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Gambling: European Court calls into question the compliance of the new Italian regulation. EU law precludes national legislation designed to protect the market position of incumbents.

Date

16 Feb 2012

Sections

InfoSociety

CJEU confirms fundamental ‘red line’ for regulated gambling markets and the obligation to ensure full transparency, legal certainty and equal treatment. 

Today the European Court of Justice (CJEU) issued its preliminary ruling in the joint cases Costa and Cifone regarding the access of European operators to Italian gambling licences (cases C-72/10 and C-77/10) under the 2006 reformed Italian gambling legislation. The CJEU confirms that Member States cannot protect vested economic interests and thereby discriminate against new operators under the aegis of consumer protection or fraud prevention. 

In particular, the Court ruled:

- That a national restriction is justifiable only if it does “not have as a true objective the protection of the market positions of the existing operators” – Para.  65

- “The very fact that the existing operators have been able to start up several years earlier than the operators unlawfully excluded ,[…] confers on them an unfair competitive advantage [which] [...]  constitutes a new breach of Articles 43 EC and 49 EC and of the principle of equal treatment.” –  Para 53.

- As regards possible justifications for unequal treatment "the objective of ensuring continuity, financial stability or a proper return on past investments for operators […] cannot be accepted as overriding reasons in the public interest" – Para 59.

- The Court rejects the justification by the objectives of reducing gaming opportunities and combating criminality, when a Member State "has long been marked by a policy of expanding activity with the aim of increasing tax revenue" – Para 62.

- The Court also points out that national measures intending to achieve such objectives must be proportional, consistent and systematic – Para 63. This is not the case if national measures, for example "rules on minimum distances were imposed exclusively on new licence holders and not on those already established" – Para 64.

    “In order to enable any potential tenderer to assess with certainty the likelihood that such penalties will be applied to it, to preclude any risk of favouritism or arbitrariness on the part of the licensing authority […] it is therefore necessary [… to set out the circumstances for the withdrawal of licenses] in a clear, precise and unequivocal manner” – Para. 78

    The Court further repeats its consistent case law that no penalties may be imposed on operators having been excluded from obtaining a license in breach of EU law – Para. 85.

In its ruling, the Court notes that the Italian legislation, in the manner in which it regulates the gambling market, is not consistent with the claimed objectives of protecting consumers from gambling addiction and limiting gambling activity in Italy. The Court points out that the aim of the Italian legislation is to protect incumbents and increase tax revenues. Such objectives cannot serve to justify violations of EU law. This ruling is in line with a series of recent rulings in which the Court focusses on the lack of consistency between the claimed objectives of Member States and the actual legislation that in fact aims to protect incumbents' interests.

Sigrid Ligné, Secretary General of the EGBA commented on today’s ruling: “This very positive ruling confirms that national legislation that opens up and regulates the gambling market may not discriminate against new operators but must guarantee fair market access.”  

Ligné adds: “The Court has made particularly clear the ‘red lines’ that Member States must observe when they regulate gambling; it is high time for the European Commission to enforce the consistent case law of the CJEU and pursue complaints and infringements procedures accordingly

– END –

For more information, please contact:

Sigrid Ligné: +32 2 554 08 90, egba@egba.eu

Note to the editor

The cases at hand regard the access of UK gambling operator Stanleybet to Italian licences. Stanleybet offers its sports betting services in Italy through more than two hundred agencies, known as ‘data transmission centres’. Costa and Cifone run two of these centres. The centre premises, open to the public, provide players with IT equipment allowing them access to a Stanleybet server located in the UK. Players can thus gamble with Stanleybet online from physical outlets in Italy. These are the facts behind the disagreement between the Italian judiciary and the two Stanleybet agents and the subsequent request by the Italian judiciary for a preliminary ruling as to the compatibility of Italian legislation with the EU Treaty.

About EGBA

The EGBA is an association of leading European gaming and betting operators Bet-at-home.com, BetClic, bwinparty, Digibet, Expekt, Interwetten, and Unibet. EGBA is a Brussels-based non-profit association. It promotes the right of private gaming and betting operators that are regulated and licensed in one Member State to a fair market access throughout the European Union. Online gaming and betting is a fast growing market, but will remain for the next decades a limited part of the overall European gaming market in which the traditional land based offer is expected to grow from € 80.4 Billion GGR in 2010 to € 92 Billion GGR in 2015, thus keeping the lion’s share with 86% of the market. Source: H2 Gambling Capital, September 2011 - www.egba.eu    

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