Brussels, 08/09/2009 (Agence Europe) - According to a ruling by the European Court of Justice (ECJ) on Tuesday 8 September, a monopoly on online gambling, such as that operated by the Portuguese charity Santa Casa da Misericórdia, is legal under Community legislation on the internal market and competition. The ECJ recognises the restrictive effect of such a monopoly but underlines that this can be justified for reasons of general interest, such as crime prevention and insofar as the restrictions are not any more than necessary. This is the first time that the ECJ has ruled on the problem created by online regulation (C-42/07).
Friedrich Stickler, the president of the European Lotteries association, which defends the monopolies exerted by the European national lotteries, declared that “this ruling…explicitly states that governments can prohibit commercial online gambling operators from offering games of chance via the internet to their citizens, even when these operators are based and licensed in another EU member state”. The independent lotteries, however, consider that the restrictions imposed by Portugal are not justified under the reasons cited. Sigrid Ligné, the secretary general of the EGBA (European Gaming and Betting Association) indicated that “several jurisdictions in the EU already prove that it is possible to guarantee a high level of consumer protection and have a well regulated and competitive online gaming market at the same time”.
The decision sheds light on the litigation brought before the Portuguese jurisdiction involving the state and the online gaming company Bwin (formerly known as Baw International Ltd). The Portuguese authorities ruled against Bwin (a small company based in Gibraltar and the Liga Portuguesa de Futebol Profissional and imposed fines of €74,500 and €75,000 respectively for having proposed internet gaming. According to Portuguese legislation, this market is reserved exclusively for Santa Casa da Misericórdia, a multifaith and non-profit making government funded body. Bwin and the Liga contested the matter at the Tribunal de Pequena Instancia Criminal do Porto, which examined the compatibility of the Portuguese regulation on the freedom of establishment and the free movement of capital and services.
The ECJ considers, first of all, that the Portuguese regulation does indeed constitute a restriction on the free provision of services. Nonetheless, this restriction can be justified by the reasons cited by the Portuguese authorities, namely the fight against crime. The ECJ subsequently points out that online gaming does present a number of specific dangers, such as the increased risk of crime and fraud. This is mainly down to the fact that the available internet sites in Portugal can be managed in other countries. Conditions to be respected from a Community point of view, a non-discriminatory application and a limit of measures on what is strictly necessary, appear, according to the experts, to have been met in the legislation in question.
The ECJ also points out that member states are to a large extent able to decide on their own legislation on online gaming in order to be able to take into account different cultural and religious differences. The legitimate establishment of Bwin in other member states does not, according to the ECJ, guarantee that on Portuguese territory, its behaviour would be acceptable to the rules and mores of this state. It is therefore up to the appeals court in Porto to decide on the case, in light of the clarifications made by the ECJ.
Notification procedure. Although Portuguese legislation stands a good chance of being validated, it is not so in regard to the fines imposed in this case. These were imposed under a national decree (282/2003) and this was not notified to the Commission. With notification not forthcoming (and required under directive 98/34 EC of the Parliament and Council on the information society), the Portuguese authorities are unable to impose sanctions under this decree. According to a source close to the procedure, this notification has still not been made.
Notification procedure does not impose any restrictions on the elaboration of legislation but does, on the other hand, allow for consultation with the Commission and other stakeholders preceding ratification of the proposed legislation. In Germany, for example, regulation aims to ban online gaming advertising and it provoked a high degree of concern in Brussels at the time of notification. Despite these concerns, Berlin imposed this advertising ban in January 2008 and the country's authorities are summoned to send in a statement of objections in the next thirty days. The French authorities managed to reach a compromise with Brussels on the so-called “controlled opening up” in this market in France. (C.D./transl.rh)