EBA on the Placanica decision

European Court of Justice ruling welcomed by EBA. Will Member States finally take heed?

Brussels, 6th March 2007: Today, the European Court of Justice (ECJ) delivered its final ruling on Placanica (Case C-338/04) which puts a further nail in the coffin of the state-monopoly model in the gambling sector. This is a landmark decision building further on the jurisprudence of the ECJ in Gambelli (C-243/01) and one which the European Betting Association (EBA) hopes has the potential to act as a guide to those EU Member States and National Authorities which must adapt their national legislation and regulatory models so as to become compliant with the EU Treaty of Rome. As a consequence of this ruling, EBA calls upon various Member States to abolish their gambling monopoly models and to allow open and fair competition from licensed and regulated European-licensed operators. Furthermore, all attempts at intimidation and criminalisation of these businesses and their executives and local suppliers are to cease immediately, while practical solutions which are compatible with European law are sought.

The Placanica case, as the case of Gambelli preceding it, arose from the question whether the Italian law restricting betting activities only to those people or companies licensed in Italy was compatible with the EU principles of freedom of establishment and freedom to provide services. The Gambelli ruling had clarified in 2003 that the restrictions imposed by Member States on their gambling markets will be only compatible with Articles 49 (freedom to provide services) and 43 (freedom of establishment), if they were justified on the very limited grounds of public order, security or health or on these overriding rulings of public interest while they must not exceed the means necessary to achieve such an objective or be applied in discriminatory manner. Specifically, an objective relating to enriching the public purse was deemed an illegitimate one for these purposes and Placanica re-iterates this so as to remove any doubt on the issue. Italy is not the only Member State where the Gambelli ruling has, to date, gone unheeded, as numerous other similar cases concerning other Member States are still pending at the ECJ.

The Placanica ruling clarifies Gambelli and is even more explicit about the ECJ’s opinion on this matter. Former ECJ Advocate General Siegbert Alber comments on this latest ruling: “Monopolies cannot and should not be the only means of regulating gaming. Granting licences can serve the same purpose. The reasons given in the Placanica case for Italy’s monopoly are much more honest than the pronouncements made by other Member States. At least Italy admits that its approach is designed to increase revenues and to combat illegal gaming.”

It is also not enough for compliance to simply open up licensing applications to all without considering the necessity of the conditions. A system that requires a local license and local corporate and server presence and other such conditions without proper consideration of alternative ways to achieve the legitimate public policy objectives will also likely fall foul of the Treaty. The EBA believes there is a workable route toward the recognition of the standards and licenses of other EU licenses and solutions for ensuring that cross-border enforcement can work without requiring internet businesses to establish themselves in every European Member State. That is, after all, what e-commerce is all about and there is no reason why this should not work in this sector.

EBA expects Placanica to give the European Commission further undisputable legal arguments and unquestionable justification to pursue infringement proceedings against Member States for illegal restrictions in their gambling markets. It is hoped that the European Commission will pursue with increased vigour and speed all pending complaints of infringement in this area for the benefit of the legitimate operators who suffer daily financial damage and their Executives who are being treated as criminals in various European jurisdictions.

Furthermore, pretending that online betting and gaming is not a popular form of entertainment that adults across Europe want to have the option of indulging in, from their choice of licensed and regulated European provider, is no longer sustainable. A competitive market among licensed and regulated operators in an innovative and technology driven business is the only way to deliver the highest levels of consumer value and consumer protection.

The EBA believes that the legal position has been further clarified and that all the necessary guidance is now there to enable governments to revisit their policies in this area. The EBA hopes that governments looking for long term solutions that are compliant with European law protect the interests of consumers and enable a regulated European industry to develop in partnership with governments as opposed to in conflict with them, now see and seize the opportunity for a dialogue with the industry.