State monopolies and public supervision of online gambling under EU law

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Under EU law (Articles 49 and 56 TFEU), State monopolies and exclusive-right concessions on gambling may be compatible with the freedoms to provide services and of establishment insofar as they are genuinely justified by the need of guaranteeing public order, crime prevention and consumer protection.

In recent case-law (Liga Portuguesa, Carmen Media and finally Dickinger and Ömer), the European Court of Justice (ECJ) applied this general principle to online gambling which deserved particular attention in light of its non-harmonised regulation and pervasive diffusion within the Member States.

In the most recent judgment to date (Dickinger and Ömer, delivered on 15 September 2011 by reference for a preliminary ruling from an Austrian criminal court), the ECJ considered the Austrian Federal Law on games of chance (Glücksspielgesetz, BGBI. 620/1989). The latter reserves to the Austrian State the right to organize the games of chance and requires inter alia that casino games marketed through the internet are provided, under a concession regime, by an operator in the form of a capital company established in Austria. Moreover, the holder of the concession is not allowed to set up branches outside Austria.

The dispute in the main proceedings concerned the activity performed by two Maltese subsidiaries of the German parent company “bet-at-home.com”, which used a server in Linz (Austria) thus allegedly offering games of chance an sporting bets in breach of the Austrian Federal Law.

The ECJ recalled that by requiring a registered office in Austria the provision at hand entails a discriminatory restriction which can therefore be justified only on one of the grounds set out in Article 52 TFUE, namely public policy, public security or public health.

In this respect, the Austrian authorities alleged that the main aim of the requirement at hand is precisely to allow effective monitoring of online gambling since the Austrian authorities do not have the same possibilities of supervising economic operators established in other Member States.

On this point the ECJ stated that the concept of public policy, first, presumes that there is a genuine and sufficiently serious threat to a fundamental interest of society and, second, must, as a justification for a derogation from a fundamental principle of the Treaty, be narrowly construed. It is therefore for the referring court to determine, first, whether the objectives relied on by the Austrian Government are capable of falling within that concept and, if so, secondly, whether the obligation concerning the registered office at issue in the main proceedings satisfies the criteria of necessity and proportionality laid down in the Court’s case-law. In particular, according to the ECJ the referring court will have to ascertain whether there are other less restrictive means of ensuring a level of supervision of the activities of operators established in Member States other than Austria, equivalent to that which can be carried out in respect of operators whose registered office is in Austria.

The referring court had asked moreover whether checks on operators of games of chance carried out in other Member States (i.e. Malta in the case under review) are relevant to assessing the proportionality of the national legislature’s decision to introduce a monopoly of internet casino games.

The parties in the main proceedings and the Maltese government relied on the consistent case-law of the Court which recognises that it is incompatible with the freedom to provide services to make a provider subject to restrictions for safeguarding the public interest insofar as that interest is already safeguarded by the rules to which the provider is subject in the Member State where he is established (Webb, Arblade, Canal Satélite Digital). They consequently submitted that, since the professional qualities and integrity of the Maltese subsidiaries are already guaranteed by the checks applied to them in Malta, it is contrary to Article 56 TFEU for the Austrian authorities to exclude them from the Austrian market on the purported ground of the objective of protecting gamblers against fraud on the part of operators of games of chance.

On this point the ECJ concluded that the mentioned case-law is not applicable in the present state of development of EU law, in a field such as that of games of chance which is not harmonised at EU level and in which the Member States have a wide discretion in relation to the objectives they wish to pursue and the level of protection they seek.

According to the ECJ, therefore, “the fact that a Member State has opted for a system of protection that differs from that adopted by another Member State cannot affect the assessment of the need for and proportionality of the relevant provisions, which must be assessed solely by reference to the objectives pursued by the competent authorities of the Member State concerned and the level of protection which they seek to ensure”.

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