29 May 2008

Discriminatory taxes on lottery and betting winning: European Commission files suit against Spain

Action brought on 15 April 2008 - Commission of the European Communities v Kingdom of Spain

Case C-153/08


Applicant: Commission of the European Communities (represented by: R. Lyal and L. Lozano Palacios, acting as Agents)

Defendant: Kingdom of Spain

Form of order sought

The applicant claims that the Court should:

declare that, by maintaining in force fiscal legislation taxing winnings from all types of lotteries, games and betting organised outside the Kingdom of Spain, whereas winnings obtained from certain lotteries, games and betting organised within the Kingdom of Spain are exempted from income tax, the Kingdom of Spain has failed to fulfil its obligations under Community law and, in particular, under Article 49 EC and Article 36 of the Agreement on the European Economic Area;

order the Kingdom of Spain to pay the costs.

Pleas in law and main arguments

Under Spanish legislation, winnings from lotteries and betting organised by Loterías y Apuestas del Estado (the Spanish public-law body in charge of lotteries and betting) or by bodies or entities of the Comunidades Autónomas (Autonomous Communities), and winnings from lotteries organised by the Spanish Red Cross or the Organización Nacional de Ciegos Españoles (Spanish national association for the blind) are exempt from income tax. However, income from lotteries, games or betting organised by other national bodies or by foreign bodies, including those established in Member States of the European Union or the European Economic Area, is added to the taxable amount and subject to progressive rates of taxation.

Relying in particular on Lindman and Safir, the Commission points out that, according to that line of authority, the organising of lotteries is to be regarded as a "service" for the purposes of the Treaty. Also according to that case-law, Article 49 EC prohibits any restriction on the freedom to provide services, or any obstacle to that freedom - even where such a restriction or obstacle applies equally to national providers of services and to those of the other Member States - and precludes the application of any rule of national law the effect of which is to make it more difficult to provide services between Member States than to provide services wholly within a particular Member State. Given the particular features of the gaming sector, the case-law accepts certain restrictions imposed by Member States, provided that such measures can be shown to be appropriate and proportionate, as well as non-discriminatory.

The Commission maintains that the Spanish legislation is discriminatory because the exemption is reserved for certain entities which that legislation defines precisely, and entities of other Member States, albeit of the same nature and in pursuit of the same objectives as the Spanish entities specified in the exemption rule, are excluded from the benefit of that exemption. Accordingly, even if the Spanish authorities had shown, in the course of the infringement proceedings, that the legislation at issue is a measure which is appropriate and proportionate to the stated objective of protecting consumers and public order - which they have failed to do - the legislation at issue could not in any circumstances be regarded as compatible with Community law, in so far as it is wholly discriminatory.

New referral to the ECJ: Club Hotel Loutraki

Reference for a preliminary ruling from the Simvoulio tis Epikratias (Greece) lodged on 9 April 2008 - Club Hotel Loutraki AE, Athinaïki Tekhniki AE and Evangelos Marinakis v Ethniko Simvoulio Radiotileorasis and Ipourgos Epikratias

Case C-145/08

Referring court

Simvoulio tis Epikratias

Parties to the main proceedings

Claimants: Club Hotel Loutraki AE, Athinaïki Tekhniki AE and Evangelos Marinakis

Defendants: Ethniko Simvoulio Radiotileorasis and Ipourgos Epikratias

Questions referred

Does a contract by which the contracting authority entrusts to the contracting undertaking the management of a casino business and the execution of a development plan consisting in the upgrading of the casino premises and the commercial exploitation of the possibilities offered by the casino's licence, and which contains a term under which the contracting authority is obliged to pay the contracting undertaking compensation should another casino lawfully operate in the wider area in which the casino in question operates, constitute a concession, not governed by Directive 92/50/EEC?

If the first question referred for a preliminary ruling is answered in the negative: does a legal action which is brought by persons who have participated in the procedure for the award of a public contract of mixed form providing inter alia for the supply of services subject to Annex I B to Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts (OJ 1992 L 209), and in which they plead breach of the principle of equal treatment of participants in tender procedures (a principle affirmed by Article 3(2) of that directive), fall within the field of application of Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts (OJ 1989 L 395), or is its application precluded inasmuch as, in accordance with Article 9 of Directive 92/50/EEC, only Articles 14 and 16 of the latter apply to the procedure for the award of the abovementioned contract for the supply of services?

If the second question referred for a preliminary ruling is answered in the affirmative: accepting that a national provision in accordance with which only all the members of a consortium without legal personality which has participated unsuccessfully in a public procurement procedure can bring a legal action against the act awarding the contract, and not consortium members individually, is not in principle contrary to Community law and specifically to Directive 89/665, and that that still applies where the legal action has initially been brought by all the members of the consortium jointly but ultimately proves, as regards some of them, to be inadmissible, is it in addition necessary, from the viewpoint of application of that directive, to examine, in order to make a declaration of inadmissibility, whether those individual members thereafter retain the right to claim before another national court any damages which may be envisaged by a provision of national law?

When it has been held by settled case-law of a national court that an individual member of a consortium may also bring an admissible legal action against an act falling within a public procurement procedure, is it compatible with Directive 89/665/EEC, interpreted in the light of Article 6 of the European Convention on Human Rights as a general principle of Community law, to dismiss a legal action as inadmissible, because of a change to that settled case-law, without the person who has brought that legal action first being given either the opportunity to cure the inadmissibility or, in any event, the opportunity to set out, pursuant to the adversarial principle, his views relating to that issue?

13 May 2008

Referral to the ECJ from the Administrative Court of Schleswig

Case C-46/08

Language of the case: German

Referring court

Schleswig-Holsteinisches Verwaltungsgericht

Parties to the main proceedings

Applicant: Carmen Media Group Ltd

Defendants: Land Schleswig-Holstein and Minister for the Interior for the Land Schleswig-Holstein

Questions referred

Is Article 49 EC to be interpreted as meaning that reliance on the freedom to provide services requires that a service provider be permitted, in accordance with the provisions of the Member State in which it is established, to provide that service there as well - in the present case, restriction of the Gibraltar gambling licence to 'offshore bookmaking'?

Is Article 49 EC to be interpreted as precluding a national monopoly on the operation of sports betting and lotteries (with more than a low potential risk of addiction), justified primarily on the grounds of combating the risk of gambling addiction, whereas other games of chance, with considerable potential risk of addiction, may be provided in that Member State by private service providers, and the different legal rules for sports betting and lotteries, on the one hand, and other games of chance, on the other, are based on the differing legislative powers of the Bund and the Länder?

If question (2) is answered in the affirmative:

Is Article 49 EC to be interpreted as precluding national rules which make entitlement to the grant of a licence to operate and arrange games of chance subject to the discretion of the competent licensing authority, even where the conditions for the grant of a licence as laid down in the legislation have been fulfilled?

Is Article 49 EC to be interpreted as precluding national rules prohibiting the operation and brokering of public games of chance on the internet, in particular where, at the same time, although only for a transitional period of one year, their online operation and brokering is permitted, subject to legislation protecting minors and players, for the purposes of the principle of proportionality and to enable two commercial gambling brokers who have previously operated exclusively online to switch over to those distribution channels permitted by the Staatsvertrag?

04 May 2008

Online betting in tennis: French Tennis Federation sued for damages

Following claims by the FFT (Fédération Française de Tennis) that services offered by online sports betting operators present a danger to the ethics of sport, bwin, a member of the European Gaming and Betting Association (EGBA), is suing the French Tennis Federation for damages before a Paris court (Tribunal de grande instance).

Following claims by the FFT (Fédération Française de Tennis) that services offered by online sports betting operators present a danger to the ethics of sport, bwin, a member of the European Gaming and Betting Association (EGBA), is suing the French Tennis Federation for damages before a Paris court (Tribunal de grande instance).

The EGBA is keen to emphasise that the nature of the Internet means that it is an extremely efficient tool in providing operators with a perfect audit trail, one that can, where appropriate, be shared with regulators and other authorities in order to trace bets and hence provide valuable evidence in the fight against fraud in sports.

In contrast to the views of the FFT, any match-fixing would penalise bookmakers severely as they take financial risk when setting odds for all sporting events. As a result, any fraud which attempts to influence the outcome of an event would both distort the odds being offered and almost certainly deprive the the sports betting operator from generating any value from the event.

The EGBA works closely with the European Sports Security Association (ESSA)*. ESSA has set up an early warning system, in close cooperation with relevant sports authorities, such as the Association of Tennis Professionals (ATP), that is designed to combat fraud in connection with sporting events.

This early warning system that connects all ESSA members enables the early detection and analysis of irregular betting patterns. When an irregularity is confirmed, the relevant bets are suspended and the information is then passed on immediately to the relevant sports authorities, so that they can carry out the necessary investigations.

* ESSA, which groups the main online gaming and betting operators, works in partnership with numerous sports authorities such as the ATP (Association of Tennis Professionnals), the WTA (Women’s Tennis Association), the ITF (International Tennis Federation), FIFA (Fédération Internationale de Football Association), UEFA (Union of European Football Association) or l’EPFL (European Professional Football League). http://www.eu-ssa.org/

EGBA press release

FFT claim rejected: Belgians will be able to place online bets with EU operators on Roland Garros and Paris Masters 2008

In three rulings issued yesterday in cases brought forward by the French Tennis Federation (FFT) in Belgium against EU licensed operators including EGBA member bwin, the Liège first instance court rejected all allegations of the complainant.

The EGBA welcomes this ruling which confirms that the operators concerned do not violate the FFT’s rights as the event organizers of Roland Garros and Paris Masters. The Belgian players will therefore continue to enjoy this very popular entertainment in 2008.

The judge, taking into consideration the corporate responsibility of the EU operators concerned and the procedures in place “preventing all anonymous bets, ensuring perfect traceability” concluded that these operators had behaved in a prudent and diligent manner. Moreover, the judge took stock of “the various measures, notably for the protection of minors” implemented by bwin, as well as its membership of “ESSA (“European Sport Security Association”) which aims to guarantee the integrity of sports betting offers and to keep sports honest and free from fraud”.

The judge also considered that the “simple mention of the name of a sports event is a necessary indication for the online betting activity” which therefore “cannot be considered as an act of parasitism since its sole purpose is to let the player identify which sport event to place a bet on”.

The Belgian judge ordered the French Tennis Federation to pay € 5000 per case for the recovery of legal costs.

Sigrid Ligné, EGBA Secretary General commented: “EU-licensed bookmakers are professionals that have a high level of expertise, know-how and risk management skills. This has been clearly recognised by the Belgian judge looking at the fact-based evidence to dismiss all the claims in this case.”

EGBA press release

European Court of Justice decides on casino monopoly

Referring court
Landesgericht Linz

Party to the main proceedings
Ernst Engelmann

Questions referred:

Is Article 43 EC (Treaty establishing the European Community, in the version of 2 October 1997, most recently amended by the Treaty of 25 April 2005 concerning the accession of the Republic of Bulgaria and Romania to the European Union (OJ 2005 L 157, p. 11)) to be interpreted as precluding a provision which provides that only public limited companies established in the territory of a particular Member State may there operate games of chance in casinos, thereby necessitating the establishment or acquisition of a company limited by shares in that Member State?

Are Articles 43 EC and 49 EC to be interpreted as precluding a national monopoly on certain types of gaming, such as games of chance in casinos, if there is no consistent and systematic policy whatsoever in the Member State concerned to limit gaming, inasmuch as national licensed organisers encourage participation in gaming - such as public sports betting and lotteries - and advertise such gaming (on television and in newspapers and magazines) in a manner which goes as far as offering a cash payment for a lottery ticket shortly before the lottery draw is made ('TOI TOI TOI - Believe in luck!')?

Are Articles 43 EC and 49 EC to be interpreted as precluding a provision under which all licences granting the right to operate games of chance and casinos are issued for a period of 15 years on the basis of a scheme under which Community competitors (not belonging to that Member State) are excluded from the tendering procedure?