22 June 2017

Online gambling: Court rejects non-transparent licensing regimes and prohibits enforcement measures

EGBA Press Release

Brussels, 22 June 2017

Today, the CJEU manifestly ruled that enforcement actions against EU licensed operators unlawfully excluded from national licensing processes are prohibited and not in compliance with EU law (case Unibet International (C-49/16). The Court confirmed the obligation on Member States to organise transparent licensing processes and rejected EU countries’ discretion to impose enforcement measures. This ruling comes at a crucial time for countries like the Netherlands, were national legislation that has been found incompatible with the Treaties, is enforced.

The Court of Justice of the EU (CJEU) found that Hungary violated the fundamental freedom to provide services guaranteed under Art 56 of the EU Treaty (TFEU) prohibiting a cross-border operator licensed in the EU to lawfully provide its services in Hungary, by failing to organise a licensing tender published according to objective, transparent, non-discriminatory and proportionate criteria. This has been precised in para. 42 stating that, where it may be of interest to an undertaking located in a Member State other than that in which the concession is granted, [the State is required] to enable the service concession to be opened up to competition and the impartiality of the award procedures to be reviewed. The Court is further stressing the need for an impartial licence award [para. 41] and stressed that the rules of law be clear and precise and predictable in their effect [para. 43]. The judgment confirms existing CJEU jurisprudence1, such as the February 2016 Sebat Ince ruling <http://www.egba.eu/cjeu-german-sports-betting-regulation-continues-being-in-breach-of-eu-law/> (C-336/14).

Hence, when the national regime is in violation of EU law, a Member State is precluded from sanctioning an operator holding a licence in the EU. Such jurisprudence is more relevant than ever with Member States such as Poland and the Netherlands introducing very restrictive and incompatible regulatory frameworks and imposing subsequent enforcement measures which clearly contradict the fundamental principles of EU law.

In addition, the CJEU judgment states (see link <http://curia.europa.eu/juris/documents.jsf?num=C-49/16> ):

* “In that regard, it is sufficient to recall that, where a restrictive system has been established for games of chance and that system is incompatible with Article 56 TFEU, an infringement of the system by an economic operator cannot give rise to penalties (Pfleger and Others, C 390/12, EU:C:2014:281, paragraph 64 and the case-law cited.)” (para. 50).

* "The answer to the third question is that Article 56 TFEU must be interpreted as precluding penalties [Note: see para. 22 where penalties are, amongst others, defined as ISP blocking and fines], such as those at issue in the main proceedings, imposed for the infringement of national legislation introducing a system of concessions and licences for the organisation of games of chance, if such national legislation proves to be contrary to Article 56 TFEU." (para. 51).

Maarten Haijer, Secretary General of EGBA, comments: “The Court reiterated that Member States must guarantee that national regulation on online gambling services meets objective, transparent, non-discriminatory and proportionate criteria. Only a properly regulated and transparent online gambling market can ensure that the consumer is channelled to the regulated offer.”

Haijer added “The Court’s ruling is a clear message to other Gaming Authorities, including the Dutch Gaming Authority, that they must not enforce regulation that does not comply with basic EU law. We expect these Member States to reconsider and lift these enforcement measures as they are acting in violation of EU law. Their actions do not serve the interest of consumers, they fail to channel the consumers to reliable providers, instead they merely prop up failed regulation.“

See the CJEU’s press release here <https://curia.europa.eu/jcms/upload/docs/application/pdf/2017-06/cp170068en.pdf> .

Background

The Budapest-Capital Administrative and Labour Court asked the CJEU whether Hungary violated the freedom to provide services (Article 56 TFEU) for imposing administrative fines and temporary ISP blocking measures against an EU licensed and regulated operator, whilst it failed to publish a call for tenders and did not enable the operator to submit an application for the purposes of obtaining a Hungarian license. In 2014, the European Commission sent an EU Pilot letter to Hungary in reaction to the changes in the Hungarian gambling framework, in which it emphasised the negative impact on the freedom to provide services (Art 56 TFEU).


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1 Sebat Ince, C-336/14, paragraph 55, EU:C:2016:72; Carmen Media Group, C-46/08, EU:C:2010:505, paragraph 90; and Stanleybet International and Others, C-186/11 and C-209/11, EU:C:2013:33, paragraph 47.

15 June 2015

Hesse Minister of the Interior concedes that Interstate Treaty on Gambling has failed

In an article, published today by Frankfurter Allgemeine Zeitung, the Minister of the Interior and Sport for the German state of Hesse, Peter Beuth, whose department is responsible for issuing Germany's 20 sports betting licences, has called for an overhaul of the Interstate Treaty on Gambling (Glücksspielstaatvertrag). He admitted that the current legislation is incapable of achieving its objectives. The German states should leave the "blind alley" and change the law.

http://wettrecht.blogspot.de/2015/06/peter-beuth-sportwetten-neu-regeln.html

12 June 2015

CJEU further clarifies requirements for EU-compliant gambling law

Brussels, 12 June 2015

Yesterday, the CJEU not only questioned several aspects of the Hungarian gambling law, but its ruling also provided a number of conclusions that are widely applicable (Case C-98/14, Berlington Hungary). These included taxation, the need to provide an attractive regulated offer and the requirement to notify gambling legislation.

EGBA Secretary General Maarten Haijer said: “The ruling of the CJEU is a timely reminder to Hungary and other Member States that national gambling legislation needs to respect the requirements of EU law. In particular, legislation must actually and primarily address the pursued objectives. Restrictions can only be justified if they serve to combat actual problems in the Member States, for example with regard to gambling-related crime or gambling addiction. Today’s ruling adds to the growing body of CJEU case law on gambling and the limits within which Member States must set their gambling policy.”

The particular case at hand concerns an amendment to the Hungarian law on games of chance made in 2012, which prohibited the operation of slot machines in amusement arcades (allowing them only in casinos).

The CJEU confirms (see link http://curia.europa.eu/juris/document/document.jsf?text=&docid=164955&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=496760) that:

- Prohibitions are found to constitute technical rules, which need to be notified to the EC: “the provisions of national legislation that prohibit the operation…constitute ‘technical rules’ within the meaning of that provision, drafts of which must be communicated...” to the European Commission (para. 100)

- The CJEU confirms that taxes may constitute a restriction on the freedom to provide services: “… national legislation, such as that at issue in the main proceedings, which, without providing for a transitional period, introduces a five-fold increase in the … tax … constitutes a restriction on the freedom to provide services, guaranteed by Article 56 TFEU provided that it is liable to prohibit, impede or render less attractive the exercise of the freedom to provide the services…” (para.42)

- The Court also inter alia embraces the need to have an attractive regulated offer as a pre-requisite to channel the consumer: “In order to achieve that objective of channelling into controlled circuits, the authorised operators must provide a reliable, but at the same time attractive, alternative to a prohibited activity...” (para. 70)

It will now be to the local Court in Hungary to provide the material ruling in the case, taking into account today’s CJEU conclusions.

For more information, please contact: Maarten Haijer, Secretary General of EGBA: +32 2 554 08 90, maarten.haijer@egba.eu

19 March 2015

Question to the European Commission with regard to the Interstate Treaty on Gambling

Question for written answer to the Commission
Rule 130
John Stuart Agnew (EFDD)

 Subject:  Germany's Interstate Treaty on Gambling
Germany’s apparent ‘gentlemen’s agreement’ (Commission communication SG(2012) D/50777) with the Commission has protected it from an infringement procedure related to its amended Interstate Treaty on Gambling for over two years now. Under the agreement, Germany was obliged to prove the suitability of its gambling law. Although the agreement’s two-year validity period expired on 1 July 2014, no infringement procedure has been initiated to date. This means that a potentially illegal law is still in place.

1. Have other Member States been granted a gentlemen’s agreement before which delayed the initiation of an infringement procedure?

2. Does the Commission deem the amended Interstate Treaty on Gambling and its implementation to be in compliance with EC law?

3. If not, why has the Commission not taken action by means of an infringement procedure without further delay?

European Commission on the sports betting licensing procedure in Germany

Question for written answer to the Commission
Rule 130
Alexander Graf Lambsdorff (ALDE)

 Subject:  Modification to the German State Treaty on Gambling
On 15 December 2011, all the German states apart from Schleswig-Holstein signed a modification to the State Treaty on Gambling. The most significant amendment is that private sports betting providers can obtain up to 20 concessions. Transposition of the modification took place in 2011 and 2012 with implementation laws which differed among the states.

For example, as the state government of Hessen concedes in a reply to a parliamentary question, imposing the numerical restriction on concessions has proved enormously long, complicated and open to dispute. In particular, the measure to contain illegal sports betting has backfired and had the opposite effect. This is mainly because the state government has still not awarded the concessions, nearly two years after the Modification came into force. The current limbo surrounding the award procedure enables private betting providers operating illegally to function largely without regulation.

The Commission gave the new Treaty a two-year trial period, which expired in July 2014.

1. What is the Commission's assessment of the implementation of the Treaty in Germany?

2. Does the tendering procedure in Hessen satisfy the principle of equal opportunity and transparency, and is it compatible with European law?

3. Does the Commission intend to initiate infringement proceedings against Germany as a result of the situation surrounding the award procedure?

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Parliamentary questions
11 March 2015
P-000412/2015
Answer given by Ms Bieńkowska on behalf of the Commission
The Commission continues monitoring closely the implementation of the German State Treaty on Gambling. The modified regime for sport betting is part of that ongoing evaluation. The Commission is aware that the tendering procedure for the award of sport betting concessions is currently still subject to review in the national remedy system. The process of the award of sport betting concessions is considered as part of the overall assessment of whether the objectives in the public interest justifying the restrictions of the German gambling legislation are met in a consistent and systematic manner as stipulated in the case law of the Court of Justice of the European Union (see recently Case C-390/12, Pfleger, judgment of 30 April 2014 paragraph 43).