Two Dutch lower courts ruled several weeks ago that access to Internet gambling sites by Dutch residents should be blocked and advertising Internet gambling services within the country should be stopped immediately. Ladbrokes (UK) and Paramount and Universal Amusements, the operator of Casino Lux (licensed and regulated operators in Curacao, Netherlands Antilles), could no longer allow Dutch residents to access and bet on their sites.
It seemed to be a huge blow for Internet operators, but on Monday the German EU Court of Justice's advocate general, Siegbert Alber, had potentially good news for foreign operators.
According to the opinion of the advocate general in Case C-243/01, in the criminal proceedings against Piergiorgio Gambelli and Others, regards the Italian prohibition on the taking of cross-border bets as contrary to the EU freedom to provide services. An organizer of bets who is established in another member state and carries out his activity in accordance with the legislation of that state should also be able to carry out business in Italy.
Gambelli and over 100 other defendants ran data transfer centers in Italy, linked by Internet with an English bookmaker, and collected sports bets in Italy on behalf of that bookmaker. In Italy, however, such activity is reserved for the state or state-licensed undertakings.
Criminal proceedings were accordingly brought against Gambelli and the others for taking unlawful bets.
Gambelli argued that the Italian legislation infringed the community law principles of freedom of establishment and the freedom to provide services.
The matter came before the Tribunale di Ascoli Piceno (Regional Court, Ascoli Piceno), which has asked the EU Court of Justice how the provisions of the EC Treaty are to be interpreted in this connection.
The opinion of the advocate general, however, is not binding on the Court of Justice. The task of the advocate general is, acting with complete independence, to propose to the court a legal solution to the cases before it. According to one of the judges involved in the case (who did not want to be mentioned by name), "It will be unlikely that the court will have another opinion as the advocate general." Percentage-wise, in 80 percent of cases, the court follows the advocate general.
In the view of the advocate general, the case goes beyond the issues discussed in the hitherto-existing case law of the Court of Justice on state regulation of games of chance. The advocate general takes the view that the data transfer centers are not branches of the English bookmaker. On the basis of the case law of the Court of Justice, he takes the view, rather, that they went into business as providers of services. In the final analysis, however, the matter is one for determination by the national court:
Infringement of the Freedom of Establishment
"If, however, there was a branch of the English bookmaker in Italy, the latter would have to be able to compete for the grant of a license, and the licensing system would have to satisfy the general community law requirements for legislation of a member state restricting the exercise of an economic activity."
In the opinion of the advocate general, the Italian provisions do not satisfy those requirements because, inter alia, they are framed in an openly discriminatory manner and are not adequate for the protection of consumers and social order.
Infringement of the Freedom to Provide Services
"Since the provisions that prevent organizers of bets from other member states from taking bets in Italy constitute an obstacle to the freedom to provide services in any event, they must be capable of being justified by imperative requirements."
The advocate general concludes, however, that the Italian legislation cannot be justified. The legislation of the member state where the service was provided (in this case the United Kingdom) already provided a sufficient guarantee of the integrity of the organizer of the bets. As far as discouraging gambling is concerned, the actual increase in the availability of games of chance facilitated by the Italian legislature in recent years belies the existence of a coherent policy of limiting gambling opportunities. For that reason, the alleged objectives, which are not (or are no longer) pursued in reality, are not sufficient to justify impeding the freedom to provide services of offerers established and duly authorized in other member states.
In the opinion of the advocate general, the feared negative financial consequences for the economies of some states arising out of a relative opening up of member states' markets for games of chance also cannot serve as justification.
The judges of the Court of Justice now retire to consider their verdict in this case. The judgment will be announced at a later date. According to spokesman Christopher Fretwell the definitive ruling will take around 6 months. Fretwell expects that the findings will be before the end of the year, although sometimes it takes up to 18 months. The Italian court referred the case to the EU Court of Justice on March 30, 2001, and the Court of Justice received all the documents on June 22, 2001.
With this information, Ladbrokes (UK) and Paramount and Universal Amusements do not have to spend a lot of money for court cases. They just have to wait for the verdict and they will have acquired the needed jurisprudence to overrule the Dutch rulings of the lower court cases.
Siegbert Alber--and, for sure, Piergiorgio Gambelli--will be remembered in history for breaking the monopolies of the national gambling organizations in Europe.