EU law: battles continue to open up betting markets, from Brussels to Lisbon

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

National laws granting monopolies or exclusive rights to provide betting and gaming services have continued to be subject to legal challenges in the wake of the ECJ judgment in Placanica (see this article). The results have been somewhat mixed for those seeking to open up EU gambling markets

Further Commission action on sports betting

Following on its formal action against restrictions on sports betting services in Denmark, Finland and Hungary, the European Commission formally requested two more EU Member States to amend their laws on sports betting services in order to bring them into line with EC Treaty rules on freedom to provide services.

The action taken in relation to France and Sweden is the second stage of the procedure under Article 226 of the EC Treaty. The next stage in this procedure if a Member State fails to bring its laws into compliance with EU law is for the Commission to bring an action in the ECJ to seek a judgment against the Member State. The Commission's concerns cover the exclusive sports betting rights themselves as well as ancillary restrictions on advertising and sponsorship, including the measures invoked against betting operators' sponsorship arrangements in football and cycling in France.

The Commission has in addition opened a new proceeding on similar grounds in relation to Greece. In all, ten EU Member States are currently subject to formal Commission challenge – over one-third of the EU – all of the cases except Austria relating to sports betting.

Unibet.com excluded from Italian cycling competition

Unibet.com was the cycling team excluded from French cycling events due to the French law prohibiting the advertising of unlicensed gambling services, an action that is part of the European Commission case against France. Now the team faces similar problems in Italy. Organisers of the Giro D'Italia excluded the Unibet.com team from competing on grounds that it was unlicensed in Italy.

However, the exclusion seems to have more to do with cycling politics than gambling restrictions. Unibet.com's Italian operation, Unibet.it, does in fact have an Italian licence – but other teams, notably Française des Jeux, do not.

Nevertheless, Unibet has since announced that it will end its sponsorship of the professional cycling team which will disband at the end of the year.

Norwegian monopoly genuinely aimed at reducing gambling addiction

The EFTA Court is the equivalent to the ECJ and interprets the almost identical rules to EU law that apply in the three EFTA States that are joined with the EU Member States in the European Economic Area: Norway, Iceland and Liechtenstein. The EFTA Court therefore applied the same principles as the ECJ when it was called upon to determine the legality of the Norwegian national gambling monopoly following a challenge by Ladbrokes. Like the ECJ, the Court considered whether this restriction on freedom to provide services was justified on the basis of a legitimate public policy objective and was both proportionate and necessary.

In this case, the court found that the Norwegian policy could be considered to be genuinely aimed at reducing gambling addiction, not a disguised protection for a State-owned company. Only a monopoly would, in the specific circumstances of Norway, be sufficient to achieve the policy objectives.

Whilst at first glance a victory for protectionism, in fact the Court's rigorous analysis of the Norwegian government's arguments shows how high a burden is faced by other states who are perhaps less consistent than Norway in adhering to their alleged aim of stopping gambling through rigid State control.

Finnish Supreme Court follows the Norwegian decision – or does it?

Another Ladbrokes challenge has been rejected in Finland, where the Supreme Administrative Court supported the government's decision to refuse Ladbrokes' licence application. A licence has already been awarded to Oy Veikkaus Ab, the state-owned national lottery company.

However, it is possibly less clear that Veikkaus's aim is to reduce gambling than was the case in Norway. The Supreme Administrative Court itself noted problems with Veikkaus's marketing and product development activities, suggesting that the age limit for gaming should be raised to 18. Finland's law on sports betting is separately already subject to European Commission challenge.

Portuguese monopoly referred to the ECJ

Another dispute over restrictions on advertising gambling services has been referred to the ECJ, this time from Portugal. BetandWin International (Bwin) entered into a sponsorship agreement with the Portuguese football league. This was challenged by the Portuguese monopoly, Santa Casa da Misericordia de Lisboa (operator of one of Europe's oldest lotteries, which was created in 1755 to provide funds for rebuilding following the Lisbon earthquake).

As well as an even stronger than usual political element - Santa Casa being fundamental to many Portuguese people's sense of national identity - the reference specifically raises the interesting question of the extent to which a national monopoly, even if justified in principle, may lawfully be extended to the Internet.

Germany – monopolies in lotteries and casinos, but not sports betting?

Finally, as well as providing yet another ECJ reference (from a court in Giessen), Germany continues to provide news stories. As the German states seek to reach agreement on gambling services, it has been reported in Reuters that the European Commission has proposed a compromise to the states that would let them keep monopolies in lotteries and casinos provided they relinquish those in sports betting services. If true, this confirms that sports betting remains top of the Commission's agenda for liberalisation.