ORAL QUESTION for Question Time at the part-session in December 2008 pursuant to Rule 109 of the Rules of Procedure by Karin Riis-Jørgensen to the Commission
Subject: Liberalisation of the national gambling monopoly
Between 6 and 8 November 2008 in Greece (Athens and Thessaloniki), two intermediaries from a private sports betting operator licensed and regulated in the EU were arrested and detained by the Greek authorities along with three customers for violating the Greek sports betting monopoly legislation.
That legislation is already the subject of a Reasoned Opinion sent by the European Commission on 28 February 2008 in the wider context of infringement proceedings launched against 10 Member States over the last two and a half years.
Given Paragraph 73 §4(1) of the Placanica ruling by the ECJ (C-338/04) does the Commission find such arrests disproportionate?
Why is the Commission not proceeding more rigorously and referring to the ECJ countries at Reasoned Opinion level like Greece or Denmark, Sweden, Finland, and the Netherlands, which have clearly, through actions like the ones above in Greece, or through complete inaction, showed that they refuse to comply with the EU Treaty?
____________________
(1) Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which imposes a criminal penalty on persons such as the defendants in the main proceedings for pursuing the organised activity of collecting bets without a licence or a police authorisation as required under the national legislation, where those persons were unable to obtain licences or authorisations because that Member State, in breach of Community law, refused to grant licences or authorisations to such persons.
23 December 2008
18 December 2008
H2 Q3 eGambling Data Bulletin – Downturn to Strengthen eGaming's Hand
H2 have released their Q3 eGambling Data Bulletin based on all of the Q3 results and trading statements as well as our analysis of traffic and industry news flow until the end of November.
The covering paper concludes that:
- The eGambling Industry will be resilient but not immune to the global recession;
As some economies are in danger of collapsing during 2009 the fortunes of individual operators are difficult to call at this stage;
- eGambling is expected to strengthen its long term position as recession pushes more cash strapped governments to deregulate;
- For the first time H2 see more European Union Member States supporting eGambling rather than opposing it as debate moves to the level of taxation and establishment criteria;
- The US is now expected to move to legalise eGaming (excluding sportbetting) with federal legislation likely to permit states to opt in/out – However, legislation is not expected until the 112th Congress with no activity until 2013;
- In the meantime any effective implementation of UIGEA by December 2009 could impact the businesses of the operators that continue to accept US players.
See all of H2's 2009 forecasts on a market-by-market and product-by-product basis in the most detailed and authoritive assessment of the value and player volume of the interactive gambling industry. The summary industry dataset includes nearly 25,000 data points dating back to 1999 (with over 50 national by product splits from 2003) and forecasts out to 2012.
press release of H2
The covering paper concludes that:
- The eGambling Industry will be resilient but not immune to the global recession;
As some economies are in danger of collapsing during 2009 the fortunes of individual operators are difficult to call at this stage;
- eGambling is expected to strengthen its long term position as recession pushes more cash strapped governments to deregulate;
- For the first time H2 see more European Union Member States supporting eGambling rather than opposing it as debate moves to the level of taxation and establishment criteria;
- The US is now expected to move to legalise eGaming (excluding sportbetting) with federal legislation likely to permit states to opt in/out – However, legislation is not expected until the 112th Congress with no activity until 2013;
- In the meantime any effective implementation of UIGEA by December 2009 could impact the businesses of the operators that continue to accept US players.
See all of H2's 2009 forecasts on a market-by-market and product-by-product basis in the most detailed and authoritive assessment of the value and player volume of the interactive gambling industry. The summary industry dataset includes nearly 25,000 data points dating back to 1999 (with over 50 national by product splits from 2003) and forecasts out to 2012.
press release of H2
22 October 2008
Online betting and gaming: Opinion of the French Advocate General on the Portuguese gaming monopoly in the bwin Liga case
The European Gaming and Betting Association (EGBA) welcomes today’s opinion by the Advocate General in a betting case involving EGBA member bwin and Portuguese monopoly Santa Casa da Misericórdia (SCML) in the context of bwin’s sponsorship deal with the Portuguese professional football league.
Whereas the Gambelli and Placanica cases in 2003 and 2007 dealt with sports betting concessions in Italy, today’s conclusion by the Advocate General addresses the legitimacy of the Portuguese gambling monopoly. It is in line with the jurisprudence of Gambelli and Placanica and supports the arguments already put forward by bwin and EU licensed operators.
Answering a key question, the Advocate General stated that the extension of the monopoly to internet activities should have been notified to the European Commission and therefore will not be applicable against bwin and the Liga, and the national court must decline to apply it.
According to the French Advocate General Bot, the Portuguese monopoly on the internet may comply with Community law if certain conditions are met.
According to Sigrid Ligné, Secretary General of the EGBA: “Considering the facts in the present case, we strongly believe that those conditions are not met and that the Portuguese monopoly is not consistent with EU law”.
Former Advocate General Alber comments: “All conditions and controls can equally be fulfilled by EU licensed private operators”.
Indeed, a monopoly is not necessary to fight crime and to protect consumers as evidenced in multi-operator and regulated jurisdictions such as the United Kingdom, Malta or Austria.
Today’s opinion takes place in the context of an increasing number of requests for preliminary rulings (17 in total) to the ECJ by national courts and at a time when the Commission in parallel is to decide whether to refer a number of Member States to the ECJ over the compatibility of their gaming legislation with EC law.
This opinion is not binding on the ECJ and the EGBA expects the final ruling on the case in the beginning of 2009.
press release of EBGA, 14 October 2008
Whereas the Gambelli and Placanica cases in 2003 and 2007 dealt with sports betting concessions in Italy, today’s conclusion by the Advocate General addresses the legitimacy of the Portuguese gambling monopoly. It is in line with the jurisprudence of Gambelli and Placanica and supports the arguments already put forward by bwin and EU licensed operators.
Answering a key question, the Advocate General stated that the extension of the monopoly to internet activities should have been notified to the European Commission and therefore will not be applicable against bwin and the Liga, and the national court must decline to apply it.
According to the French Advocate General Bot, the Portuguese monopoly on the internet may comply with Community law if certain conditions are met.
According to Sigrid Ligné, Secretary General of the EGBA: “Considering the facts in the present case, we strongly believe that those conditions are not met and that the Portuguese monopoly is not consistent with EU law”.
Former Advocate General Alber comments: “All conditions and controls can equally be fulfilled by EU licensed private operators”.
Indeed, a monopoly is not necessary to fight crime and to protect consumers as evidenced in multi-operator and regulated jurisdictions such as the United Kingdom, Malta or Austria.
Today’s opinion takes place in the context of an increasing number of requests for preliminary rulings (17 in total) to the ECJ by national courts and at a time when the Commission in parallel is to decide whether to refer a number of Member States to the ECJ over the compatibility of their gaming legislation with EC law.
This opinion is not binding on the ECJ and the EGBA expects the final ruling on the case in the beginning of 2009.
press release of EBGA, 14 October 2008
23 September 2008
Portugal: Discriminatory taxation of gambling winnings?
European Commission Threatens to Refer Portugal to the ECJ
The European Commission has sent Portugal a formal request to amend its discriminatory rules that provide for the taxation of foreign lottery winnings, despite winnings from lotteries organised in Portugal being exempt from income tax.
According to the Portuguese rules, income earned in Portugal in the form of prizes or winnings from competitions, games or gambling is subject to taxation. However, an exemption applies to lottery winnings from Euromilhões e Liga dos Milhões, lotteries and games organised by the Portuguese monopoly Santa Casa da Misericórdia de Lisboa, which also carries out activities of social interest within the country.
The Commission considered that the exemption provided in the Portuguese legislation constituted a discrimination prohibited by the EC Treaty, as the favourable treatment is not open to other EU entities also carrying activities of social interest similar to Santa Casa da Misericórdia de Lisboa.
The Commission stated that taxing the winnings from foreign but not national lotteries cannot possibly be justified as a measure to avoid the damaging consequences of gambling.
The Commission therefore considers these rules to be contrary to the EC Treaty and the EEA Agreement, as they restrict the freedom to provide services. This request is in the form of a reasoned opinion, the second stage of the infringement procedure under Article 226 of the Treaty.
http://gamingintelligencegroup.com
The European Commission has sent Portugal a formal request to amend its discriminatory rules that provide for the taxation of foreign lottery winnings, despite winnings from lotteries organised in Portugal being exempt from income tax.
According to the Portuguese rules, income earned in Portugal in the form of prizes or winnings from competitions, games or gambling is subject to taxation. However, an exemption applies to lottery winnings from Euromilhões e Liga dos Milhões, lotteries and games organised by the Portuguese monopoly Santa Casa da Misericórdia de Lisboa, which also carries out activities of social interest within the country.
The Commission considered that the exemption provided in the Portuguese legislation constituted a discrimination prohibited by the EC Treaty, as the favourable treatment is not open to other EU entities also carrying activities of social interest similar to Santa Casa da Misericórdia de Lisboa.
The Commission stated that taxing the winnings from foreign but not national lotteries cannot possibly be justified as a measure to avoid the damaging consequences of gambling.
The Commission therefore considers these rules to be contrary to the EC Treaty and the EEA Agreement, as they restrict the freedom to provide services. This request is in the form of a reasoned opinion, the second stage of the infringement procedure under Article 226 of the Treaty.
http://gamingintelligencegroup.com
28 July 2008
French Council of State refers question of compatibility of a betting monopoly with Community law to the European Court of Justice
by attorney-at-law Martin Arendts, M.B.L.-HSG
In addition to the references of two Dutch supreme courts (cf. German Gaming Law updated, no. 106 and 107), the French Council of State (Conseil d’État), in its capacity as France’s supreme administrative court, has referred questions regarding the compatibility of a betting monopoly with Community law to the European Court of Justice (ECJ) for preliminary ruling (order of 9 May 2008, decision no. 287503).
The proceedings were initiated by the Malta based bookmaker ZETurf (Zeturf Limited), who sought revocation of a statutory instrument (decret no. 97-456 of 5 May 1997), which establishes a monopoly for the horse betting provider Pari Mutuel Urbain (PMU), founded in 1930, from the competent French Ministry of Agriculture. The bookmaker ZEturf, state licensed in Malta, an EU member state, argued that the betting monopoly was incompatible with Community law. As the Ministry of Agriculture showed no reaction, ZEturf filed action against this implicit refusal with the Conseil d’État on 25 November 2005.
ZEturf’s action has to be seen against the backdrop of the decision of the Tribunal de grande instance de Paris which, by decision of 8 July 2005, prohibited this bookmaker from accepting horse bets. This prohibition which was affirmed in the appeal, was repealed by a fundamental decision of the Court of Cassation (Cour de Cassation) of 10 July 2007, in particular reasoned on the basis of Community law.
The Council of State (Conseil d’État) has now decided to refer the question of compatibility of the French horse betting monopoly with Community law to the ECJ in accordance with Art. 234 EC Treaty. In this respect, the Conseil d’État asked the ECJ two questions. In essence, the Council of State inquires whether the freedom to provide services guaranteed in Art. 49 and 50 of the EC Treaty is to interpreted to the effect that it precludes a national legislation which establishes a monopoly regime in favour of a single provider, that is meant to combat crime and protect public order in a more efficient way than by less interfering action, if that regime is accompanied by a dynamic commercial policy on the part of the operator, so that a satisfactory reduction in gaming opportunities is not achieved. One aspect of this question is the necessity to be assessed as part of the proportionality test, that is the examination into alternatives to the monopoly legislation and the question as to less interfering action (considering the Rosengren decision, discussed at the oral hearing in the Case “Liga Portuguesa”- C-42/07). Another already critical point is the question whether a monopoly is legally tenable, where a monopoly undertaking, such as the economically very successfully acting operator PMU, does by no means limit gaming opportunities but seeks to increase its turnover instead. In addition to this, with his second question referred for preliminary ruling, the Conseil d’État asks whether, when assessing the justification of the impairment of the freedom to provide services, one had to take into consideration the online-offer alone or all forms of distribution.
In view of the now 16 pending proceedings for preliminary ruling relating to bets and games of chance (including three referred by national supreme courts) as well as numerous upcoming actions in infringement proceedings (after the first action against Spain for discriminatory taxation of winnings resulting from games of chance), one can now expect the ECJ to comprehensively clarify the legal questions raised.
* * *
Questions, referred to the ECJ by the Council of State:
1. Are Articles 49 and 50 of the Treaty establishing the European Community to be interpreted as precluding national legislation which has established a system whereby off-course horserace betting is managed exclusively by a single, non-profit-making operator where, although that system appears to fit the purpose of combating criminality and thus of protecting public order more effectively than would less restrictive measures, it is accompanied by a dynamic commercial policy on the part of the operator, in order to neutralise the risk of unauthorised gambling networks emerging and to channel bettors towards the lawful offer, that does not, in consequence, fully achieve the objective of reducing gambling opportunities?
2. Is it appropriate, in order to determine whether national legislation such as that in force in France, which has established a system whereby off-course horserace betting is managed exclusively by a single, non-profit-making operator, is contrary to Articles 49 and 50 of the Treaty establishing the European Community, to assess the impairment of freedom to provide services solely from the point of view of the restrictions placed on offering on-line horserace betting, or is it appropriate to take into consideration the entire horserace betting sector in whatever form it is offered and is accessible to bettors?
from: German Gaming Law updated No. 110
In addition to the references of two Dutch supreme courts (cf. German Gaming Law updated, no. 106 and 107), the French Council of State (Conseil d’État), in its capacity as France’s supreme administrative court, has referred questions regarding the compatibility of a betting monopoly with Community law to the European Court of Justice (ECJ) for preliminary ruling (order of 9 May 2008, decision no. 287503).
The proceedings were initiated by the Malta based bookmaker ZETurf (Zeturf Limited), who sought revocation of a statutory instrument (decret no. 97-456 of 5 May 1997), which establishes a monopoly for the horse betting provider Pari Mutuel Urbain (PMU), founded in 1930, from the competent French Ministry of Agriculture. The bookmaker ZEturf, state licensed in Malta, an EU member state, argued that the betting monopoly was incompatible with Community law. As the Ministry of Agriculture showed no reaction, ZEturf filed action against this implicit refusal with the Conseil d’État on 25 November 2005.
ZEturf’s action has to be seen against the backdrop of the decision of the Tribunal de grande instance de Paris which, by decision of 8 July 2005, prohibited this bookmaker from accepting horse bets. This prohibition which was affirmed in the appeal, was repealed by a fundamental decision of the Court of Cassation (Cour de Cassation) of 10 July 2007, in particular reasoned on the basis of Community law.
The Council of State (Conseil d’État) has now decided to refer the question of compatibility of the French horse betting monopoly with Community law to the ECJ in accordance with Art. 234 EC Treaty. In this respect, the Conseil d’État asked the ECJ two questions. In essence, the Council of State inquires whether the freedom to provide services guaranteed in Art. 49 and 50 of the EC Treaty is to interpreted to the effect that it precludes a national legislation which establishes a monopoly regime in favour of a single provider, that is meant to combat crime and protect public order in a more efficient way than by less interfering action, if that regime is accompanied by a dynamic commercial policy on the part of the operator, so that a satisfactory reduction in gaming opportunities is not achieved. One aspect of this question is the necessity to be assessed as part of the proportionality test, that is the examination into alternatives to the monopoly legislation and the question as to less interfering action (considering the Rosengren decision, discussed at the oral hearing in the Case “Liga Portuguesa”- C-42/07). Another already critical point is the question whether a monopoly is legally tenable, where a monopoly undertaking, such as the economically very successfully acting operator PMU, does by no means limit gaming opportunities but seeks to increase its turnover instead. In addition to this, with his second question referred for preliminary ruling, the Conseil d’État asks whether, when assessing the justification of the impairment of the freedom to provide services, one had to take into consideration the online-offer alone or all forms of distribution.
In view of the now 16 pending proceedings for preliminary ruling relating to bets and games of chance (including three referred by national supreme courts) as well as numerous upcoming actions in infringement proceedings (after the first action against Spain for discriminatory taxation of winnings resulting from games of chance), one can now expect the ECJ to comprehensively clarify the legal questions raised.
* * *
Questions, referred to the ECJ by the Council of State:
1. Are Articles 49 and 50 of the Treaty establishing the European Community to be interpreted as precluding national legislation which has established a system whereby off-course horserace betting is managed exclusively by a single, non-profit-making operator where, although that system appears to fit the purpose of combating criminality and thus of protecting public order more effectively than would less restrictive measures, it is accompanied by a dynamic commercial policy on the part of the operator, in order to neutralise the risk of unauthorised gambling networks emerging and to channel bettors towards the lawful offer, that does not, in consequence, fully achieve the objective of reducing gambling opportunities?
2. Is it appropriate, in order to determine whether national legislation such as that in force in France, which has established a system whereby off-course horserace betting is managed exclusively by a single, non-profit-making operator, is contrary to Articles 49 and 50 of the Treaty establishing the European Community, to assess the impairment of freedom to provide services solely from the point of view of the restrictions placed on offering on-line horserace betting, or is it appropriate to take into consideration the entire horserace betting sector in whatever form it is offered and is accessible to bettors?
from: German Gaming Law updated No. 110
Administrative Court of Berlin repeals prohibition order against a sports betting agent issued by the State of Berlin
Sports betting monopoly de facto terminated
by attorney-at-law Martin Arendts, M.B.L.-HSG
The Administrative Court of Berlin (Verwaltungsgericht Berlin) had already voiced fundamental doubts regarding the constitutionality of the Interstate Treaty on Gambling in several summary proceedings during the last months and has thus granted relief from judicial execution to the sports betting agents involved (cf. German Gaming Law updated No. 102). The Administrative Court of Berlin has now repealed a prohibition order issued by the State Office for Citizens’ and Police Affairs (Landesamt für Bürger- und Ordnungsangelegenheiten), holding it to be unlawful (decision of 7 July 2008, file no. VG 35 A 167.08). The claimant, represented by ARENDTS ANWÄLTE (www.gaminglaw.de), can thus continue to transfer sports bets to a bookmaker licensed in Malta, an EU member state.
This new decision involves a prohibition order of 6 March 2008 based on the Interstate Treaty on Gambling (Glücksspiel-Staatsvertrag) and the corresponding implementation act (Ausführungsgesetz zum Glücksspiel-Staatsvertrag - AG GlüStV). The detailed reasons are still due. However, as reported, the court had already voiced considerable doubts in the proceedings for relief from execution as to whether the new regulations could constitute a constitutional authority. The state sports betting monopoly, as a considerable interference with the private sports betting providers’ and agents’ right to choose their profession was not justifiable from a constitutional point of view.
The Administrative Court of Berlin explicitly allowed appeal against this decision which will have to be reviewed by the Administrative Court of Appeal of Berlin-Brandenburg (Oberverwaltungsgericht Berlin-Brandenburg). In view of the scope of the decision, which declares the Interstate Treaty on Gambling to be untenable and contrary to constitutional law, one has to assume that the State of Berlin will exhaust this legal remedy. For the time being, though, the state monopoly has de facto ended, since the market for sports betting in Berlin cannot be sealed off from bookmakers, licensed in other EU member states, anymore.
from: German Gaming Law updated No. 109
by attorney-at-law Martin Arendts, M.B.L.-HSG
The Administrative Court of Berlin (Verwaltungsgericht Berlin) had already voiced fundamental doubts regarding the constitutionality of the Interstate Treaty on Gambling in several summary proceedings during the last months and has thus granted relief from judicial execution to the sports betting agents involved (cf. German Gaming Law updated No. 102). The Administrative Court of Berlin has now repealed a prohibition order issued by the State Office for Citizens’ and Police Affairs (Landesamt für Bürger- und Ordnungsangelegenheiten), holding it to be unlawful (decision of 7 July 2008, file no. VG 35 A 167.08). The claimant, represented by ARENDTS ANWÄLTE (www.gaminglaw.de), can thus continue to transfer sports bets to a bookmaker licensed in Malta, an EU member state.
This new decision involves a prohibition order of 6 March 2008 based on the Interstate Treaty on Gambling (Glücksspiel-Staatsvertrag) and the corresponding implementation act (Ausführungsgesetz zum Glücksspiel-Staatsvertrag - AG GlüStV). The detailed reasons are still due. However, as reported, the court had already voiced considerable doubts in the proceedings for relief from execution as to whether the new regulations could constitute a constitutional authority. The state sports betting monopoly, as a considerable interference with the private sports betting providers’ and agents’ right to choose their profession was not justifiable from a constitutional point of view.
The Administrative Court of Berlin explicitly allowed appeal against this decision which will have to be reviewed by the Administrative Court of Appeal of Berlin-Brandenburg (Oberverwaltungsgericht Berlin-Brandenburg). In view of the scope of the decision, which declares the Interstate Treaty on Gambling to be untenable and contrary to constitutional law, one has to assume that the State of Berlin will exhaust this legal remedy. For the time being, though, the state monopoly has de facto ended, since the market for sports betting in Berlin cannot be sealed off from bookmakers, licensed in other EU member states, anymore.
from: German Gaming Law updated No. 109
Administrative Court of Freiburg grants sports betting agent relief from judicial execution: German sports betting monopoly in breach of Community law
by attorney-at-law Martin Arendts, M.B.L.-HSG
In four judgments rendered in main proceedings, the 1st chamber of the Administrative Court of Freiburg (Verwaltungsgericht Freiburg) just recently declared the state sports betting monopoly to be in breach of Community law and revoked prohibition orders issued by the Regional Council of Karlsruhe (decisions of 16 April 2008, file-no. K 2683/07, 1 K 2063/06, 1 K 2066/06 and 1 K 2052/06). The 3rd chamber of the Administrative Court of Freiburg has now joined this legal opinion in summary proceedings. The agent, represented by attorney-at-law Alice Wotsch of ARENDTS ANWÄLTE (www.gaminglaw.de), can thus continue to transfer sports bets to his contractor, an EU-licensed bookmaker (decision of 30 June 2008, file-no. 3 K 1113/08).
In the court’s opinion, the motion for protection is justified irrespective of the question whether the applicant is operator of the game of chance or not. The State of Baden-Württemberg’s sports betting monopoly being in breach of Community law, the agents’s interest to be spared of the consequences of judicial execution until a final decision in the main proceedings will be pronounced, prevails against the public interest in the execution. Moreover, it was not apparent, that there were currently specific dangers resulting from brokering sports bets.
from: German Gaming Law updated No. 108
In four judgments rendered in main proceedings, the 1st chamber of the Administrative Court of Freiburg (Verwaltungsgericht Freiburg) just recently declared the state sports betting monopoly to be in breach of Community law and revoked prohibition orders issued by the Regional Council of Karlsruhe (decisions of 16 April 2008, file-no. K 2683/07, 1 K 2063/06, 1 K 2066/06 and 1 K 2052/06). The 3rd chamber of the Administrative Court of Freiburg has now joined this legal opinion in summary proceedings. The agent, represented by attorney-at-law Alice Wotsch of ARENDTS ANWÄLTE (www.gaminglaw.de), can thus continue to transfer sports bets to his contractor, an EU-licensed bookmaker (decision of 30 June 2008, file-no. 3 K 1113/08).
In the court’s opinion, the motion for protection is justified irrespective of the question whether the applicant is operator of the game of chance or not. The State of Baden-Württemberg’s sports betting monopoly being in breach of Community law, the agents’s interest to be spared of the consequences of judicial execution until a final decision in the main proceedings will be pronounced, prevails against the public interest in the execution. Moreover, it was not apparent, that there were currently specific dangers resulting from brokering sports bets.
from: German Gaming Law updated No. 108
ECJ: Brokering bets not exempt from Value Added Tax pursuant to the of Sixth Council Directive 77/388/EEC
by attorney-at-law Martin Arendts, M.B.L.-HSG
The European Court of Justice (ECJ) has recently held that commissions paid to a sports betting agent is not exempt from VAT (order of 14 May 2008, Joined Cases C-231/07 and C-232/07). The Brussels Court of Appeal (Cour d’appel Bruxelles) had asked the ECJ for clarification as to whether an exemption pursuant to Art. 13 part B letter d no. 3 of the Sixth Council Directive 77/388/EEC should be considered, according to which the supply of certain financial services relating to turnovers resulting from the transfer of bets are exempt from VAT. Interpreting this directive, the ECJ declined this. The Belgian initial proceedings concerned tobacconists (“buralistes”) which accepted bets on behalf of a bookmaker and paid out the winnings to betting customers.
Operative part of the order:“
The terms 'transactions, including negotiation, concerning deposit accounts and payments' used in Article 13(B)(d)(3) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment are to be interpreted as meaning that they do not refer to the supply of services by an agent acting on behalf of a client which carries out the activity of accepting bets on horse races and other sporting events, consisting of acceptance by the agent of bets on behalf of the client, registration thereof, confirmation to the client, by presentation of the betting slip, that a bet was made, collection of funds, payment of winnings, sole assumption of liability as regards the client for management of the funds collected and for thefts and/or losses of money and receipt of remuneration in the form of commission from the client as remuneration for that activity.”
from: German Gaming Law updated No. 108
The European Court of Justice (ECJ) has recently held that commissions paid to a sports betting agent is not exempt from VAT (order of 14 May 2008, Joined Cases C-231/07 and C-232/07). The Brussels Court of Appeal (Cour d’appel Bruxelles) had asked the ECJ for clarification as to whether an exemption pursuant to Art. 13 part B letter d no. 3 of the Sixth Council Directive 77/388/EEC should be considered, according to which the supply of certain financial services relating to turnovers resulting from the transfer of bets are exempt from VAT. Interpreting this directive, the ECJ declined this. The Belgian initial proceedings concerned tobacconists (“buralistes”) which accepted bets on behalf of a bookmaker and paid out the winnings to betting customers.
Operative part of the order:“
The terms 'transactions, including negotiation, concerning deposit accounts and payments' used in Article 13(B)(d)(3) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment are to be interpreted as meaning that they do not refer to the supply of services by an agent acting on behalf of a client which carries out the activity of accepting bets on horse races and other sporting events, consisting of acceptance by the agent of bets on behalf of the client, registration thereof, confirmation to the client, by presentation of the betting slip, that a bet was made, collection of funds, payment of winnings, sole assumption of liability as regards the client for management of the funds collected and for thefts and/or losses of money and receipt of remuneration in the form of commission from the client as remuneration for that activity.”
from: German Gaming Law updated No. 108
Dutch Council of State refers legitimacy and tendering of a sports betting monopoly to the European Court of Justice for review
by attorney-at-law Martin Arendts, M.B.L.-HSG
In addition to the Dutch reference to the European Court of Justice (ECJ) by the Supreme Court of the Netherland in the case of Ladbrokes (cf. German Gaming Law updated no. 106), the Raad van State, in its capacity as the highest administrative court of the Netherlands, has referred a case to Luxembourg (decision of 14 May 2008, file-no. 200700622/1). This reference has been filed with the ECJ as Case C-203/08. The referral is based on administrative proceedings between the world’s largest betting exchange Betfair (Sporting Exchange Ltd.) and the Dutch Minister of Justice.
Hence, within one month, two last instance courts have referred questions relating to the admissibility of the Dutch sports betting monopoly to the ECJ. National last instance courts are obliged to refer Community law related preliminary questions to the ECJ, which has the monopoly on the interpretation of EU law, provided that these legal question are not yet resolved (acte clair theory). Due to these references, a planned reorganisation of the gaming law in the Netherlands was put off. It was planned i.a. to grant Holland Casinos an exclusive online gaming license.
As it was the case in several pending proceedings, there is the question of the relevance of a license issued in another Member State in this case as well. The reference by the Raad von State does, by the way, concern the tendering of a gambling license as well. In particular, Betfair applied for two gambling licenses after the Minister for Justice had refused to declare the UK based betting exchange’s access to the market to be unobjectionable. On the one hand side, Betfair applied for the 5-year sports betting license, currently held by the monopoly operator De Lotto (Stichting de Nationale Sporttotalisator), while on the other hand applying for the license currently held by Scientific Games Racing B.V. However, the Ministry took the view that the licenses were to be extended as long as the current license holder wished to continue.
Betfair considered this to be in breach of Community law and an undue discrimination and, in particular, invoked the freedom to provide services as guaranteed by the EC Treaty. Commenting on the reference order, Betfair pointed to the fact that I was a strictly regulated, tax paying, UK based company which was a global leader in terms of fraud prevention and customer protection. One should therefore allow fair competition within the EU.
The Raad von State referred following questions to the ECJ :
1. Should Article 49 EC be interpreted as meaning that, where a closed licensing system is applied in a Member State to the provision of services relating to games of chance, the application of that article precludes the competent authority of that Member State from prohibiting a service provider to whom a licence has already been granted in another Member State to provide those services via the internet from also offering those services via the internet in the first Member State?
2. Is the interpretation which the Court of Justice has given to Article 49 EC, and in particular to the principle of equality and the duty of transparency arising therefrom, in a number of individual cases concerning concessions applicable to the procedure for the granting of a licence to offer services relating to games of chance under a statutorily established single-licence system?
3. (a) Under a statutorily established single-licence system, can the extension of the licence of the existing licence-holder, without potential applicants being given an opportunity to compete for that licence, be a suitable and proportionate means of meeting the imperative requirements in the general interest which the Court of Justice has recognised as justifying restriction of the freedom to provide services in respect of games of chance? If so, under what conditions?
(b). Does it make a difference to the answer to Question 3(a) whether Question 2 is answered in the affirmative or the negative?
from: German Gaming Law updated No. 107
In addition to the Dutch reference to the European Court of Justice (ECJ) by the Supreme Court of the Netherland in the case of Ladbrokes (cf. German Gaming Law updated no. 106), the Raad van State, in its capacity as the highest administrative court of the Netherlands, has referred a case to Luxembourg (decision of 14 May 2008, file-no. 200700622/1). This reference has been filed with the ECJ as Case C-203/08. The referral is based on administrative proceedings between the world’s largest betting exchange Betfair (Sporting Exchange Ltd.) and the Dutch Minister of Justice.
Hence, within one month, two last instance courts have referred questions relating to the admissibility of the Dutch sports betting monopoly to the ECJ. National last instance courts are obliged to refer Community law related preliminary questions to the ECJ, which has the monopoly on the interpretation of EU law, provided that these legal question are not yet resolved (acte clair theory). Due to these references, a planned reorganisation of the gaming law in the Netherlands was put off. It was planned i.a. to grant Holland Casinos an exclusive online gaming license.
As it was the case in several pending proceedings, there is the question of the relevance of a license issued in another Member State in this case as well. The reference by the Raad von State does, by the way, concern the tendering of a gambling license as well. In particular, Betfair applied for two gambling licenses after the Minister for Justice had refused to declare the UK based betting exchange’s access to the market to be unobjectionable. On the one hand side, Betfair applied for the 5-year sports betting license, currently held by the monopoly operator De Lotto (Stichting de Nationale Sporttotalisator), while on the other hand applying for the license currently held by Scientific Games Racing B.V. However, the Ministry took the view that the licenses were to be extended as long as the current license holder wished to continue.
Betfair considered this to be in breach of Community law and an undue discrimination and, in particular, invoked the freedom to provide services as guaranteed by the EC Treaty. Commenting on the reference order, Betfair pointed to the fact that I was a strictly regulated, tax paying, UK based company which was a global leader in terms of fraud prevention and customer protection. One should therefore allow fair competition within the EU.
The Raad von State referred following questions to the ECJ :
1. Should Article 49 EC be interpreted as meaning that, where a closed licensing system is applied in a Member State to the provision of services relating to games of chance, the application of that article precludes the competent authority of that Member State from prohibiting a service provider to whom a licence has already been granted in another Member State to provide those services via the internet from also offering those services via the internet in the first Member State?
2. Is the interpretation which the Court of Justice has given to Article 49 EC, and in particular to the principle of equality and the duty of transparency arising therefrom, in a number of individual cases concerning concessions applicable to the procedure for the granting of a licence to offer services relating to games of chance under a statutorily established single-licence system?
3. (a) Under a statutorily established single-licence system, can the extension of the licence of the existing licence-holder, without potential applicants being given an opportunity to compete for that licence, be a suitable and proportionate means of meeting the imperative requirements in the general interest which the Court of Justice has recognised as justifying restriction of the freedom to provide services in respect of games of chance? If so, under what conditions?
(b). Does it make a difference to the answer to Question 3(a) whether Question 2 is answered in the affirmative or the negative?
from: German Gaming Law updated No. 107
27 July 2008
Court of Appeal of Munich enjoins the Free State of Bavaria from illegal gambling advertisement -
State monopoly operators in breach of Interstate Treaty on Gambling
by attorney-at-law Martin Arendts, M.B.L.-HSG
The Centre for Protection against Unfair Competition (Wettbewerbszentrale) recently won a court suit in the second instance against the Free State of Bavaria who offers sports betting and games of chance commercially via its State Lottery Administration (Staatliche Lotterieverwaltung), which is a member of Deutscher Lotto- und Totoblock, the cartel of the monopoly operators. The Court of Appeal of Munich (Oberlandesgericht München) enjoined the Free State of Bavaria from unfair advertisements with regard to three different circumstances (decision of 22 April 2008, file-no. 29 W 1211/08 - not yet final).
According to the holding of the Court of Appeal of Munich, the advertisement challenged by Wettbewerbszentrale, which contains statements like “Join the game” and ”Lotto … current Jackpot: about 18 Mill. Euros”, unduly pushes the amount to be won in each following draw to the fore. Such an advertisement is in breach of sec. 5 (1) of the Interstate Treaty on Gambling (Glücksspiel-Staatsvertrag). Pursuant to this provision, in order to avoid the character of an incitement, advertisement for public games of chance must be confined to information and education on the options of taking part in games of chance.
Relating to this decision, attorney-at-law Dr. Andreas Ottofülling of the Centre for Protection against Unfair Competition explains: “It clearly shows that the Free State of Bavaria as operator of the lottery did not comply with the principles of advertisement set up by himself. The state cannot justify the monopoly on lotteries with the need to protect the citizens from gambling addiction on the one hand side and on the other hand boldly incite to participate in games of chance himself. “
The authorities’ pleading that the state lottery operators had substantially adjusted and retrenched their advertisement in view of the requirements set forth by the Federal Constitutional Court, is obviously not tenable in view of this decision. There is not only a clear regulatory deficit (as accurately pointed out by the Administrative Court of Berlin), but also a serious enforcement deficit remaining. Contrary to the requirements set forth by the Federal Constitutional Court, there is no independent supervision of the state operators, by which the monopoly operators’ illegal behaviour could be controlled.
The reasoning of the Court of Appeal of Munich for this decision have now been published (MD 2008, p. 709 et seq.). With regards to the Free State of Bavaria’s unfair advertisement practices the court explains:
“The newspaper advertisement pushes the amount to be won in the next draw to the fore as an eye catcher. Information other than this circumstance accounting for the particular attractivity of a participation in the game is only provided in considerably smaller script. There is a blatant imbalance between highlighting the amount to win and mentioning the danger of addiction and the low probability of winning, which does hardly show up in comparison. This imbalance of the advertisement, which results from one-sidedly highlighting the chance of a particularly high win, provides an increased incentive to participate in the lottery for people addressed by the advertisement. The informative and educational content which is allowed pursuant to sec. 5 (1) Interstate Treaty on Gambling is clearly only second to the presentation as advertisement with incitement to participate. This is in breach of sec. 5 (1), 5 (2) sentence 1 Interstate Treaty on Gambling.
The two other forms of advertisement (billboard and cover ads) have the character of the forbidden form of incitement even more, as they do not even contain minor disclaimers pointing to circumstances against the participation in the game, but places the amount to be won in a unique position. Doing so they are even in breach of no. 2 of the requirement of the directive for the prevention of- and fight against gaming addiction (Annex to the Interstate Treaty on Gambling), pursuant to which the information about the jackpot is to be combined with an information on the probability of winnings and losses. (…)
Regarding the advertisement on the cover of the magazine, one has to add, that, when assessing the determining general impression that the advertisement has on the relevant public it addressed, one has to consider the design of the rest of the cover – in particular the title “Join the game” also designed as an eye catcher – as well. Together with the title held in form of a command, highlighting the possible win does not only incite to participate in the game but also has a requesting effect.”
from: German Gaming Law updated No. 105
by attorney-at-law Martin Arendts, M.B.L.-HSG
The Centre for Protection against Unfair Competition (Wettbewerbszentrale) recently won a court suit in the second instance against the Free State of Bavaria who offers sports betting and games of chance commercially via its State Lottery Administration (Staatliche Lotterieverwaltung), which is a member of Deutscher Lotto- und Totoblock, the cartel of the monopoly operators. The Court of Appeal of Munich (Oberlandesgericht München) enjoined the Free State of Bavaria from unfair advertisements with regard to three different circumstances (decision of 22 April 2008, file-no. 29 W 1211/08 - not yet final).
According to the holding of the Court of Appeal of Munich, the advertisement challenged by Wettbewerbszentrale, which contains statements like “Join the game” and ”Lotto … current Jackpot: about 18 Mill. Euros”, unduly pushes the amount to be won in each following draw to the fore. Such an advertisement is in breach of sec. 5 (1) of the Interstate Treaty on Gambling (Glücksspiel-Staatsvertrag). Pursuant to this provision, in order to avoid the character of an incitement, advertisement for public games of chance must be confined to information and education on the options of taking part in games of chance.
Relating to this decision, attorney-at-law Dr. Andreas Ottofülling of the Centre for Protection against Unfair Competition explains: “It clearly shows that the Free State of Bavaria as operator of the lottery did not comply with the principles of advertisement set up by himself. The state cannot justify the monopoly on lotteries with the need to protect the citizens from gambling addiction on the one hand side and on the other hand boldly incite to participate in games of chance himself. “
The authorities’ pleading that the state lottery operators had substantially adjusted and retrenched their advertisement in view of the requirements set forth by the Federal Constitutional Court, is obviously not tenable in view of this decision. There is not only a clear regulatory deficit (as accurately pointed out by the Administrative Court of Berlin), but also a serious enforcement deficit remaining. Contrary to the requirements set forth by the Federal Constitutional Court, there is no independent supervision of the state operators, by which the monopoly operators’ illegal behaviour could be controlled.
The reasoning of the Court of Appeal of Munich for this decision have now been published (MD 2008, p. 709 et seq.). With regards to the Free State of Bavaria’s unfair advertisement practices the court explains:
“The newspaper advertisement pushes the amount to be won in the next draw to the fore as an eye catcher. Information other than this circumstance accounting for the particular attractivity of a participation in the game is only provided in considerably smaller script. There is a blatant imbalance between highlighting the amount to win and mentioning the danger of addiction and the low probability of winning, which does hardly show up in comparison. This imbalance of the advertisement, which results from one-sidedly highlighting the chance of a particularly high win, provides an increased incentive to participate in the lottery for people addressed by the advertisement. The informative and educational content which is allowed pursuant to sec. 5 (1) Interstate Treaty on Gambling is clearly only second to the presentation as advertisement with incitement to participate. This is in breach of sec. 5 (1), 5 (2) sentence 1 Interstate Treaty on Gambling.
The two other forms of advertisement (billboard and cover ads) have the character of the forbidden form of incitement even more, as they do not even contain minor disclaimers pointing to circumstances against the participation in the game, but places the amount to be won in a unique position. Doing so they are even in breach of no. 2 of the requirement of the directive for the prevention of- and fight against gaming addiction (Annex to the Interstate Treaty on Gambling), pursuant to which the information about the jackpot is to be combined with an information on the probability of winnings and losses. (…)
Regarding the advertisement on the cover of the magazine, one has to add, that, when assessing the determining general impression that the advertisement has on the relevant public it addressed, one has to consider the design of the rest of the cover – in particular the title “Join the game” also designed as an eye catcher – as well. Together with the title held in form of a command, highlighting the possible win does not only incite to participate in the game but also has a requesting effect.”
from: German Gaming Law updated No. 105
22 July 2008
Supreme Court of the Netherlands refers sports betting monopoly to the European Court of Justice for review
by attorney-at-law Martin Arendts, M.B.L.-HSG
The Supreme Court of the Netherlands (Hoge Raad der Nederlanden), the highest Dutch court for civil and criminal cases, referred a case regarding the cross-border offer of sports betting to the European Court of Justice (ECJ) for preliminary ruling. The referral is based on proceedings between the private bookmaker Ladbrokes and the Dutch gambling monopoly operator De Lotto. In 2002 Ladbrokes was restricted from accepting sports bets from Dutch citizens.
The Hoge Raad referred three questions to the ECJ:
• First, the court request to know whether under European law is it allowed to make the offering of gambling attractive through the introduction of new games and through advertising in order to keep (potential) gamblers away from illegal offerings?
• Moreover, the Dutch court asks whether the national judge has to decide in every case whether the application of the national gambling policy (e.g. in this case an order to block a website) is justified in each specific case?
• Finally, the court inquires about the relevance of a license issued in another Member State: Can a Member State, on the basis of a closed licensing system, prevent the offering of gambling via the Internet by an operator who is licensed in another Member State?
Irrespective of this referral, the European Commission has already instigated two infringement proceedings against the Netherlands (IP/06/436 and IP/08/330). In the first proceedings, in which the reasoned opinion of the European Commission has already been served, an action against the Netherlands could now be filed with the ECJ.
By reference of the present case to the ECJ, there will be 16 preliminary ruling proceedings pending (eight of which were referred by German administrative courts relating to the critical factual and legal situation in Germany). Most recently, that is during the current year, the Administrative Court of Schleswig (German Gaming Law updated no. 94), the Regional Court of Porto (German Gaming Law updated no. 100), the County Court of Linz (German Gaming Law updated no. 101) and the Greek Symvoulio tis Epikrateias (German Gaming Law updated no. 103) have referred betting and gambling cases to the ECJ.
from: German Gaming Law updated No. 106
The Supreme Court of the Netherlands (Hoge Raad der Nederlanden), the highest Dutch court for civil and criminal cases, referred a case regarding the cross-border offer of sports betting to the European Court of Justice (ECJ) for preliminary ruling. The referral is based on proceedings between the private bookmaker Ladbrokes and the Dutch gambling monopoly operator De Lotto. In 2002 Ladbrokes was restricted from accepting sports bets from Dutch citizens.
The Hoge Raad referred three questions to the ECJ:
• First, the court request to know whether under European law is it allowed to make the offering of gambling attractive through the introduction of new games and through advertising in order to keep (potential) gamblers away from illegal offerings?
• Moreover, the Dutch court asks whether the national judge has to decide in every case whether the application of the national gambling policy (e.g. in this case an order to block a website) is justified in each specific case?
• Finally, the court inquires about the relevance of a license issued in another Member State: Can a Member State, on the basis of a closed licensing system, prevent the offering of gambling via the Internet by an operator who is licensed in another Member State?
Irrespective of this referral, the European Commission has already instigated two infringement proceedings against the Netherlands (IP/06/436 and IP/08/330). In the first proceedings, in which the reasoned opinion of the European Commission has already been served, an action against the Netherlands could now be filed with the ECJ.
By reference of the present case to the ECJ, there will be 16 preliminary ruling proceedings pending (eight of which were referred by German administrative courts relating to the critical factual and legal situation in Germany). Most recently, that is during the current year, the Administrative Court of Schleswig (German Gaming Law updated no. 94), the Regional Court of Porto (German Gaming Law updated no. 100), the County Court of Linz (German Gaming Law updated no. 101) and the Greek Symvoulio tis Epikrateias (German Gaming Law updated no. 103) have referred betting and gambling cases to the ECJ.
from: German Gaming Law updated No. 106
21 July 2008
French Council of State refers Zeturf case to ECJ
Reference for a preliminary ruling from the Conseil d'État (France) lodged on 21 May 2008
(Case C-212/08)
Language of the case: French
Referring court
Conseil d'État
Parties to the main proceedings
Applicant: Société Zeturf Limited
Defendants: Premier ministre, Ministre de l'Agriculture et de la Pêche, Ministre de l'Intérieur, de l'Outre-mer et des Collectivités territoriales, Ministre de l'Économie, de l'Industrie et de l'Emploi - intervening party: G.I.E. Pari Mutuel Urbain (PMU)
Questions referred
Are Articles 49 and 50 of the Treaty establishing the European Community to be interpreted as precluding national legislation which has established a system whereby off-course horserace betting is managed exclusively by a single, non-profit-making operator where, although that system appears to fit the purpose of combating criminality and thus of protecting public order more effectively than would less restrictive measures, it is accompanied by a dynamic commercial policy on the part of the operator, in order to neutralise the risk of unauthorised gambling networks emerging and to channel bettors towards the lawful offer, that does not, in consequence, fully achieve the objective of reducing gambling opportunities?
Is it appropriate, in order to determine whether national legislation such as that in force in France, which has established a system whereby off-course horserace betting is managed exclusively by a single, non-profit-making operator, is contrary to Articles 49 and 50 of the Treaty establishing the European Community, to assess the impairment of freedom to provide services solely from the point of view of the restrictions placed on offering on-line horserace betting, or is it appropriate to take into consideration the entire horserace betting sector in whatever form it is offered and is accessible to bettors?
(Case C-212/08)
Language of the case: French
Referring court
Conseil d'État
Parties to the main proceedings
Applicant: Société Zeturf Limited
Defendants: Premier ministre, Ministre de l'Agriculture et de la Pêche, Ministre de l'Intérieur, de l'Outre-mer et des Collectivités territoriales, Ministre de l'Économie, de l'Industrie et de l'Emploi - intervening party: G.I.E. Pari Mutuel Urbain (PMU)
Questions referred
Are Articles 49 and 50 of the Treaty establishing the European Community to be interpreted as precluding national legislation which has established a system whereby off-course horserace betting is managed exclusively by a single, non-profit-making operator where, although that system appears to fit the purpose of combating criminality and thus of protecting public order more effectively than would less restrictive measures, it is accompanied by a dynamic commercial policy on the part of the operator, in order to neutralise the risk of unauthorised gambling networks emerging and to channel bettors towards the lawful offer, that does not, in consequence, fully achieve the objective of reducing gambling opportunities?
Is it appropriate, in order to determine whether national legislation such as that in force in France, which has established a system whereby off-course horserace betting is managed exclusively by a single, non-profit-making operator, is contrary to Articles 49 and 50 of the Treaty establishing the European Community, to assess the impairment of freedom to provide services solely from the point of view of the restrictions placed on offering on-line horserace betting, or is it appropriate to take into consideration the entire horserace betting sector in whatever form it is offered and is accessible to bettors?
European Court of Justice to decide on the applicability of Community procurement law on casino licenses
by attorney-at-law Martin Arendts, M.B.L.-HSG
After the Austrian regional court of Linz’s reference for preliminary ruling regarding the monopoly on casinos (cf. German Gaming Law updated no. 101) other proceedings regarding the licensing procedure for casinos have just recently been referred to the European Court of Justice (ECJ) for preliminary ruling, this time from Greece (Case C-145/08 – „Club Hotel Loutraki“). The reference for preliminary ruling by the Symvoulio tis Epikrateias involves the question whether Community procurement law (here Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts - Procurement Directive) is applicable to the licensing of casinos and the exploitation of such a license.
The questions for preliminary ruling referred by the Greek court sound technical at first, but have considerable practical repercussions. If the Directive relating to the coordination of procedures for the award of public service contracts (Procurement Directive) is applicable, the licenses in question would be subject to an EU-wide tender procedure before being awarded. The ECJ’s decision could challenge the current licensing system for casinos in several Member States, particularly in Germany and Austria.
The first two questions referred by the Greek court relate to the award and the procurement of a casino license. The court wants to know, whether the relevant directives are applicable to such a licensing contract:
• 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?
Two further questions relate to the procedural situation (filing for remedy, the affected undertakings’ right to set out their views).
Should the ECJ affirm the applicability of the Procurement Directive, the strict rules of Community procurement law would have to be observed. In particular, the Procurement Directive provides for the grounds, on which a tenderer may be excluded and for the assessment of the tenderer’s financial and economic capacity. A third category of provisions is in relation to the tenderer’s technical capacity. The second referred question explicitly bears upon the principle of equal treatment of participants to a tender.
from: German Gaming Law updated No. 103
After the Austrian regional court of Linz’s reference for preliminary ruling regarding the monopoly on casinos (cf. German Gaming Law updated no. 101) other proceedings regarding the licensing procedure for casinos have just recently been referred to the European Court of Justice (ECJ) for preliminary ruling, this time from Greece (Case C-145/08 – „Club Hotel Loutraki“). The reference for preliminary ruling by the Symvoulio tis Epikrateias involves the question whether Community procurement law (here Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts - Procurement Directive) is applicable to the licensing of casinos and the exploitation of such a license.
The questions for preliminary ruling referred by the Greek court sound technical at first, but have considerable practical repercussions. If the Directive relating to the coordination of procedures for the award of public service contracts (Procurement Directive) is applicable, the licenses in question would be subject to an EU-wide tender procedure before being awarded. The ECJ’s decision could challenge the current licensing system for casinos in several Member States, particularly in Germany and Austria.
The first two questions referred by the Greek court relate to the award and the procurement of a casino license. The court wants to know, whether the relevant directives are applicable to such a licensing contract:
• 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?
Two further questions relate to the procedural situation (filing for remedy, the affected undertakings’ right to set out their views).
Should the ECJ affirm the applicability of the Procurement Directive, the strict rules of Community procurement law would have to be observed. In particular, the Procurement Directive provides for the grounds, on which a tenderer may be excluded and for the assessment of the tenderer’s financial and economic capacity. A third category of provisions is in relation to the tenderer’s technical capacity. The second referred question explicitly bears upon the principle of equal treatment of participants to a tender.
from: German Gaming Law updated No. 103
20 July 2008
Discriminatory taxation of gambling winnings: European Commission brings action against Spain
First action relating to cross-border gambling in the course of pending infringement proceedings
By attorney-at-law Martin Arendts, M.B.L.-HSG
The barriers against the cross-border offering of sports betting and gambling erected by the EU (and EEA) Member States have been under strict scrutiny by the European Commission for several years. The Commission judges numerous national provisions to be in breach of Community law and has therefore already initiated infringement proceedings against several Member States, including Germany (two proceedings, one relating to the sports betting monopoly and one relating to the new Interstate Treaty on Gambling) and Austria. In one of these proceedings, and after preliminary steps to no avail (letter of formal notice by the Commission, statement by the government) the Commission has now filed suit against the Kingdom of Spain with the European Court of Justice (Case C-153/08). So far, the Commission had brought action only against Italy four years ago for procuring horse betting licenses without an invitation to tender and obtained a positive decision of the ECJ (Case C-260/04).
In its statement of claim against Spain, the European Commission invokes discriminatory taxation in breach of Community law. Pursuant to the Spanish tax provisions, winnings from lotteries and betting organised by the 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 comparable to the German states) as well as winnings from lotteries organised by the Spanish Red Cross or ONCE (Organización Nacional de Ciegos Españoles, the national association for the Spanish blind persons) 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 EU or the EEA is added to the taxable amount and subject to progressive rates of taxation.
Relying in particular on the relevant ECJ case-law relating to the taxation of games of chance, the Lindman decision (Case C-42/02), as well as the Safir decison (Case C-118/96, concerning the taxation of life insurances), the Commission points out that, according to the settled case-law of the ECJ, the organising of lotteries is to be regarded as a "service" for the purposes of the EC Treaty. Also, according to that case-law, Article 49 EC Treaty 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 entities of other Member States are excluded from the benefit of that tax exemption. 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.
Deciding this case, the ECJ will therefore have to clarify the scope of the rule of non-discrimination relating to the cross-border offering of gambling and sports betting services. It is the opinion of most German authorities, for example, that licensing only one operator of games of chance, which is to a significant part owned by the state or a federal state (Land) and completely banning operators from other Member States (via the internet or via receiving offices in Germany) is not discriminatory. However, the scope of the rule of non-discrimination is much broader. The ECJ held any rule of law to be discriminating if it makes it more difficult to provide services between Member States (cross-border) than to provide services wholly within a particular Member State.
After bringing this first action for infringement, one can assume that the European Commission will bring actions against the other Member States involved as well, provided that they cannot clear away the Commission’s objections and shape their national law in conformity with Community law respectively.
from: German Gaming Law updated No. 104
By attorney-at-law Martin Arendts, M.B.L.-HSG
The barriers against the cross-border offering of sports betting and gambling erected by the EU (and EEA) Member States have been under strict scrutiny by the European Commission for several years. The Commission judges numerous national provisions to be in breach of Community law and has therefore already initiated infringement proceedings against several Member States, including Germany (two proceedings, one relating to the sports betting monopoly and one relating to the new Interstate Treaty on Gambling) and Austria. In one of these proceedings, and after preliminary steps to no avail (letter of formal notice by the Commission, statement by the government) the Commission has now filed suit against the Kingdom of Spain with the European Court of Justice (Case C-153/08). So far, the Commission had brought action only against Italy four years ago for procuring horse betting licenses without an invitation to tender and obtained a positive decision of the ECJ (Case C-260/04).
In its statement of claim against Spain, the European Commission invokes discriminatory taxation in breach of Community law. Pursuant to the Spanish tax provisions, winnings from lotteries and betting organised by the 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 comparable to the German states) as well as winnings from lotteries organised by the Spanish Red Cross or ONCE (Organización Nacional de Ciegos Españoles, the national association for the Spanish blind persons) 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 EU or the EEA is added to the taxable amount and subject to progressive rates of taxation.
Relying in particular on the relevant ECJ case-law relating to the taxation of games of chance, the Lindman decision (Case C-42/02), as well as the Safir decison (Case C-118/96, concerning the taxation of life insurances), the Commission points out that, according to the settled case-law of the ECJ, the organising of lotteries is to be regarded as a "service" for the purposes of the EC Treaty. Also, according to that case-law, Article 49 EC Treaty 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 entities of other Member States are excluded from the benefit of that tax exemption. 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.
Deciding this case, the ECJ will therefore have to clarify the scope of the rule of non-discrimination relating to the cross-border offering of gambling and sports betting services. It is the opinion of most German authorities, for example, that licensing only one operator of games of chance, which is to a significant part owned by the state or a federal state (Land) and completely banning operators from other Member States (via the internet or via receiving offices in Germany) is not discriminatory. However, the scope of the rule of non-discrimination is much broader. The ECJ held any rule of law to be discriminating if it makes it more difficult to provide services between Member States (cross-border) than to provide services wholly within a particular Member State.
After bringing this first action for infringement, one can assume that the European Commission will bring actions against the other Member States involved as well, provided that they cannot clear away the Commission’s objections and shape their national law in conformity with Community law respectively.
from: German Gaming Law updated No. 104
18 July 2008
Administrative Court of Berlin once again grants relief from judicial execution to a sports betting agent
by attorney-at-law Martin Arendts, M.B.L.-HSG
The Administrative Court of Berlin (Verwaltungsgericht Berlin) has once again expressed fundamental constitutional objections against the Interstate Treaty on Gambling (Glücksspiel-Staatsvertrag) and thus granted relief from judicial execution to a sports betting agent (decision of 5 May 2008, case-no. VG 35 A 108.08). The agent, represented by ARENDTS ANWÄLTE (www.gaminglaw.de), may thus continue to transfer sports bets to a private bookmaker, state licensed in Malta, an EU member state.
The Administrative Court thus continues its jurisprudence of now granting relief from judicial execution after the transitional period, set by the Federal Constitutional Court (Bundesverfassungsgericht) in its landmark sports betting decision of 28 March 2006, expired at the end of 2007. In proceedings for amendment (pursuant to sec. 80 par. 7 of the regulations governing administrative courts, VwGO), the court has just recently granted relief from judicial execution against a prohibition order dating back to the year 2007 (decision of 2 April 2008, case-no. VG 35 A 52/08), a decision it refused to render last year.
The new decision pertains to a prohibition order of 6 March 2008, issued on the basis of the new Interstate Treaty on Gambling and the relevant implementation act of the State of Berlin (AG GlüStV). In its decision, the court argues the current diverging jurisprudence very comprehensively and voices severe doubts as to whether the new provisions provided a constitutional authority for the prohibition order. According to the court, the state sports betting monopoly constituted a severe interference with the private sports betting operators’ and agents’ freedom to choose their profession and could probably not be justified. In view of the drastic constitutional objections, there was no need to discuss an infringement of the freedom of establishment and the freedom to provide services, as guaranteed by the EC Treaty, anymore (p. 34).
The exclusion of private sports betting operators constituted a material interference with the freedom to choose one’s profession. According to the doctrine of substantiality the (parliamentary) legislator did not only have to enact a legal basis for the monopoly, but sufficient structural and legal specifications (as demanded by the Federal Constitutional Court in its fundamental sports betting decision of 28 March 2006) as well. The legislator was obliged to enact at least the basic structure as to type and customisation of sports bets. The regulation as demanded by the Federal Constitutional Court must not be left to the executive (p. 10).
Total consistency was now necessary after the expiration of the transitional period (p. 7). Therefore, there was no room for an additional transitional period as provided for by sec. 25 (1) of the Interstate Treaty on Gambling. After the expiration of the transitional period one now had to take a holistic look at the entire gambling sector (p. 32). However, there were only rudimentary substantial criteria as to type and customisation of the sports bets. Moreover it was not apparent that the legislator acted on the distribution of sports bets in accordance with the requirements set forth by the Federal Constitutional Court. Sports bets were continued to be marketed as “an everyday merchandise” (as expressly criticised by the Federal Constitutional Court). In particular the Administrative Court has a critical view on the tight net of receiving offices. In this respect, no re-organisation of this legal and factual structure as criticised by the Federal Constitutional Court was apparent (p. 13).
In addition, there were considerable doubts, whether the requirements for players’ protection were sufficiently respected in adopting and structuring the monopoly. Stake ceiling was not provided for by law (p. 27). Finally, doubts still persisted as to whether financial interests were not continued to be pursued by this re-organisation. After all, fiscal interests were pointed out as being material during the legislative procedure.
The Administrative Court of Berlin does not consider it necessary to mandate conditions in order to grant relief from judicial execution, as recently ordered by the Administrative Court of Kassel (followed by the Administrative Court of Trier) and the Administrative Court of Munich (cf. German Gaming Law updated no. 99 and 100). Specific dangers really emanating from the operator or the agent could be addressed by issuing a prohibition order under trade law (p. 37).
The Administrative Court of Berlin also granted relief with regards to the high administrative fee (EUR 2.000,-). The requirements for charging the fee were not fulfilled. Upon summary examination, the court did not find a case of illegal gambling.
from: German Gaming Law updated No. 102
The Administrative Court of Berlin (Verwaltungsgericht Berlin) has once again expressed fundamental constitutional objections against the Interstate Treaty on Gambling (Glücksspiel-Staatsvertrag) and thus granted relief from judicial execution to a sports betting agent (decision of 5 May 2008, case-no. VG 35 A 108.08). The agent, represented by ARENDTS ANWÄLTE (www.gaminglaw.de), may thus continue to transfer sports bets to a private bookmaker, state licensed in Malta, an EU member state.
The Administrative Court thus continues its jurisprudence of now granting relief from judicial execution after the transitional period, set by the Federal Constitutional Court (Bundesverfassungsgericht) in its landmark sports betting decision of 28 March 2006, expired at the end of 2007. In proceedings for amendment (pursuant to sec. 80 par. 7 of the regulations governing administrative courts, VwGO), the court has just recently granted relief from judicial execution against a prohibition order dating back to the year 2007 (decision of 2 April 2008, case-no. VG 35 A 52/08), a decision it refused to render last year.
The new decision pertains to a prohibition order of 6 March 2008, issued on the basis of the new Interstate Treaty on Gambling and the relevant implementation act of the State of Berlin (AG GlüStV). In its decision, the court argues the current diverging jurisprudence very comprehensively and voices severe doubts as to whether the new provisions provided a constitutional authority for the prohibition order. According to the court, the state sports betting monopoly constituted a severe interference with the private sports betting operators’ and agents’ freedom to choose their profession and could probably not be justified. In view of the drastic constitutional objections, there was no need to discuss an infringement of the freedom of establishment and the freedom to provide services, as guaranteed by the EC Treaty, anymore (p. 34).
The exclusion of private sports betting operators constituted a material interference with the freedom to choose one’s profession. According to the doctrine of substantiality the (parliamentary) legislator did not only have to enact a legal basis for the monopoly, but sufficient structural and legal specifications (as demanded by the Federal Constitutional Court in its fundamental sports betting decision of 28 March 2006) as well. The legislator was obliged to enact at least the basic structure as to type and customisation of sports bets. The regulation as demanded by the Federal Constitutional Court must not be left to the executive (p. 10).
Total consistency was now necessary after the expiration of the transitional period (p. 7). Therefore, there was no room for an additional transitional period as provided for by sec. 25 (1) of the Interstate Treaty on Gambling. After the expiration of the transitional period one now had to take a holistic look at the entire gambling sector (p. 32). However, there were only rudimentary substantial criteria as to type and customisation of the sports bets. Moreover it was not apparent that the legislator acted on the distribution of sports bets in accordance with the requirements set forth by the Federal Constitutional Court. Sports bets were continued to be marketed as “an everyday merchandise” (as expressly criticised by the Federal Constitutional Court). In particular the Administrative Court has a critical view on the tight net of receiving offices. In this respect, no re-organisation of this legal and factual structure as criticised by the Federal Constitutional Court was apparent (p. 13).
In addition, there were considerable doubts, whether the requirements for players’ protection were sufficiently respected in adopting and structuring the monopoly. Stake ceiling was not provided for by law (p. 27). Finally, doubts still persisted as to whether financial interests were not continued to be pursued by this re-organisation. After all, fiscal interests were pointed out as being material during the legislative procedure.
The Administrative Court of Berlin does not consider it necessary to mandate conditions in order to grant relief from judicial execution, as recently ordered by the Administrative Court of Kassel (followed by the Administrative Court of Trier) and the Administrative Court of Munich (cf. German Gaming Law updated no. 99 and 100). Specific dangers really emanating from the operator or the agent could be addressed by issuing a prohibition order under trade law (p. 37).
The Administrative Court of Berlin also granted relief with regards to the high administrative fee (EUR 2.000,-). The requirements for charging the fee were not fulfilled. Upon summary examination, the court did not find a case of illegal gambling.
from: German Gaming Law updated No. 102
Subscribe to:
Posts (Atom)