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DIFFERING PERSPECTIVES ON LATEST EUROPEAN COURT OF JUSTICE RULING

Thursday September 15,2011 : Has online gambling in Europe gained, or has it suffered a setback?
 
There were sharply differing perspectives evident this week following the latest findings of the European Court of Justice, which at the request of the Austrian judiciary looked at compliance with European Union law in the case of the Austrian authorities vs. Dickinger and Ömer (C-347/09) - the Bet-at-home.com issue.
 
The Reuters news agency saw it as a victory for state monopolies, reporting that
 
* The Austrian gambling monopoly had been justified provided it met certain criteria
 
* EU countries can exclude foreign licensed operators
 
* There is a lack of harmonisation in EU gaming rules that needs to be addressed
 
The Court’s ruling came in a case involving two Austrians who set up a multinational group -- bet-at-home.com -- whose members included several Maltese subsidiaries holding Maltese licences. The two, backed by the Maltese government, claimed Maltese online gaming rules were adequate to protect consumers.
 
Austrian authorities disagreed and accused the two of breaking the country's gaming laws. The Austrian court hearing the matter sought advice from the Court of Justice on the issue.
 
The EU court said the fragmented regulatory system across the 27-country European Union meant member states were entitled to do whatever they considered necessary to protect their citizens.
 
European Lotteries, an umbrella group for 78 licensed national lotteries in 43 countries across Europe, welcomed the decision, according to the Reuters report.
 
"Those that keep on calling for 'mutual recognition' of gambling licences between member states have now been dealt the final blow," Friedrich Stickler, president of the group, told the news agency.
 
However, the online gambling trade body European Gaming and Betting Association had a different view of the ruling, commenting that it presaged tighter rules on state gambling monopolies.
 
"Clearly the legal situation and fragmentation of the Internal Market for online gambling is unsustainable and requires urgent action from the European legislator to adopt an EU framework for the sector," EGBA Secretary-General Sigrid Ligne said.
 
Ligne pointed out that the court's findings stressed in particular:
 
* In order to justify a monopoly, legislation must "ensure a particularly high level of protection". National legislation establishing a monopoly “must genuinely be based on a finding that the crime and fraud linked to gaming are a problem in the Member State concerned”.
 
* Only advertising which is moderate and strictly limited to what is necessary to channel consumers towards controlled gaming networks is permissible.
 
* The judges commented that a "policy of expanding games of chance characterised inter alia by the creation of new games and by the advertising of those games, such a policy cannot be regarded as being consistent unless the scale of unlawful activity is significant. The objective of protecting consumers from addiction to gambling is in principle difficult to reconcile with a policy of expanding games of chance.
 
* A distinction must therefore be drawn between a restrained commercial policy seeking only to capture or retain the existing market for the organisation with the monopoly, and an expansionist commercial policy whose aim is to expand the overall market for gaming activities.
 
* An expansionist commercial policy whose aim is to expand the overall market for gaming activities is not consistent with the objective of fighting crime and fraud”, the press release concludes.
 
Commenting on the ruling, Ligné said that EU states operating gambling monopolies have failed to evidence the suitability of their structures to guarantee a particularly high level of consumer protection, which is a requirement to justify a measure as restrictive as a monopoly.
 
"In the case at hand, it is now up to the national court to decide whether the Austrian internet monopoly does in fact provide a particularly high level of consumer protection as required by steady ECJ case law. The Court notes that the Austrian referring court has already expressed its doubts in that respect, and EGBA expects that the criminal charges against Dickinger and Ömer will be dismissed," Ligné added, noting that the Court has once more commented on the absence of harmony in EU gambling legislation," she said.
 
“Increasingly, the Member States of the EU are regulating the online gaming market on a multi-licence basis and that trend is also fostered by the European Commission pushing forward its Green Paper process on online gaming," Ligné concluded.
 
"This ruling signals yet again the urgent need for a comprehensive EU framework taking fully into account the cross border dimension of online gambling.”  
 
The European Commission will decide next year whether to propose any reform.
 

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