On this first day of spring, the European Commission has taken action to put an end to obstacles to the free movement of sports betting services in Denmark, Finland and Hungary.
The Commission has formally asked the three member states to amend their laws following its consideration of their replies to letters of formal notice sent in April 2006. The Commission had sought, via this notice, to verify whether the restrictions in question are compatible with Article 49 of the EC Treaty, which guarantees the free movement of services.
The Commission considers the restrictions in question as not compatible with existing EU law, and suggests that the measures taken by these member states to restrict the free movement of sports betting services have not been shown to be necessary, proportionate and non-discriminatory.
Furthermore, in the Commission's view, existing national operators cannot be regarded as non-profit operations, given that they are subject to strict annual revenue targets and often rely on commercial retail outlets to market their various gambling services. The formal requests take the form of "reasoned opinions," representing the second stage of the infringement procedure laid down in Article 226 of the EC Treaty. The Commission may refer the matter to the European Court of Justice if two months pass with no satisfactory reply.
Not surprisingly, the European Betting Association (EBA) opined that the member states' replies were deemed inadequate by the European Commission. According to the EBA, none of the states have shown any indication or willingness to reconsider their monopolistic restrictions or to engage in a process of constructive dialogue with other stakeholders. On the contrary, some of these member states have introduced even more restrictive legislation against private European-licensed operators while at the same time allowing their state-owned or state-controlled operators to expand and advertise their products and services.
"We hope that the countries addressed by today's decision will now engage quickly in the necessary reforms," EBA Secretary General Sigrid Ligné explained. "There are several other member states that are under similar investigation and we invite them to move towards recognition and licensing schemes for the European private online operators to compete cross border in the internal market."
Members of European Lotteries (EL), which supports the preservation of gambling monopolies, nevertheless remain hopeful.
"I am confident that EU member states will prove the regulatory validity surrounding gambling in their respective jurisdictions," EL President Winfried Wortmann said. "What we are being presented with today is the view of the administration, the European Commission, not the final decision of the judge, which is the European Court of Justice (ECJ).
"Only two weeks ago, the ECJ once again recognized, in its Placanica judgment, the right of member states to restrict the offer of gambling services and the number of operators on their territory if justified by reasons of overriding general interest such as consumer protection, the prevention of both fraud and incitement to squander on gaming, as well as the general need to preserve public order. Only one week ago, the EFTA Court dismissed an infringement case brought forward by the European Commission's EFTA counterpart, expressly upholding Norway's gambling monopoly."
Wortmann said he expects the European Commission to reconsider its approach of looking at gambling from a pure internal market perspective and enter into a "full picture dialogue" with member states and the lotteries, encompassing the numerous social implications of gambling recognized by the ECJ and beyond.
The Commission's decision to inquire into the compatibility with EU law of the measures in question is based on complaints made by a number of service providers and on information gathered by the Commission's staff. 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 extend to the promotion or advertising of the services and to the participation of nationals in the member state in question in the games.
The European Court of Justice has stated that any restrictions seeking to protect general interest objectives, such as the protection of consumers, must be "consistent and systematic" in how they seek to limit betting activities. A member state cannot invoke the need to restrict its citizens' access to betting services if at the same time it incites and encourages them to participate in state lotteries, games of chance or betting which benefits the state's finances.