By Thibault Verbiest and Ewout Keuleers1
In its opinion of March 13, 2003, Advocate-General Siegbert Alber defended the thesis supporting that the Italian legislation concerning sports bets constituted a non-justified obstacle to the freedom to provide services throughout the European Union.
Facts of the Case
Pursuant to article 4 of Act No. 1/89, the organization of the bets on sports events, supervised by the CONI or UNIRI, is reserved for companies having a public concession. The public prosecutor initiated a criminal procedure against Piergiorgio Gambelli and others, this for the organization of and reception of bets for the British bookmaker Stanley International Betting. The latter, established in Liverpool, was granted with the required U.K. license to pursue its activities.
In the appeal procedure, the Court of Ascoli Piceno evoked two reasons to introduce a prejudicial question at the European Court of Justice. In the first place, the court raised some questions concerning the proportionality between the adopted measure, i.e. criminal repression, and the objective pursued. In the second place, the court estimated that there was a contradiction between, on the one hand, the national conservation of the monopoly and, on the other hand, the expansive policy conducted by Italian authorities, this to raise public funds.
The opinion of Advocate-General Alber
In his opinion, Advocate-General Alber had to provide an answer on two questions. In the first place, does Act No. 401/89 impede the freedom to provide services, as guaranteed by article 49 of the Treaty of Rome? In the second place, he had to formulate an answer to a question that was evoked for the first time before the Court of Justice in this matter: the freedom of establishment. In relation to the later principle and having considered the facts of the case, the data transmission centers, i.e. the core business activity of Gambelli, offered various services. In this light, the activities Gambelli carried out on behalf of Stanley constituted "one" of the many economic activities Gambelli carried out. Consequently, Alber concluded that the data transmission centers could not be considered branches of the U.K.-established bookmaker and that the concerned activities related to the provision of services.
Notwithstanding the fact that the freedom of establishment or other dispositions of community law, in particular EC competition law, can be of importance, almost all legal discussions focus on the application of article 49 of the Treaty of Rome concerning freedom to provide services. According to the established European jurisprudence, in particular the Schindler, Läärä and Zenatti cases, member states have a large discretional competence to derogate from this principle and impede the free provision of services, provided that the restrictive measurements are i) not-discriminatory, ii) justified by reasons general interest and iii) proportional and necessary to achieve the objectives pursued.
Are the measures imposing discrimination between service providers?
The Italian legislation on sports betting imposes a monopolistic structure. One can consider that there is discrimination between national and foreign service providers, when the latter are excluded from deploying their economic activities in the member state concerned. In fact, the attribution of a concession to national operators can prejudice the position of foreign operators. Having considered the facts of the case, the Advocate-General concluded that that imposed measure was discriminatory for two reasons. The legislation a quo did not only excluded certain legal entities from obtaining the required concession, but moreover it also required that a concession holder would have an Italian office.
Are the measures justified, proportional and necessary?
Following the jurisprudence of the court in the Zenatti case, Advocate-General Alber directly proceeded with an analysis of the reasons of general interest. The Italian government evoked three such reasons to justify the adopted restriction: i) the prevention of crime, ii) the protection of players and iii) the re-allocation of profits to public funds. Notwithstanding the fact that the court considered in the Zenatti case that it belonged to the national jurisdictions to assess the justification in question, Alber estimated that a thorough analyzes was in order.
- To Fight Criminal or Fraudulent Organizations
As for the first justification, the Advocate-General held that games were subject to a proper regulation in almost all the Member States and that the underlining ratio legis is often similar. For this reason the authorities of the country of destination, i.e. Italy, should accept that the control exercised by the competent authorities of the country of origin is a sufficient safeguard to counter criminal acts or fraudulent schemes. In connection hereto, it should be underscored that this reasoning is closely connected to article 3 of Directive 2000/31/EC on electronic commerce. In article 3, the so-called internal market clause, it is stated that i) each Member State shall ensure that the information society services, including online gaming services, provided by a service provider established on its territory comply with the national provisions applicable in that Member State and ii) that Member States may not restrict the freedom to provide information society services from another Member State.
- The Protection of Players and Society at Large
Contrary to the argument developed by the Italian authorities, Alber saw a contradiction between, on the one hand, the restrictive measure and its underlying justification, while on the other hand, the policy actually pursued. Considering the aggressive publicity campaigns and the possibility to grant thousands of new concessions, the Advocate-General concluded that one could not speak about a coherent gaming policy directed to restrict the supply of gaming services on the Italian market. In this view, the one Stanley- imposed the restriction could not be justified.
- The Re-Allocation of Benefits
The court affirmed in its decisions Schindler, Läärä and Zenatti, that the re-allocation of profits to public funds or charitable activities cannot be a sufficient justification to override the freedom to provide services throughout the European Union. Moreover, as Alber underlined, a predominant concern for the member states was the economic consequences resulting out of a major change in the gaming sector, i.e. cross-border provision of gaming services. In this respect, it is obvious that the potential dangers associated with gaming activities are of no consideration. Consequently, this concern cannot be evaluated within the framework of consumer protection or other reasons of general interest.
In conclusion, the Advocate-General held that the Italian legislation in the field of sports bet did not only impose a discriminatory measure, but in view of the facts of the case, failed the required justification on grounds of general interest.
Notwithstanding the fact that this opinion does not bind the Court of Justice, it is a serious indication that the gaming sector may be facing a Copernican revolution. If the European Court of Justice follows this opinion, an initiative of the European Commission to establish a European regulatory framework for online gaming services has to be put on the community agenda.
Considering the borderless nature of e-gaming services and the need to regulate the information society from a higher level than the one of the member states, the adoption of a European regulatory framework for e-gaming services seems to be appropriate. This community framework would not only establish the ground principles for the cross-border provision of e-gaming services and harmonize consumer protection in the field of gaming legislation, but would also give Member States a certain degree of flexibility to adopt tailored national measures, this in compliance with the European framework.
1Thibault Verbiest is an attorney at Bars of Brussels and Paris and chairman of the federal Internet Observatory.
1Ewout Keuleers is an attorney at the Bar of Brussels and a researcher at the Center for Computer and Law CRID.