The ruling is a setback for online gaming groups, which have launched a series of legal challenges to domestic betting monopolies, because it could make it harder for them to open up shops across the EU.
The case concerns a dispute between the Portuguese state betting monopoly, Santa Casa, and bwin, which owns the website betandwin.com.
Shares in the Austrian online gambling group bwin, one of Europe's biggest Internet bookmakers, tumbled more than 5% on the news of the ruling.
Santa Casa had sought to break up a sponsorship deal involving the Portuguese football league that allowed bwin to advertise its website to fans.
In its ruling on Tuesday, the European Court of Justice said: "The prohibition imposed on operators such as bwin of offering games of chance via the Internet may be regarded as justified by the objective of combating fraud and crime." The judgement is in contrast with previous rulings of the Court (see 'Background').
Bwin reacted by asking update EU regulation to face the new market developments. "Online gaming has become a market reality. There is an urgent need to develop a legal framework in tune with the times to warrant the interest of consumers, the state and operators," Bwin Co-CEO Manfred Bodner commented in a statement.
"Court rulings will not be able to fill in for a regulation in the medium and long run," Bodner said.
The other bwin co-CEO, Norbert Teufelberger, added: "Only a regulated online gaming market with a diversified and attractive line-up of games will provide adequate security against the risks of a black market which in fact not only opens up the floodgates to crime but also passes up on consumer protection."
European Lotteries, the EU lobby group representing national lotteries, welcomed the ruling.
"This strengthens the hand of national governments and lotteries in controlling what gambling takes place on the Internet," said Rupert Hornig, the group's EU representative.
(EurActiv with Reuters.)
