EU Court strikes blow to gambling industry

European Union law may allow countries to ban foreign gambling websites if the intention is to prevent criminal offences, the European Court of Justice said yesterday (8 September) in a judgement that goes against previous rulings by the Court and is sure to reverberate through the betting industry.

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.)

Gambling activities have traditionally been strictly regulated at national level to protect consumers against addiction, fraud, money-laundering and fixed games. But since the Internet has become the most successful gambling platform, the industry has lodged a number of EU-wide complaints regarding access to national markets.

The European Commission has opened numerous infringement procedures against member states to verify whether national measures limiting the cross-border supply of online gambling services are compatible with Article 49 of the EC Treaty, which guarantees free movement of services (EURACTIV 05/04/06).

The European Court of Justice has previously stated that any restriction which seeks to protect general-interest objectives, such as the protection of consumers, must be 'consistent and systematic' in how they seek to limit activities. Therefore, a member state cannot invoke the need to restrict its citizens' access to gambling services if at the same time it incites and encourages them to participate in state games of chance or betting offered by national operators or monopolies (EURACTIV 08/03/07).

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