Brussels, 17/02/2012 (Agence Europe) - Italian betting and gaming legislation, which requires a minimum distance between betting outlets with the aim of protecting the market position of existing operators, contravenes European law, the Court of Justice of the EU ruled on 16 February in joined cases C-72/10 and C-77/10. The European judges followed the opinion of the advocate general (see EUROPE 10486), deciding that new Italian measures in place since 2006 are, like those that preceded them (against which the Court ruled in 2003 and 2007) contrary to freedom of establishment, free provision of services and the principle of equality of treatment.
Current Italian legislation on betting and gaming states that collecting and managing of bets may only be undertaken by the holders of licences, granted under a public tendering procedure, and police authorisation. Any infringement of that legislation carries criminal penalties. In 1999, following public tendering procedures, the Italian authorities granted a significant number of licences. Among those excluded from the tendering procedures were operators in the form of companies whose shares were quoted on the regulated markets. This exclusion was ruled unlawful by the Court in 2007 (see EUROPE 9381). From 2006, Italy introduced reforms in the betting and gaming sector and issued 16,000 new licences alongside the old ones. One of the requirements was that a minimum distance had to be observed between the new outlets and those for which a licence had been awarded following the 1999 tendering procedure.
Messrs Marcello Costa and Ugo Cifone, managers of Data Transmission Centres (DTCs) linked to English company Stanley International Betting Ltd were accused of the illicit operation of betting activities, because they had been collecting bets without meeting the requirements under the Italian legislation. Stanley operates in Italy exclusively through (over 200) agencies, in the form of DTCs. It had been unlawfully excluded from the 1999 tendering procedure and had decided not to take part in the 2006 procedure because the Italian authorities had not given it satisfactory answers to its requests for clarification of the new legislation.
The Corte Suprema di Cassazione (Supreme Court of Cassation, Italy), which is hearing those cases, asked the Court of Justice to clarify whether the Italian legal framework, which appeared to it to be discriminatory, was compatible with the freedom of establishment and the freedom to provide services (Articles 43 and 49 of the EC Treaty).
The Court found that the provision under which new licence holders must, when setting up, observe a minimum distance from existing licensees, is discriminatory. It protects the market position acquired by operators which are already established, to the detriment of new licence holders, which are compelled to open premises in less commercially attractive locations. Thus the arguments advanced by the Italian government in defence of this provision - avoiding an excess of supply in some areas and preventing illegal betting in areas less well served areas - were rejected by the Court. On the one hand, it is the government itself which had long encouraged the expansion of the sector with the aim of increasing tax revenue and, on the other, the rules on minimum distances were not imposed systematically on all operators, only on new licence holders.
With regard to the sanctions provided for by the Italian legislation (withdrawal of the licence and of the financial guarantees arranged in order to obtain it) where the licensee or a director of the licensee has marketed unauthorised gambling involving offences “liable to breach the relationship of trust with the State Monopolies Board”, the Court found that they do not apply to Messrs Costa and Cifone, linked to an operator (Stanley) which had been excluded from the first tendering procedure (see above) “in breach of EU law”. That also, the Court stated, “applies in the case of the new tendering procedure intended to remedy the operator's unlawful exclusion, if that new procedure has none the less failed to achieve that objective”. The Court held, furthermore that the conditions and detailed rules of a tendering procedure and, in particular, provisions concerning the withdrawal of licences granted “must be drawn up in a clear, precise and unequivocal manner”, which was not the case in the circumstances under consideration. In principle, however, such matters are for the national court to verify. (FG/transl.rt)