 TFEU confers on local authorities a broad
discretion in enabling them to refuse authorisation to open a casino, amusement
arcade or bingo hall on grounds of »substantial impairment of the interests of the
State and of the residents of the administrative area concerned«, provided that that
legislation is genuinely intended to reduce opportunities for gambling and to limit
activities in that domain in a consistent and systematic manner or to ensure the
maintenance of public order and in so far as the competent authorities exercise their
powers of discretion in a transparent manner. Again, it is for the national court to
determine whether those conditions are satisfied.
In Digibet,
the Court again reaffirmed that Member States have broad discretion
in the field of regulating games of chance. The Court found that Article 56 TFEU
does not preclude legislation common to the majority of the federal entities of a
Member State having a federal structure, in this case Germany, which prohibits, in
principle, the organisation and facilitation of games of chance via the Internet. In
this case, for a limited period, a single federal entity has maintained in force more
liberal legislation coexisting with the restrictive legislation of the other federal
entities, provided that such legislation is able to satisfy the conditions of
proportionality laid down by the case-law of the Court.
Moreover, in Biasci
the Court interpreted Articles 49 and 56 TFEU as not
precluding national legislation which requires companies wishing to pursue
activities linked to gaming and betting to obtain a police authorisation, in addition to
a licence issued by the State, in order to pursue such activities, and which restricts
the grant of such authorisation, inter alia, to applicants who already hold such a
licence. Furthermore, in Domenico Politano,
the Court held that Article 56 TFEU
does not preclude national legislation, which imposes on operators wishing to
respond to a call for tenders for the grant of concessions in the field of betting and
gambling, the obligation of providing evidence of their economic and financial
standing by means of statements issued by at least two banks, without also allowing
that standing to be proved by other means. Similarly, in Global Starnet,
the Court
interpreted Articles 49 and 56 TFEU and the principle of protection of legitimate
expectations as not precluding national legislation which imposes on persons who
are already concession holders in the sector of the online operation of legal gaming,
new conditions for the exercise of their activity by means of an addendum to the
existing agreement. Finally, in Stanleybet Malta,
the Court interpreted Articles 49
TFEU and 56 TFEU and the principles of equal treatment and effectiveness as not
Case C-470/11, SIA Garkalns v Rīgas dome, ECLI:EU:C:2012:505.
Case C-156/13, Digibet Ltd and Gert Albers v Westdeutsche Lotterie GmbH & Co. OHG,
Joined Cases C-660/11 and C-8/12, Daniele Biasci and Others v Ministero dell`Interno and Questura di
Livorno and and Cristian Rainone and Others v Ministero del`Interno and Others, ECLI:EU:C:2013:550.
Case C-225/15, Criminal proceedings against Domenico Politanò, ECLI:EU:C:2016:645.
Case C-322/16, Global Starnet Ltd v Ministero dell`Economia e delle Finanze and Amministrazione
Autonoma Monopoli di Stato, ECLI:EU:C:2017:985.
Case C-463/13, Stanley International Betting Ltd and Stanleybet Malta Ltd v Ministero dell`Economia
e delle Finanze and Agenzia delle Dogane e dei Monopoli di Stato, ECLI:EU:C:2015:25.
precluding national legislation, which provides for the organisation of a fresh call for
tenders for the award of licences with a period of validity shorter than that of
licences awarded previously because of the reorganisation of the system by way of
an alignment of licence expiry dates.
As another example, a broad margin of discretion was also approved to Austria in
respect of two Slovenian gambling providers. Austria considered that Slovenian
regulation does not assure a similar level of protection of society against the
negative effects of gambling to the Austrian one. In the case HIT,
LARIX operate casinos in Slovenia. The two companies applied for licenses to
advertise their gaming establishments in Austria, but were denied. Austrian law
provides that permits for advertising casinos located in other Member States can be
granted only where the legal protection for gamblers in the casino`s State »at least
corresponds to« the protection provided in Austria. The Austrian authorities found
that Slovenian regulations were insufficient to meet this test, noting in particular the
lack of a legal obligation to warn and bar gamblers who seem to be exceeding their
limits; the lack of a monitoring system for gambling abuse; the lack of adequate
legislation to protect minors; and, the lack of a provision for direct civil actions in
case a gaming establishment breaches its obligations (more on this in Delfabbro and
King, 2012).
The companies brought suit, alleging that Austria`s refusal to allow their
advertisements was in breach of the right to freely provide services under EU law.
Austria argued that its restriction was justified by overriding reasons in the public
interestin particular, the protection of consumers. The Court found the Austrian
regulation requiring comparable protections for gambling establishments to be a
restriction on the freedom to provide services under Article 56 TFEU. However, it
also found that the restriction was justified on public interest grounds.
The Court
in HIT and HIT LARIX thus held that a Member State may restrict advertisements
for foreign casinos on the ground that the casino`s home state does not provide
equivalent protection for gamblers. However, they cannot require an identical
regulation, and the restriction must be directly related to protecting consumers. The
Court therefore held that a measure like Austria`s would be proportional so long as it
required only an equivalent (but not identical) level of protection, and so long as it
was directly related to protecting consumers against the risks of gambling.
Nevertheless, the disagreement over proportionality is evident in the differences
between the opinion of the Court and that of Advocate General Mazák, who had
argued that Austria`s rule »goes beyond what is necessary to achieve the objective of
protecting consumers«. The Advocate General was concerned that the system of
prior authorization for advertising could constitute `a »hidden« total prohibition of
the advertising of foreign casino`s, and that it »leads, ultimately, to a discrimination
based on the origin of the applicant«. Moreover, he was concerned with the fact that
the grant of a permit »depends solely on the content of the legislation of the Member
Case C-176/11, HIT hoteli, igralnice, turizem dd Nova Gorica and HIT LARIX, prirejanje posebnih
iger na srečo in turizem dd v Bundesminister für Finanzen, ECLI:EU:C:2012:454.
HIT and HIT LARIX, para. 36.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
State, without taking account of the actual level of protection provided by the casino
The proportionality question is therefore the driving force behind the numerous
references for preliminary rulings in the field of gambling, making it hard to
establish legal certainty in respect of very diverse national circumstances
surrounding particular legal systems of the Member States, their traditional origin, as
well as distinct political choices of their legislatures as to how to respond to the
unwanted providers of gambling from other EU Member States.
3.4.3 Surprising knock-outs of some national systems of gambling control
Uncertainty over the system of principles, developed by the Court in respect of
applying Articles 49 and 56 TFEU to the national rules governing gambling, is
evident from the fact that two years before the Court`s decision in HIT, the Court
ruled that certain provisions in the Austrian Gaming Act and »the total absence of
transparency for the purposes of the grant of the concessions« to the Austrian de-
facto monopolist casino operator, Casinos Austria AG (»CASAG«), are contrary to
EU law. The judgment confirms that the Member States may not require the
gambling providers to be physically present on the territory of the respective
Member States.
The Austrian Gaming Act (Glücksspielgesetz) established a state monopoly on
lotteries and casinos. Only operators having been granted a license according to the
Act were entitled to offer such gaming operations in Austria. At the time of the
referral to the Court, the Act required a casino operator to be a publicly listed
company with a seat in Austria and a share capital of EUR 22 million. All twelve
licenses have been held by CASAG, to which the licenses had been awarded behind
closed doors without any tender procedure. Furthermore, the licensing and
supervising authority, the Ministry of Finance, is an indirect shareholder of CASAG
through the participation of the state.
The German citizen Ernst Engelmann »operated gaming establishments in Austria
[…]. In those establishments, he offered his customers, inter alia, a game called
observation roulette and the card games Poker and Two Aces. He had not sought a
concession to organise games of chance, nor was he the holder of a lawful
authorisation in another Member State.« Therefore, he was charged according to the
Austrian Criminal Code for offering games of chance without a national license.
However, the court of appeal was in doubt of the conformity of relevant provisions
of the Austrian Gaming Act with EU law, namely with the freedom of establishment
(Art 49 TFEU) and the freedom to provide services (Art 56 TFEU).
It is important to note, that due to the Austrian regulations at stake, it was impossible
for potential licensees from other Member States to acquire a license under Austrian
law. The requirement of a seat and the lack of transparency were clear violations of
Advocate General Mazák in HIT and HIT LARIX, paras 2226.
EU law. Consequently, in November 2010, the Austrian government issued a draft
amendment of the Austrian Gaming Act as part of the budgetary bill, slightly
redesigning one license requirement for the lottery and casino licenses. The purpose
of the new draft amendment was to overcome violations of EU freedoms which were
found by the Engelmann ruling. This amendment modified the requirement of
having a seat in the operational phase to the effect that now a seat in any Member
State is sufficient, if the potential licensee also has a »comparable license« from the
Member State in which it is established or, in case of a successful application, the
company founds its seat in Austria within a certain respite. Judging from the Court`s
previous case law, it may be concluded that the Austrian Gaming Act, even after
these amendments, would still not be compliant with EU law and could ultimately
result in the Court issuing a ruling similar to the one already delivered in
the Engelmann case.
At least two additional judgments thus found the Austrian gaming law framework in
contradiction with EU law. Firstly, on 15 September 2011 the Court held in
Dickinger and Ömer
that EU law, in particular Article 56 TFEU, precludes the
imposition of criminal penalties for infringing a monopoly of operating games of
chance, such as the monopoly of operating online casino games, if such legislation is
not compatible with EU law. And secondly, on 30 April 2014 the Court held in
Pfleger and others
that Article 56 TFEU precludes national legislation that does
not actually pursue the objective of protecting gamblers or fighting crime and does
not genuinely meet the concern of reducing opportunities for gambling or to fight
gambling-related crime in a consistent and systematic manner.
Moreover, with respect to the Greek system of a monopoly, the Court held in
Stanleybet I
that Articles 49 and 56 TFEU preclude national legislation which
grants the exclusive right to run, manage, organise and operate games of chance to a
single entity, where: a) that legislation does not genuinely meet the concern to
reduce opportunities for gambling and to limit activities in that domain in a
consistent and systematic manner and, b) where strict control by the public
authorities of the expansion of the sector of games of chance, solely in so far as is
necessary to combat criminality linked to those games, is not ensured. Stanleybet,
William Hill and Sportingbet, companies with their registered office in the United
Kingdom, where they hold bookmaker`s licences, have therefore successfully
challenged Greek Law, under which the exclusive right to run, organise and operate
games of chance and betting forms with fixed or variable winnings was granted to
OPAP for a period of 20 years.
Furthermore, with respect to the German regulatory system intended to control
gambling activities on its territory, the Grand Chamber of the Court issued its
Case C-347/09, Criminal proceedings against Jochen Dickinger and Franz
Ömer, ECLI:EU:C:2011:582.
Case C-390/12, Robert Pfleger and Others, ECLI:EU:C:2014:281.
Joined Cases C-186/11 and C-209/11, Stanleybet International Ltd, William Hill Organization Ltd,
William Hill plc, Sportingbet plc v Ipourgos Oikonomias kai Oikonomikon Ipourgos Politismou,
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
judgment in three joined cases,
finding that the public monopoly of the
organisation of sporting bets and lotteries in Germany does not pursue the objective
of combating the dangers of gambling in a consistent and systematic manner. In
Germany, jurisdiction over gambling is divided between the federal State and the
Länder. In most of the Länder, there is a regional monopoly for the organisation of
sporting bets and lotteries, while the organisation of bets on horse racing and the
operation of gaming machines and casinos are entrusted to duly-authorised private
operators. By the treaty on lotteries in Germany (Lotteriestaatsvertrag), which came
into force on 1 July 2004, the Länder created a uniform framework for the
organisation of games of chance, apart from casinos. Following a judgment of the
Budesverfassungsgericht, that treaty was replaced by the treaty on games of chance
in Germany (Glücksspielstaatsvertrag), which entered into force on 1 January 2008.
The latter prohibited all organisation or intermediation of public games of chance on
the Internet.
The company Winner Wetten has commercial premises at Bergheim, where it
carries on the business of brokering bets on sporting competitions on behalf of
Tipico Co. Ltd, a company established in Malta. The mayor of the town having
ordered it to stop trading, this company brought an action before the Administrative
Court of Cologne, claiming that the public monopoly on bets on sporting
competitions in force in the Land of North Rhine-Westphalia, on which the decision
it wished to have annulled was based, is contrary to the freedom to provide services
guaranteed by Article 56 TFEU. The Court ruled out provisionally, maintaining the
effects of national legislation concerning a public monopoly on bets on sporting
competitions, which comprises restrictions that are incompatible with the freedom of
establishment and the freedom to provide services, because those restrictions do not
contribute to limiting betting activities in a consistent and systematic manner (more
on this in Beukers, 2011).
Most recently, however, the Court has ruled on the incompatibility of the Hungarian
system of rules restricting gambling on its territory with EU law. In 2017, the Court
held in Unibet
that the Hungarian legislation on the authorisation of online games
of chance was not compatible with the principle of the freedom to provide services.
It found that that legislation limited, first, in a discriminatory manner, and, second,
by reason of its non-transparent nature, the opportunity for operators established in
other Member States to organise such games in Hungary. Unibet International is a
company established in Malta whose business consists in particular in the
organisation of online games of chance and which, to that end, holds licences issued
by several Member States. In 2014, the Hungarian authorities established that Unibet
was providing, on Hungarian-language Internet sites, services relating to games of
chance even though it did not hold the licence required in Hungary to carry on such
an activity. Subsequently, those authorities ordered that access be temporarily
blocked from Hungary to Unibet`s Internet sites and imposed a fine on that
company. Unibet thereupon brought an action before the Court in Budapest seeking
Case C-409/06, Winner Wetten GmbH v Bürgermeisterin der Stadt Bergheim, ECLI:EU:C:2010:503.
Case C-49/16, Unibet International Ltd v Nemzeti Adó- és Vámhivatal Központi Hivatala,
the annulment of those two decisions on the ground that the Hungarian legislation
underlying them was contrary to the principle of the freedom to provide services. In
that regard, Unibet took the view that, although, during the periods in dispute,
operators established in other Member States could, theoretically, have been granted
a licence in Hungary to organise online games of chance (as the provision of such
services was not reserved to a State monopoly), it was in practice impossible for
them to obtain such a licence.
The Court ruled that the Hungarian legislation concerned did not satisfy the
requirement of transparency in so far as neither the conditions governing the
exercise by the national authorities of their powers during the procedures for
awarding concessions to »trustworthy« operators of game of chance nor the
technical conditions which operators must satisfy when submitting their tenders had
been defined with sufficient precision. In those circumstances, the Court concluded
that the principle of the freedom to provide services also precluded that legislation.
Finally, the Court stated that no penalties may be imposed on the basis of rules held
to be contrary to the EU law.
Moreover, in February 2018 the Court held in Sporting Odds
that the Hungarian
legislation on the grant of concessions for operating traditional casinos and that
relating to the organisation of online casino games are not compatible with EU law.
The Court namely found that the Hungarian legislation prevents, in a discriminatory
manner, operators of games of chance established in another Member State from
having access to the Hungarian market for those games. The Court stated that the
Hungarian legislation reserves the possibility to obtain a licence to organise online
casino games exclusively to operators managing a casino under a concession on
national territory, which constitutes a discriminatory restriction. In that connection,
the Court considered that such a radical restriction of the principle of freedom to
provide services cannot be justified by the objectives of public order and public
health, which were the two premises upon which the Hungarian Government relied
in support of the legislation. The Court reasoned that those objectives may be
attained by less restrictive measures. The Court thus ruled that neither the Hungarian
legislation on granting concession to operate traditional casinos nor that relating to
the organisation of online casino games are compatible with the principle of freedom
to provide services.
Accordingly, it may be concluded that despite much talk around the »revolutionary«
rulings of the Court in a long series of cases referred to it by the national courts, the
national borders as regards games of chance will subsist. There is namely still
significant room for national rhetoricians with good argumentation skills, who can
justify restrictive national measures and thus prevent floods of games of chance,
domestic and foreign. These nationalistic, protectionist tactics are also motivated by
the significant numbers of employees in the gaming industry in Belgium over
10.000 persons worked in this sector; in Germany over 65.000 persons and in the
United Kingdom over 100.000 (Study of games of chance in the European Union,
Case C-3/17, Sporting Odds Limited v Nemzeti Adó- és Vámhivatal Központi Irányítása,
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
carried out by the Swiss Institute of Comparative Law at the request of the
Commission on 14 June 2006).
4 European Commission: gambling or leaving nothing to the chance?
This casuistic approach by the Court is, however, evidently led to uncertainty for the
Member States and gambling providers. From the point of view of the European
Commission, this is hardly the right path to tread in an increasingly integrated EU.
4.1 First way of »tackling the problem« infringement procedures
The Advocate General`s opinion in HIT and HIT LARIX proposed a more restrictive
approach that would have taken into account the risks for protectionism raised by a
rule like Austria`s. Since the early 1990`s, the Commission has kept a firm eye on
the gambling sector and has become very critical about protectionist national
gambling laws, which often illegitimately restrict free movement of goods, services
and freedom of establishment. In this regard the Commission was using different
instruments to achieve at least a quasi-single European gambling market.
Nevertheless, the Commission is being politically realistic in Member State`s
reluctance to support an establishment of a true single market for games of chance.
The former Head of the Services Unit at the Internal market DG Bergevin, is
reported as stating, that »the Member States frankly don«t want us sticking our noses
in at all and certainly don«t want an internal market for on-line gambling«
(Gellatly, 2007). Additionally, in early 2007 the Internal Market Commissioner
McCreevy told the European Parliament that on the question of European gambling
harmonisation »It«s not my intention to bring forward a harmonised piece of
legislation on gambling in the European Union« (Jones, 2007).
The vast majority of the Commission`s resources were being invested in considering
possible infringement actions against a number of Member States for unlawful
restrictions of the supply of certain gambling services. The Commission`s complaint
was that the Member States in question appear to be invoking public interest
grounds to restrict access to gambling services offered by non-nationals, while
encouraging such state-run activities in order to obtain revenue.
In the last few years the Commission complained in relation to several Member
State`s gambling legislation:
against Denmark for Danish law restricting in particular the provision of
sports betting services;
against Greece, which explicitly forbade electronic games with electronic
mechanisms and software from public and private places; the law had been
introduced in an attempt to stamp out illegal gambling, with offenders
facing fines of 5,000 to 75,000 euros and imprisonment of one to 12
against Austria, France, Italy Germany, Finland, Sweden, Holland and
Hungary for invoking the need to restrict its citizen`s access to gambling
services while at the same time inciting and encouraging them to participate
in state lotteries, games of chance or betting which benefits the state`s
The Commission, however, generally appeared rather pessimistic about the use of
court action to achieve market opening, with Bergevin remarking that: »I`d give it
even odds on whether the courts will help the betting industry or close the market
further. Whatever happens, you should never place all your trust on what judges
think«. In relation to all the infringement procedures the Commission was
emphasising, that any potential action »relates only to the compatibility of the
national measures in question with existing EU law« (e.g. Press Release IP/06/1362)
and that »(i)t does not touch upon the existence of monopolies as such, or on
national lotteries. Nor does it have any implications for the liberalisation of the
market for gambling services generally, or for the entitlement of Member States to
seek to protect the general interest, so long as this is done in a manner consistent
with EU law i.e. that any measures are necessary, proportionate and non-
Nevertheless, in late 2017 the Commission decided to close infringement procedures
and complaints in the gambling sector.
The decision is in line with its political
commitment to be more strategic in enforcing EU law. The Commission considered
that complaints in the gambling sector can be handled more efficiently by national
courts and also in the light of the numerous judgments of the Court on national
gambling legislation. Complainants are therefore encouraged to make use of national
remedies when facing problems with EU law in the gambling sector. The
Commission also pointed out that the Member States are autonomous in the way
they organise their gambling services, including the level of taxation, provided the
fundamental freedoms of the Treaty are respected. The Commission further
acknowledged the broader political legitimacy of the public interest objectives that
Member States are pursuing when regulating gambling services. The Commission
also noted Member States« efforts to modernise their online gambling legal
frameworks, channel citizens« demand for gambling from unregulated offer to
authorised and supervised websites, and ensure that operators pay taxes. With that in
mind, the Commission concluded that it is not a priority for the Commission to use
its infringement powers to promote an EU internal market in the area of online
gambling services.
Perhaps it is not realistic to expect the European Commission to fully liberalise the
EU gaming market. However, it is clear that Member States will have to stop
invoking important reasons of public order to justify gaming restrictions, while the
actual objective pursued is the protection of the national markets from foreign
competition. Despite the before mentioned cautious approach of the Commission,
some Member States nevertheless decided to liberalise the gambling sector even
Press Release IP-17-5109.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
before the Commission«s closure of all open infringement actions in the field.
Among them is France, which announced its intent to partially open up its betting
market and act as a role-model for the other Member States. French financial
minister Woerth explained »Proceedings against France regarding our online
betting market monopoly have been open since June 2007. In these circumstances,
either we dig in our heels or we change our position. We have settled upon a
controlled opening up of our online betting market«. The announcement has soon
after been brought to effect (Ninivin, 2008).
4.2 Second way of »tackling the problem« regulatory activities
Alternatively, a number of commentators (e.g. Caligiuri, 2012) and trade
bodies have argued for greater harmonization in this area. The Commission has
struggled to insert the country of origin principle in the EU legislation concerning
gambling. According to this principle, a gaming operator should only comply with
the law of its country of origin and could not be subjected to additional requirements
for the cross-border provision and promotion of its services. Two acts were at front:
Electronic Commerce Directive; and
Directive on Services in the Internal Market.
The E-Commerce Directive (Directive 2000/31/EC of the European Parliament and
of the Council of 8 June 2000 on certain legal aspects of information society
services, in particular electronic commerce, in the Internal Market)
provides the
legal framework for electronic commerce in the Internal Market. The Directive
removes obstacles to cross-border online services by providing the country of origin
principle (or the Internal Market clause), which means that information society
services are, in principle, subject to the law of the Member State in which the service
provider is established and the Member State in which the information society
service is received cannot restrict incoming services. Notwithstanding this, however,
Article 1(5) of the E-Commerce Directive excludes gambling activities, which
involve wagering a stake with monetary value in games of chance, including
lotteries and betting transactions, from its scope of application. Therefore, the
country of origin principle concerning the cross-border provision of information
society services cannot be invoked as regards games of chance.
For this reason, the Commission soon after the Court`s rulings in Gambelli and
Lindman issued a press release, where it stressed that online gambling is a new area
in which action may be required because of significant Internal Market problems.
The Commission announced that it would examine the need for and scope of a
possible new EU initiative. In the past years, however, no plans for amendments of
the E-Commerce Directive as gambling is concerned have been announced and it
can be doubted when (if ever) in the future the Directive will be of application on
OJ L 178, 17. 7. 2000, pp. 116.
IP/03/1580 of 21 November 2003.
this sector. After the developments in relation to the Services directive the
Commission`s inactivity comes as no surprise.
The original proposal of the Directive on services in the internal market (the
Bolkestein`s proposal) foresaw removing barriers to cross-border provision of
services on the basis of the country of origin principle. The proposal was harshly
criticised for supporting regulatory competition between the Member States and has
substantially been amended and finally adopted as the Directive 2006/123/EC of the
European Parliament and of the Council of 12 December 2006 on services in the
internal market.
While the proposal was in the legislative procedure, the European Lotteries
Association argued that games of chance had nothing in common with the aims of
the proposed directive and that gambling is not suitable for being subjected to the
internal market principles. The Association claimed that applying these principles
for gambling would trigger a damaging liberalisation of the gambling sector and that
sport`s revenues would be jeopardised,.
The EU`s legislator supported this view
and exempted gambling from the Directive`s application.
The adopted Directive 2006/123/EC therefore (despite removing the country of
origin principle altogether) defines games of chance as a services sector, which is
excluded from its application (Article 2(2)(h)). According to the Commission
explanation: »The exclusion in Article 2(2)(h) covers any service which involves
wagering a stake with pecuniary value in games of chance, including in particular,
numeric games such as lotteries, scratch cards, gambling services offered in casinos
or licensed premises, betting services, bingo services and gambling services
operated by and for the benefit of charities or non-profit-making organisations. In
contrast, games of skill, gaming machines that do not give prizes or that give prizes
only in the form of free games and promotional games whose exclusive purpose is to
encourage the sale of goods or services are not covered by the exclusion and thus
benefit from the Services Directive. Furthermore, other services provided in casinos,
for example the sale of food and drinks, are also not covered by the exclusion and
have to be covered by implementing measures« (Handbook on the implementation of
the Services Directive, p. 12). Nevertheless, national rules regulating games of
chance need to be consistent with Article 56 TFEU and it will be left to the Court to
determine the competence of Member States that seek to restrict or prevent the
provision of gambling services across Member States.
Similarly, »(g)ames of chance, involving a stake representing a sum of money,
including lotteries, betting and other forms of gambling services, as well as on-line
games and search engines« are excluded from the 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 (Audio-visual Media
OJ L 376, 27. 12. 2006, pp. 3668.
Will amateur sport lose out in the EU services directive?, Euractiv, 11. 3. 2005.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
Services Directive),
which amends and renames the Television without Frontiers
Directive. The directive covers all audio-visual media services -traditional television
(linear service) and video-on-demand (non-linear services) - and assures that service
providers are subject only to the rules applicable in their own country (country of
origin principle). Games of chance are excluded from the Directive, as it excludes all
services whose principal purpose is not the provision of programmes, i.e. where any
audio-visual content is merely incidental to the service and not its principal
How realistic it is for the two EU legislators to actually pass such a piece of
legislation, however, may be ascertained by the critics of the European Parliament in
relation to the Commission«s White Paper on Sport in the EU,
where the
Parliament voiced its concern at a possible deregulation of national gambling
markets. It stressed that the revenues generated by state-owned or state-licensed
lotteries are »the most important source of income« and »indispensable« for sports
organisations in the EU and warned that no sustainable and politically feasible
alternative to this funding in the event of a liberalisation has so far been either
proposed or seriously discussed.
Moreover, in 2010 the Competitiveness Council
pointed out that the need to effectively regulate gambling services requires that
Member States supervise the provision of gambling services in their territories
through regulatory public authorities, established according to national legislation.
4.3 Soft law approach to coordinating gambling regulation
After gambling services being excluded from the Services Directive and every other
legislation connected to gambling and further after the former Internal Market
Commissioner announced giving up on any harmonisation plans, the Commission
focused instead on a soft law approach towards coordinating national regulations on
The first step in this direction could be found in an extensive study on gambling in
the EU, which was requested from the Swiss Institute of Comparative Law by the
Commission. The study on gambling provides an analysis of the national regimes
governing gambling in the EU and confirms that in all Member States the sector is
subject to rules and regulations aimed at safeguarding public interest objectives.
While pursuing broadly similar aims, the national laws and regulations vary
considerably and often lead to barriers to the freedom to provide services and the
freedom of establishment that are incompatible with Community law.
In line with the Council`s conclusions of 2010, the Commission adopted a Green
Paper on online gambling in the Internal Market in 2011.
The Commission`s
OJ L 332, 18. 12. 2007, pp. 2745.
Audio-visual Media Services Directive, preambule, rec. 18.
COM(2007) 391 final.
European Parliament warns of gambling liberalisation, European Lotteries Press Release, 8 May 2008.
3057th Competitiveness Council conclusions, 2010.
COM(2011) 128 final.
conclusion from the public consultation performed was that it did not appear
appropriate at this stage to propose sector specific EU legislation. However, there
was an almost unanimous call for policy action at the EU level and the responses
allow for a clear identification of the key priority areas where action is required.
Consequently, the Commission by way of a Communication of 2012,
together with
the accompanying Commission Staff Working Document, identified the key
challenges posed by the co-existence of national regulatory frameworks within the
internal market. In particular, it was pointed out that in view of the developments
regarding the offer and promotion of online gambling in the EU, greater clarity was
needed. The 2012 Communication proposes a combination of initiatives and relevant
measures covering a range of issues, seeking to enhance legal clarity and establish
policies based on available evidence, highlighting five priority areas to address, i.e.
compliance of national regulatory frameworks with EU law; enhancing
administrative cooperation and efficient enforcement; protecting consumers and
citizens, minors and vulnerable groups; preventing fraud and money laundering;
and, safeguarding the integrity of sports and preventing match-fixing. The proposed
actions focus on online gambling services and issues linked to the free movement of
services and the freedom of establishment in light of the growth of online gambling
in the EU and the well-developed cross-border supply of such services.
In line with this commitment, in 2014 the Commission adopted the Recommendation
on principles for the protection of consumers and players of online gambling
services and the prevention of minors from gambling.
The recommendation
encourages EU Member States to ensure a high level of protection for consumers
and minors through the adoption of principles for online gambling services and for
responsible advertising and sponsorship (more on this in Griffiths, 2005).
Furthermore, in November 2015, gambling regulatory authorities of EEA Member
States signed a cooperation arrangement to enhance administrative cooperation.
The arrangement covers a number of different areas, such as the organisation of
gambling, including tender procedures; verification of information provided by other
authorities and exchange of technical expertise; the supervision of compliance with
national laws, including the protection of consumers; prevention of money
laundering and fraud; d betting related to match-fixing; and, practical cooperation to
assist authorities in their day-to-day supervisory function and sharing of good
practices. The cooperation arrangement is accompanied by files (»gateways«) on the
participating countries. These gateways provide information on the role and remit of
national authorities, areas they would like to share information on, competences of
other national authorities with regards to gambling, as well as any limitations in laws
e.g. regarding data protection.
Moreover, the European Commission adopted a decision in April 2018 requesting
the European Committee for Standardisation to draft a European standard on
reporting in support of supervision of online gambling services by the gambling
COM (2012) 596 final.
2014/478/EU, OJ L 214, 19. 7. 2014, pp. 3846.
J. Hojnik: Online Gambling under EU Law: Strolling Between Controlled Expansion and
Genuine Diminution of Gambling Opportunities
regulatory authorities in EU Member States. Standardisation in this field aims to
develop a voluntary tool to facilitate the flow of information between regulatory
authorities in EU Member States and the operators and suppliers. It would define the
core elements for reporting purposes. However, the Commission noted that the
standard would be without prejudice to the scope of competence of EU country
authorities in the regulation of online gambling and would not impose any obligation
on them to introduce reporting requirements or to authorise or deny authorisation to
any operators or suppliers.
5 Conclusion
As EGBA has rightly emphasized in its 2018 Manifesto titled »A EU Framework
For Online Gambling 2.0«, Europe«s current online gambling regulation is highly
fragmented causing many problems for consumers, gambling authorities and online
gambling companies. Since the launch of the EU Digital Single Market the
European Commission has been committed to deepening integration of the digital
economy and ensuring consumers are better protected online. But that has not been
the case for the millions of Europeans who gamble online. The most recent
European Commission Communication on online gambling in Europe is from 2012
and, given major technological and regulatory developments since, is out of date and
should be reviewed. We may or may not agree as to whether liberalisation of
gambling would be detrimental to EU citizens. It is nevertheless true that a uniform
approach to all types of gambling is not the right approach. Games of chance are
namely a very complex sector of services. Both the methods of playing as well as
their social consequences are complex. Certain games of chance are therefore more
suitable for competition rules than are others.
The whole activity of lotteries, for example, may fail if there is no limitation as to
the number of lotto services offered on the market of a Member State. The winning
pot is namely rising on the basis of player`s payments and a significant sector of the
public purchase tickets only when the potential winnings are extremely high. In
circumstances where there are a large number of lotto providers the pot would raise
slowly as only smaller number of players would be interested in playing and thus
many lotto providers would not exist for long. Indeed, this could be one way of
protecting people from gambling. As the Portuguese government in Gambelli
emphasised, there is, however, another danger in this regard free cross-border
gambling would enable establishment of large European lotteries with enormous
winnings, which would attract players from all the EU and where the income would
flow from the small to large EU Member States. Players would participate in
lotteries that provide the highest winning and thus they would contribute to the
social, cultural and sport budget of the large Member States. Under this scenario, the
small States would need to make up for the loss of income by imposing higher taxes.
On the other hand, in times of cross-border television and Internet, when EU citizens
follow all major national football (and other sport`s) leagues in Europe, it is
probably unsound to limit their access to sport bets to national sport events only.
Even though economic goals are not an acceptable justification for restrictive
national gambling legislation as free movement of services is concerned, the
financial importance of gambling services will no doubt denote future efforts to
liberalise the sector. In this respect, one can expect conflicts between the Member
States in various ways, not just between liberal and conservative states in terms of
gambling regulation, but also between small and large Member States. States with
large internal markets, and thus a prevalence of domestic gaming customers,
typically try to limit the offering of games by imposing high taxes. Smaller States
and economies with proportionally small internal markets, which rely largely on
customers from other economies, are prone to offer low tax burdens and thus
encourage gaming operators to create a more comprehensive non-gaming tourist
amenities in order to export gambling and non-gambling services as much as
possible and maximise the economic benefits with minimal negative social impacts.
In this respect, the proportionality question will no doubt continue to arise in future
gambling cases at the Court, particularly as Internet gambling and cross-border
providers continue their fight to take maximum advantage of the free market
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... Gambling involves risking something of value on the outcome of an event that is at least partially determined by chance. Online platforms have increased opportunities to gamble in more convenient, easily accessible formats (Hojnik, 2018;Lawn et al., 2020). For some, internet gambling comes with many related harms (e.g., see Håkansson & Widinghoff, 2020). ...
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Technological advancements and worldwide television exposure led to a poker boom in the early 2000s, and poker (both live and online) has retained some of that popularity today. The present study examined online poker playing trends based on actual electronic betting records data for 2489 subscribers to a major global internet gambling operator from 2015 to 2017. We found that overall financial involvement (median total overall spend: €439.7) and time commitment (median number of sessions: 43) during the two-year study period were relatively moderate. We identified the top 1% by total overall spend as a subgroup of highly involved players with disproportionately higher financial involvement (median total overall spend: €272,581.4) and time commitment (median number of sessions: 1149). Our results were similar to those reported in LaPlante et al.’s (Comput Hum Behav 25(3):711–717, 2009. study of online poker betting records, suggesting that players’ levels of involvement are similar to those from ten years ago despite numerous changes to the online poker environment. We also analyzed records of deposits and withdrawals, and we observed similar indicators of moderate gambling behavior within the overall sample (median two-year total amount deposited: €176.4). In contrast to popular beliefs about internet gambling, in our sample, most online poker play was arguably moderate. However, a small percentage of highly involved players play poker at extreme levels and require closer scrutiny.
... Competition is continuous in the online gambling industry. Regulatory systems in various jurisdictions restrict gambling offer and demand in different ways, and gambling companies operating on the global market are both public and private, licensed and unlicensed (e.g., Hojnik, 2018;Littler & Järvinen-Tassopoulos, 2018). Finland's case is particular in the European Union: as other Member States have opened partly their gambling markets to international gambling providers, Finland has been maintaining and strengthening its monopolistic gambling regime for the past ten years (Nikkinen, 2014;Marionneau, 2015;Cisneros Örnberg & Hettne, 2018;Selin, 2019; see also Miettinen, this volume). ...
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This qualitative study examines what factors and measures may contribute to the success of a state-owned gambling company online. As each jurisdiction restricts online gambling offer and demand according to domestic legislation, there are few tools to limit the competition of online operators. In order to understand how different stakeholders want to limit online competition and preserve the benefits guaranteed by a monopolistic gambling system, thematic interviews (N = 17) were conducted among the state-owned gambling company Veikkaus’ representatives and among public servants engaged in gambling regulation, ownership steering, the prevention of gambling harm, or the distribution and reception of gambling proceeds. Chantal Mouffe’s theorisation on ‘antagonism’ and ‘agonism’ is used to examine the impact of competition of these stakeholders. The results show that the challenges of the Finnish state-owned gambling operator were related to competition (e.g., losing customers and proceeds to international competitors) and to regulation (e.g., channelling gambling and preventing gambling harms). The results also indicated that Veikkaus’ representatives seem to have an agonistic relationship with the regulators and the public servants interested in prevention of gambling harms. The only antagonism found in this study is based on the conflicting power relations of Veikkaus and the international online gambling companies.
... 000 milliards de dollars le coût de la cybercriminalité à travers le monde pour les entreprises et pour l'année 20211 . La sphère numérique est simultanément « un levier économique, source de valeur (…), et source de cyberdélinquance » 2 . ...
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L’avènement de l’Internet a permis aux États membres de l’Union européenne d’exploiter des technologies nouvelles et des connexions de plus en plus rapides dans l’opération des jeux d’argent. L’Internet leur a ouvert de nouvelles possibilités d’étendre les limites de leur marché national et de mettre à jour leurs produits et services relatifs aux jeux d’argent. Bien que la conquête de l’espace virtuel se soit faite à des périodes différentes compte tenu de la régulation de l’opération des jeux d’argent en ligne et du jeu des citoyens en ligne dans chaque État membre, le secteur des jeux d’argent virtuels est devenu une industrie lucrative en Europe ayant une valeur estimée à 24,7 millions d’euros en 2020.
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In a series of recent judgments, the Court of Justice has developed its approach to games of chance and online gambling. It has made it clear it will not use the EU free movement of services provisions to liberalize the internal market for games of chance. Member States are given a remarkable discretion to regulate gambling services. To this end, the Court applies its standard test for restrictions very flexibly, including even an interesting moral strand, on the basis of overriding reasons in the general interest and objectives of combating fraud and gambling addiction. The remaining scrutiny is essentially left to the national courts. As far as the award of licences is concerned, the requirements of transparency are applied more strictly, which may have a significant impact on market access. This contribution provides a thorough analysis of the EU framework now in place for games of chance. In addition, it proposes some general guidelines for the needed political, legislative activity at the EU level. Such activity could enhance both revenue and Member State control over gambling services, whilst allowing cooperation between them to achieve their individual objectives.
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The recent economic crisis has brought into focus how even open and highly interdependent economies in the European Union try to govern their economies according to territorially defined interests. The aim of this article is to examine an area, online gambling, with the technological and legal conditions that challenge approaches that favour economic patriotism. The article compares two cases, the United Kingdom and Italy, that represent two different models of economic governance to argue that they are similar in which interests they seek to protect and at which level.
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AIMS – The principles of free trade and free circulation of services within the European Union have created pressures to make the strictly controlled European gambling markets more open. According to the Court of Justice of the European Union, restrictions on gambling are only allowed if they are justified in admissible terms of consumer protection, prevention of criminal activity and protection of public order. This study compares the gambling laws of two European societies, France and Finland, to analyse how their legal frames of gambling have been adjusted to these principles. DESIGN – The data consists of up-to-date legislation on gambling in Finland and France. A qualitative analysis was conducted to study whether new ways of justifying have been included in legislative texts and if these are substantiated by measures related to consumer protection or crime prevention. RESULTS – France has mainly justified its restrictive policies on gambling in terms of preventing criminal activities while the Finnish legislation highlights the charitable causes funded by gambling proceeds, a claim not accepted by the Court of Justice of the European Union. Consumer protection is increasingly stressed in both countries, and the range of rationales has also grown notably since 2007. CONCLUSION – While the vocabularies of justification accepted by the CJEU have expanded since 2007, these have not been substantiated by many new legislative measures. This is not attributed to political ill will but rather to the difficulty of changing existing legislative traditions.
Some men gamble, some men drink, some men lose all inhibitions. But of those who are the gamblers, some of them lose their clothes, some of them win them back, others put on the sackcloth. (Carmina Burana, In the Tavern)
[Abstract editor: The case-law of the European Court of Justice is full of standard formulas. This articleanalyses one such formula, the so-called ‘formula on retained powers’ according to which the scope of application of EU law extends to subject areas over which Member States are supposed to have retained powers. It attempts to trace it back through the line of ECJ decisions, to analyse the specific components and arguments encapsulated in it, and to identify its justifications and effects. It is argued that the recurrence of this judicial formula amounts to the emergence of a new doctrine in EU law called the ‘total law doctrine’ based on both the recognition of the essential own capacities of the Member States within the integrated European space and on the requirement to include certain under-protected interests and situations in the manner national authorities usually use to think and to act.]
Billions of Euros of turnover are generated every year from games of chance. The legal framework conditions regulating this branch of the economy vary significantly within the European Union. Whilst in many countries such as Germany the state has a dominating monopoly position, other Member States, such as Denmark, France and Italy, have made moves towards a consistent partial liberalisation. These different framework conditions lead to problems, increasingly so as the European internal market is otherwise growing closer together. This is especially evident in the area of online gambling which, due to the structure of this medium, is not restricted by national boundaries, but must nevertheless not constitute a legal no man's land. Against this background, it appears logical for the European Court of Justice (ECJ), on the occasion of the submission of cases by Member State courts pursuant to Art. 267 of the Treaty on the functioning of the European Union (TFEU) (previously Art. 234 EC), to repeatedly have called for the examination of national gambling regulations with regard to their compliance with Union law, as the ECJ's standing jurisdiction acknowledges that a (national) state monopoly for cross-border issues represents a violation of the freedom of establishment as set out in Art. 56 TFEU (previously Art. 49 EC) or the freedom of establishment as set out in Art. 49 TFEU (previously Art. 43 EC) respectively. Such restrictions of gambling activities may, however, be justified by matters of overriding general interest.
Drug consumption and gambling are regarded as morality policies, especially in the American literature. Both are perceived as sinful and treated accordingly. This highly generalized assessment is rarely analysed systematically in a non-American context. Therefore, we investigate whether these policies are indeed framed morally and if this framing is stable over time in two European countries. Next, we analyse whether shifts in morality framing have consequences for regulation. In this way,we contribute to the literature on morality policies, particularly the ways in which these policies are defined and empirically identified. We identify morality policies based on how actors frame issues rather than by policies' substantive content. We show that the morality framing was once prominent but has lost its importance over time, and we find a close connection between frame shifts and policy output, although this is not a uniform development and does not characterize all cases.
Since the 1990s the European Court of Justice has provided an institutional backdrop from which the requirements of EU law regarding gambling regulation are evolving. Given the total absence of harmonisation, Member States are competent to regulate gambling conditional upon such regulation being compatible with EU law. This book analyses the regulatory approaches undertaken in France, the Netherlands and the United Kingdom regarding a variety of forms of online and offline gambling with a view to assessing the compatibility of these approaches. Furthermore it illustrates prevailing commonalities between the regimes and injects a degree of realism into the debate, softening the hard stance taken by stakeholders at opposite ends of the policy spectrum. © 2011 by Koninklijke Brill NV, Leiden, The Netherlands. All rights reserved.
The free movement of services is a fundamental tenet of the European Union’s Common Market. Gambling services’ free movement, however, has long been obstructed by municipal gambling restrictions. One such restriction in place in Sweden authorized the prosecution of two newspaper editors for publishing advertisements of foreign-based online gambling operators. In the course of the editors’ appeal from their conviction, the Swedish courts referred questions to the European Court of Jus-tice regarding the compliance of Sweden’s domestic restriction with European treaty provisions enshrining the free movement of services. The Court of Justice provided little guidance, however, when it addressed the dispositive question of proportionality; that is, whether Sweden’s law went beyond the point needed to affect Sweden’s legitimate underlying policy objectives. The court, in its deferent and cursory proportionality analysis, employed a standard ill-equipped to account for the effects national gam-bling restrictions have on the Common Market in the online age.