New developments in EU gambling regulation

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

Following several months of relative inactivity, recent weeks have seen a number of important new developments in the sphere of gambling regulation courtesy of a number of the European Union ("EU") institutions. Potentially the most interesting, and certainly the most unexpected of these, has been the news that the European Commission plans to finalise very soon infringement decisions concerning a number of Member States' gambling legislation. Separately, the European Parliament has also been seeking to influence gambling policy in the EU by voting in favour of a pared back version of MEP Ashley Fox's report on online gambling. Finally, the Court of Justice of the European Union ("CJEU") has also been making its mark, in particular by restating the legal position that in the absence of harmonisation in the gambling sector in the EU, there is no obligation for one Member State to recognise the licences issued by other Member States. We discuss each of these events in further detail below.

European Commission to issue infringement decisions against Member States

It has recently been reported that an official of DG Internal Market and Services has indicated that the European Commission had finalised its investigations into the gambling laws of a number of EU Member States and would soon be issuing infringement decisions.

The European Commission has to date engaged with a number of individual Member States whose gambling regulations are considered to be contrary to the EU rules on free movement. The Commission has opened infringement proceedings in several of these cases, with proceedings still outstanding in respect of Germany, Greece, the Czech Republic, Finland, Hungary, Slovakia, the Netherlands and Sweden. While the Commission has the power to pursue infringing member states in the European Courts, no such action has been taken to date and there is no indication from the Commission as to whether it will pursue this route in the pending decisions.

Issuing infringement decisions will be an important marker for the current EU Internal Market Commissioner Michel Barnier, whose term will expire in 2014. Mr Barnier published an action plan for online gambling in October 2012 (see our update of 24 October 2012), which many thought at the time that would help to create greater clarity for gambling consumers, operators and retailers alike. Mr Barnier's public stance on gambling reform also included a commitment to take action against those Member States whose regulatory approach to gambling continues to infringe EU law. However, with very little in the way of concrete action, it seemed until now that Mr Barnier's term would end with few of his commitments realised.

European Parliament agrees proposed online gambling policy

The European Parliament has also been active in influencing EU gambling policy, demonstrating marked opposition to any steps to create a single, EU-wide gambling market. The Parliament voted on 10 September 2013 in favour of a report prepared by British Conservative MEP, Ashley Fox which set out suggested policies ahead of a new European Parliament being voted in next year.

The final version of the report which was the subject of the Parliament's vote contained many concessions from the original version published in June (see our update of 25 June 2013 for more detail on the original draft). Ashley Fox MEP indicated publicly that he was very surprised at the extent of the changes requested. He also expressed his disappointment that his colleagues seemed so keen for national gambling monopolies to be protected.

While the report's recommendations are intended to influence EU gambling policy, they have no binding effect in themselves. However, the vote certainly gives an indication of the lack of political will in the EU for harmonisation of gambling regulation between Member States in the near future.

CJEU highlights lack of mutual recognition of Member State gambling licences

Politics aside, a recent judgment of the CJEU included several statements which underscored the court's stance in respect of the compatibility of restrictions in national gambling legislation with EU law. The CJEU confirmed the position that in the absence of harmonisation in the sphere of betting and gaming, there is no obligation of mutual recognition of licences issued by the various Member States. In addition, any national legislation which precludes all cross-border activity in the betting and gaming sector, irrespective of the form in which that activity is undertaken, will be contrary to EU law.

The decision related to a preliminary reference made by an Italian Court in a case brought by Data Transfer Centres on behalf of Goldbet, a gambling operator governed by Austrian law and licensed in several countries. DTC is a company which puts betters in contact with foreign bookmakers such as Goldbet;

The questions on which the Court of Justice was asked to opine related to the Italian licensing framework for gambling operators. In particular, the case concerned the inconsistencies in the treatment of operators tendering for new licences in Italy.

The situation arose as a result of certain operators being excluded from the tendering process for the award of licences held in 1999, which was subsequently found to be contrary to EU law. The CJEU's judgement found that the measures (introduced by the Bersani Decree in 2006) brought in to remedy the problems with the 1999 tendering process are themselves contrary to EU law to the extent that they offer certain protections to the commercial interests of the 1999 licensees. The Bersani Decree included a restriction over the number of gambling outlets allowed in a municipality by reference to number of inhabitants and the number of 1999 licensees already established in the area and a requirement for minimum distances between new licensed outlets and outlets established under 1999 licences.