by attorney-at-law Martin Arendts, M.B.L.-HSG
After the Gambelli decision at the end of 2003 and its follow-up decision Placanica of March 2007 another landmark decision of the European Court of Justice (ECJ) regarding the freedom to provide services with regard to sports betting will be pronounced at the beginning of next year.
On 29 April 2008, the ECJ’s Grand Chamber, composed of 13 judges, heard Case No. C-42/07, referred from Portugal last year (cf. German Gaming Law updated no. 79 for the questions referred for preliminary ruling).
The ECJ’s upcoming decision should have significant effects not only on Portugal but also on the other EU Member States (in view of the eight pending German preliminary ruling proceedings this should be especially true for Germany). In particular, it remains to be seen, whether the consistency test with regards to national provisions on gambling, put at the centre of the legal discussion by all parties (next to the parties of the main proceedings not less than nine EU Member States as well as the European Commission), is going to experience further specification by the ECJ with regards to the “Gambelli Criteria” as stipulated in the Gambelli and Placanica decisions. Such a “Gambelli III” decision should be of vital importance for the other proceedings pending before the ECJ and should have further legal and political implications.
The subject matter of the initial proceedings is the sponsoring of the Portuguese Football League by bwin, a private bookmaker. Plaintiffs are Liga Portuguesa de Futebol Professional and Baw International Ltd. (a Gibraltar licensed bookmaker and member of the bwin group). Defendant is the Portuguese monopoly provider Santa Casa da Misericórdia de Lisboa. Santa Casa had tried to have that bookmaker’s sponsoring agreement with the Football League (valued at up to EUR 10 mill. over a period of 4 years) declared void. This contract provided for the Football League to be renamed in “Bwin League”. Santa Casa invoked the Portuguese Advertisement Code (Codigo de Publicidade) pursuant to which games of chance were banned from being advertised for, except for such games operated by Santa Casa. The plaintiffs appealed a fine of about EUR 80.000,- imposed on them and invoked prevailing Community law, in particular the freedom to provide services, the freedom of establishment and the principle of free movement of capital.
The oral hearing before the Grand Chamber of the ECJ on 29 April 2008 was above all about the justification of the gambling monopoly. Attorney-at-law Serra Jorge, representing the Football League and the bookmaker, contested that the limitation to one single operator was justified. Providing for a single license was not compatible with fighting crime either, since the Portuguese betting clients would then search illegal alternatives rendering them subject to an increased danger of fraud. A monopoly would drive people into the black market. Serra added, that all EU Member States were fighting money laundering, organised crime and betting fraud. Fighting crime and consumer protection could be accomplished equally effective if not more effective by a well organised licensing system. There were no risks with bookmakers licensed in another member state. Traditionally monopolies were less supervised than private companies.
The Portuguese government representing Santa Case on the other hand argued, that Santa Casa was now able to offer games of chance via the Internet as well (although limited to the games so far offered in receiving offices). Lottery scratch tickets were not offered via the Internet for reasons of gamblers’ protection. A monopoly was justified by limiting the demand for games of chance. Liberalising the gaming sector was a key political question which had to rest with the individual Member State. The free market logic must not force a Member State to abrogate a reliable and proven legal system.
The ECJ asked the parties, whether a national monopoly could be justified for reasons of crime prevention and, whether it was not possible to attain the same goal by other means as well. Moreover, the court asked the parties, whether a monopolized system for one type of game of chance, such as bets for example, could be justified, if a licensing system existed for other types, such as casinos. Furthermore, the ECJ asked for an opinion on whether a provider under a state monopoly should be banned from offering his services beyond the borders of its country of origin.
In addition, the ECJ’s judge-rapporteur, judge Konrad Schiemann, inquired about the notification proceedings regarding the legal regulation of the Internet offer and about the significance of the current ECJ jurisdiction regarding the Swedish monopoly on alcohol (Rosengren decision, Case C-170/04).
One can expect fundamental clarifications from the court as it dealt with the tensions between a state monopoly and the basic freedoms beyond the scope of the questions referred to it. Not only the proceedings before the ECJ but also thousands of proceedings before national courts are about the question, whether one type of game of chance can be monopolised by a state, whereas other, in part clearly more dangerous ones, are allowed to be offered by private operators. Is “coherence light”, that is a systematic regulation restricted to, say sports betting, sufficient or should the regulation of other types of games of chance such as casino games and slot machines be considered as well (a question referred to the ECJ by the Administrative Courts of Giessen, Stuttgart and Schleswig)?
As already reported in German Gaming Law updated no. 100, there is another case, on the basis of a reference for a preliminary ruling regarding the same facts, pending before the ECJ (Santa Casa da Misericórdia de Lisboa v Liga Portuguesa de Futebol Profissional (CA/LPFP), Baw International Ltd und Betandwin.com Interactive Entertainment, Case C-55/08). However, the ECJ has not joined the cases (which would have caused a significant delay) but stayed the later proceedings instead.
The ECJ’s Advocate General in charge of these proceedings, Yves Bot, announced to submit his opinion on 9 September 2008. A decision of the ECJ, usually pronounced within a few months thereafter, is therefore to be expected at the beginning of next year.
from: German Gaming Law updated No. 101