European countries are an example of relatively harmonious development of the gambling industry. Here it is not customary to prohibit the work of gambling operators, while the rules of market formation and operation are strict. You can read about concrete examples of the influence of the decisions of the Court of Justice of the European Union (CJEU) in the material.
To begin with, it should be noted that the regulation of gambling markets in the EU member states may vary significantly. First of all, it is characterized by the national regulatory framework. The CJEU is empowered to decide whether a national regulatory regime is in compliance with EU law.
Since the European Union is an economic and political association, the legal and regulatory framework in force in the territory of its member States must comply with EU law. The CJEU‘s series of judgments provides guidance on the interpretation of fundamental rights, freedoms and obligations in relation to the domestic online gambling market. Thus, national courts have the opportunity to commensurate the severity of restrictive measures in the gambling industry. In other words, the CJEU sets a vector that determines whether certain requirements to gambling operators are justified, and also forms an understanding of common goals in the development of gambling.
The CJEU has defined the implementation of cross-border gambling services as an economic activity that is part of the scope of fundamental freedoms assumed by the Treaty on the Functioning of the European Union (TFEU). It should be noted that Article 56 of the TFEU provides for a ban on restricting the freedom to provide services to users in the EU countries. In this context, an important aspect is the absence of obligations related to mutual recognition of gambling operators’ licensing. Accordingly, the license is valid for work in the country where it was issued – the authorities are not obliged to reckon with the permission granted by the gambling regulator of another country.
CJEU in its own activities in relation to the gambling market is based on the need to restrict the industry from providing certain services in order to protect the public interest, the rights of minors, gambling addicts, as well as to combat money-laundering.
However, in order to make a restrictive decision, the court must conclude that it is proportionate and justified. In this regard, it must be proved that the innovation will achieve the objectives described above.
In addition, EU member states must demonstrate that the course they have taken with regard to the development of the gambling industry is consistent and effective in safeguarding the public interest.
Further, we propose to consider several cases, the decision on which was entrusted to the CJEU.
Sporting Odds Limited v Nemzeti Adóses Vámhivatal Központi Irányítása
The decision was adopted by the sixth chamber of CJEU on February 28, 2018. The main subject of intervention was the need to interpret article 4 of the Treaty on European Union, article 56 of the TFEU, and articles 41, 47 and 48 of the Charter of Fundamental Rights of the European Union.
The request was made as part of the proceedings between Sporting Odds Ltd and the Central Office of the National Tax and Customs Administration of Hungary. The subject of the dispute was the imposition of a fine of HUF 3.5 million on the company. The penalty was applied for the provision of online gambling services without a special jurisdictional permit.
Hungarian law establishes the need to obtain a special permit for the provision of online gambling services. At the same time, Sporting Odds Ltd is a British company, which operates under a license issued by the UK gambling regulator.
The investigation revealed that the company’s website provided sports betting services. Proceeding from the fact that Hungarian legislation on gambling contradicts EU legislation, the company decided to challenge the fine in the Administrative Court of Budapest.
The Court of First Instance made no unequivocal decision either as to whether the company had the opportunity to participate in the tender procedure provided for by law or whether its actions could be called systematic. Due to the insolvency of the local court, the case was referred to the CJEU. It held that the restriction on the work of gambling operators in Hungary, especially the monopoly nature of certain segments of the gambling business, was not an effective solution for achieving the objectives stated in the general description of the court’s work.
Based on the CJEU‘s ruling, it is for the prosecution to prove that the restrictions applied to gaming operators in the country are necessary for the realization of citizens’ rights and to counteract the negative impact of gambling. The state did not provide the necessary information about the damage to the work of Sporting Odds Ltd. on the market.
Accordingly, in the opinion of CJEU, it is not lawful to impose a penalty on the company.
Global Starnet Ltd vs. the Italian Ministry of Economy and Finance
The decision was made by the first chamber of the CJEU on December 20, 2017.
The request was made regarding the interpretation of articles 26, 49, 56, 63 and 267 of the TFEU as well as article 16 of the Charter of Fundamental Rights of the European Union. The parties to the proceedings are Global Starnet Ltd, the Italian Ministry of Economy and Finance and Amministrazione Autonoma Monopoli di Stato (AAMS, Italy). The subject of the dispute were the conditions applicable to the operation of online operators when using slots, as well as the area of competence of national courts in respect of this issue.
According to the CJEU regulation, Article 267(3) of the TFEU must be interpreted to mean that the case must be referred to the EU even if there is no conflict between national legislation and EU regulations.
Articles 49 and 56 of the TFEU as well as the principle of protection of legitimate expectations must be interpreted as not contradicting national legislation. In case of tougher requirements for gembling companies, the conditions should be added to the concession agreement. The approach of the reference court, according to the ruling of the CJEU, does not go beyond the minimum requirements for compliance with the basic principles and is not a disproportionate measure.
It should be reminded that new restrictions of VLT-terminals in Italy have a negative impact not only on operators but also on customers.