EC to Scrutinize Gambling Laws of Seven EU States

5 April 2006

The long-awaited decision of the European Commission to send official requests for information on national legislation restricting the supply of sports betting services to seven member states came down Tuesday.

The Commission wishes to determine whether the measures in question are compatible with Article 49 of the EC Treaty, which guarantees the free movement of services. This decision relates only to the compatibility of the national measures in question with existing EU law and only in the field of sports betting. It does not touch upon the existence of monopolies as such or on national lotteries. Nor does it have any implications on the liberalization of the market for gambling services generally or for the entitlement of member states to protect their general interests (so long as this is done in a manner consistent with EU law, meaning the measures must be necessary, proportionate and non-discriminatory).

The letters of formal notice are the first step in an infringement procedure under Article 226 of the EC Treaty. The member states in question--Denmark, Finland, Germany, Hungary, Italy, the Netherlands and Sweden--have two months to respond. The Commission hopes that the answers it receives will lead to an early and satisfactory resolution of the matter.

"The Commission has an obligation under the Treaties to ensure that MS (member state) legislation is fully compatible with EU law," Internal Market and Services Commissioner Charlie McCreevy explained. "This is an important responsibility which it takes seriously. It has received a number of complaints from operators in the area of sports betting, and it feels obliged to respond. It has, therefore, decided to seek information on the matter from the MS concerned. I don't underestimate the sensitivities that exist in many MS on the question of gambling. In sending these letters, we are not seeking to liberalize the market in any way. Rather, we are seeking reassurance that whatever measures member states have in place are fully compatible with existing EU law, or have been brought fully into line. I hope that the replies we receive will offer us sufficient reassurance. In that case, it will be the end of the matter. I will certainly do what I can to facilitate an early resolution, and I encourage all concerned to play their part too."

The Commission's decision to inquire into the compatibility of the measures in question is based on complaints made by a number of service providers and on information gathered by the Commission. The complaints concern restrictions on the provision of sports betting services, including the requirement for a state concession or license (even where a provider is lawfully licensed in another member state). In some cases, restrictions also extended to the promotion or advertising of the services and to the participation of nationals in the member state in question in the games.

Today IGN contacted all the concerning sports betting operators (all members of the European Lotteries) in Denmark, Finland, Germany, Hungary, Italy, the Netherlands and Sweden and asked the seven possible offenders for a reaction, and only Dutch Tjeerd Veenstra, director De Lotto and lobbyist for European Lotteries, responded. Veenstra countered, "The Netherlands also awaits a formal letter from the EU Commission. I have been told that the complaint is based on the Ladbrokes case, but official confirmation is not yet there."

He added, "We know that our opponents have sent a lot of complaints to the EU Commission--a deliberate move to create as much as possible confusion and to put pressure upon the Commission. One of the tactics is their battle to obtain a deregulation of the gambling services in Europe. The Commission is, of course, submitted to normal proceedings and can not postpone infinitely the discussion about the complaints. We, as European Lotteries, would, however, have preferred a dialogue with the Commission to clarify the situation. But they decided otherwise, and so be it.

"I must say that I am absolutely amazed about the way our opponents explain the procedure. It sometimes seems that starting up this procedure is already a verdict in itself. The fact is that the Commission will send a letter to the addressed MS based on complaints with a request to clarify. And I am confident that the response of the MS will confirm that they are not infringing EU law. An example is our Ladbrokes case. What can be added to the very clear verdicts of the Court of Arnhem and the Supreme Court?"

Veenstra also pointed to a press release, distributed yesterday by the Commission, in which "the responsible commissioner, Charlie McGreevy, declared that he has no intention to liberalize the gambling market in Europe, but seeks reassurance that the MS with their gambling policy are in line with existing EU law and jurisprudence."

He continued, "It must also not be forgotten that the EU Commissioner announced yesterday a new draft Services Directive which is in line with the amendments of the European Parliament. This new draft will exclude the gambling services.*

"Adding up the events in the last 10 days--the verdict of the Bundesverfassungsgericht in Karlsruhe, the clear statements of EU Commissioner McGreevy with regard to the liberalization of gambling and the removal of the gambling services from the new draft Services Directive--(there is) much reason for us to celebrate. That does not mean that we consider the battle as been won. There is much to do. One of the things to do is the dialogue with the EU Commission and offering them our expertise and long time experience in this complex field. Our European society needs peace and clarity in this sometimes so troublesome area."

The European remote gambling industry, of course, welcomes the decision taken by the European Commission to launch a large-scale investigation into the sports betting market in the seven member states.

"The Commission has serious doubts whether restrictions in these markets are aimed at reducing gambling opportunities rather than protecting revenues for the state budget," the European Betting Association and the Remote Gambling Association said in a joint statement. "The Commission has grounds to believe that these member states violate the Internal Market principle of freedom to provide services (Article 49 of the EU Treaty) in this sector.

"As Guardian of the Treaty, the Commission has the duty to investigate potential breaches of EU law in all service sectors and has therefore decided to send a letter of formal notice to these governments, which constitutes the first step of an infringement procedure.

"This investigation results from complaints lodged to the Commission in recent years by gambling operators, consumers, media companies, tourism operators, sports organizations and charities, originating from various Member States (Austria, Denmark, Finland, Germany, Greece, Hungary, Italy, Portugal, Sweden and the UK). Complainants include EBA and RGA members who have systematically been victims of discriminatory practices in these MS and were unable to exercise their legitimate rights to provide these services as confirmed by the ECJ case law.

"In a context of rising national protectionism in various MS, the remote gambling industry welcomes the Commission's strong determination to enforce Internal Market rules in this sector. More notably since both the European Parliament and the Council decided not to address gambling in the Services Directive."

Didier Dewyn, secretary general of the EBA, urges the Commission to "improve the situation for EBA and RGA members who have been victims of such unfair discriminatory practices across the union, without having to take member states to the Court in Luxembourg."

Both associations believe the investigation sends a clear message to consumers, the industry and member states that there's a need to clarify the legal situation in the sector. The EBA and the RGA hope that governments will take serious heed of the Commission's determination not to tolerate discriminatory practices anymore and provide fair and regulated market access to their members.

Clive Hawkswood, chief executive of the RGA, calls upon member states "to work with our industry and others to identify and adopt fair and sustainable rules for remote gambling within the European Union."

"Together," he said, "we can address all of their legitimate concerns about keeping crime out and protecting consumers."

And the beating on the drums will go on for a long time to come.

*The European Commission on Tuesday received broad support from MEPs for its reworking of the controversial law on liberalizing Europe's services sector. The revised draft follows an earlier vote by the European Parliament in which deputies scrapped the most disputed elements of the legislation. The Commission has replaced the controversial "country of origin" principle--stating that companies can do business across borders according to rules in their home country--with a line suggesting that host countries can maintain some special requirements for foreign firms to protect public policy, security, health or environment.

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.