World Online Gaming Law Report, April 2007 (Volume 6 Issue 4)
Courts in Germany and Portugal have recently referred cases concerning sports betting monopolies to the European Court of Justice. Martin Arendts, Attorney at Law with Arendts Anwälte, explains how these cases give the ECJ a further chance to clarify the law regarding state monopolies, following its rulings in the Italian cases of Zenatti, Gambelli and Placanica.
Open questions
In its Placanica decision of 6 March 20071, the ECJ ruled that it is inconsistent with Community law to criminally sanction the cross-border provision of sports betting. However, several questions remained open. National courts still argue under what circumstances a monopoly with regard to sports betting can be upheld under Community law, after Italy opted for a licensing concept. Therefore, several German courts drew the conclusion that they do not have to take the Placanica reasoning into consideration at all2. In his opinion on the Placanica case, the Advocate General Colomer hinted to the country of origin principle, by arguing: 'Therefore, if an operator from another Member State meets the requirements applicable in that State, the national authorities of the Member State in which the service is provided should accept that as a sufficient guarantee of the integrity of the operator3'. In its judgment, the ECJ already held the Italian regulation to be inconsistent, so it did not take a stand on this argument.
References for preliminary rulings by the ECJ
Now, it is for the ECJ to decide these open questions. A Portuguese court, the Tribunal de Pequena Instância Criminal do Porto, has referred key questions on the compatibility of gambling monopolies under Community law to the ECJ (Case C-42/07).
The background of this case is an ongoing dispute between the Portuguese monopoly operator, Santa Casa da Misericordia de Lisboa, and Gibraltar-based Baw International Ltd (a subsidiary of listed company, bwin). The dispute revolves around Baw's existing sponsorship of the Portuguese professional football league (Liga Portuguesa de Futebol Profissional), which Santa Casa has tried to have annulled by Portuguese courts, claiming that the sponsorship contravenes Portuguese advertising law. Portugal's advertising code specifically states that the advertising of games of chance is prohibited, except for games developed by Santa Casa. Baw International Ltd, along with the Liga Portuguesa, to whom Bwin's sponsorship is worth up to €10 million over the next four years, brought forward that Santa Casa's privileged position as a monopoly operator of all lottery, betting and internet games contravenes Community law.
As well as being certain to make an impact in Portugal, the questions the Porto court has referred to the ECJ are of great interest in a broader European context.
The court referred the following:
- Does the monopoly granted to Santa Casa [da Misericórdia de Lisboa], when relied on against Baw [International Ltd], that is to say, against a provider of services established in another Member State in which it lawfully provides similar services, which has no physical establishment in Portugal, constitute an impediment to the free provision of services, in breach of the principles of freedom to provide services, freedom of establishment and the free movement of payments enshrined in Articles 49, 43 and 56 respectively of the EC Treaty?
- Is it contrary to Community law, in particular to the abovementioned principles, for rules of domestic law such as those at issue in the main proceedings, first to establish a monopoly in favour of a single body for the operation of lotteries and mutual betting and then to extend that monopoly to 'the entire national territory, including ... the internet'?
Separately, the Administrative Court of Giessen in Germany referred a German sports betting case to the ECJ4. Last year, the Administrative Court of Cologne had referred a first case to Luxemburg5. However, this case (C-409/06 - Winner Wetten) only deals with the temporary suspension of the basic freedoms, guaranteed by the EC Treaty, with regard to sports betting (as the Administrative Court of Appeal of North Rhine-Westphalia openly suspended the freedom to provide services and the freedom of establishment in more than 200 cases concerning betting shops).
The new German case has a much broader scope. On the one hand, the German court explicitly asked the ECJ whether a sports betting monopoly is consistent with Community law, if the authorities encourage the participation in gambling and if private operators are allowed to offer gambling services with equal or even higher risks compared with sports betting, e.g. horse betting, slot machines or casinos. On the other hand, the German court wants to know if operators from other Member States can rely on their foreign license, as the German regulations do not provide for a licensing procedure consistent with the requirements of Community law.
Possible consequences of the upcoming decisions
Both the German and Portuguese cases require the ECJ to explicate under what circumstances and requirements a national monopoly can be upheld, effectively excluding operators licensed in other EU Member States. Should an operator licensed in one Member State be allowed to offer its services throughout the EU? If the answer is 'Yes', the existing national monopolies will probably not survive.
I expect the ECJ to further develop the consistency test and to question the coherency of national regulations. In this context, the ECJ will have to answer whether it is contrary to Community law for a Member State to extend a monopoly to the internet. Most of Europe's more embattled monopoly operators have gone online, including Française des Jeux, Svenska Spel and Holland Casino. German state lottery companies proposed last year to uphold their monopolies and to avoid anti-trust law problems by shutting down the use of the internet for all gambling services. The draft of the new German Interstate Treaty on Gambling (Glücksspiel-Staatsvertrag) provides for a complete ban of the provision and advertising over the internet. However, the European Commission, in a formal letter to the German government, has already declared this ban to be inconsistent with Community law. In this context, the ECJ might also exemplify whether it is against Community law to blacklist websites of operators licensed in other Member States (as Italy already tried to do with Maltese websites).
It is also interesting to note that the Portuguese court not only referred to the freedom to provide services and the freedom of establishment (as in the previous cases), but also to the free movement of payments. Taking the Unlawful Internet Gambling Enforcement Act (UIGEA) as a model, several Member States are planning to restrict and block payments to foreign sports betting and gambling operators. In Germany, the draft of the new Interstate Treaty explicitly addresses payment solutions.
It is not very likely that the ECJ will accept this. It is also likely that the ECJ will disapprove the theory, brought forward by the Administrative Court of Appeal of North RhineWestphalia and followed by some German courts, that national courts are entitled to suspend the basic freedoms, simply by arguing with stability of the law and a loophole in the law.
Martin Arendts
Attorney at Law
Arendts Anwälte
martin.arendts@anlageanwalt.de
footnotes:
1. Joined Cases C-338/04, C-359/04 and C-360/04.
2. For example, the Administrative Court of Appeal of Rhineland-Palatia (Oberverwaltungsgericht RheinlandPfalz), decision of 2 May 2007, file-no. 6 B 10118/07.OVG.
3. Opinion of Advocate General Colomer, delivered on 16 May 2006, paragraph 130.
4. Administrative Court of Giessen, decision of 7 May 2007, file-no. 10 E 13/07.
5. Adminstrative Court of Cologne, decision of 21 September 2006, file-no. 1 K 5910/05.
No comments:
Post a Comment