On 15 October 2016, the Austrian Constitutional Court held that the Austrian gambling monopoly does not infringe upon the freedom to provide services under art. 56 of the TFEU. Therefore, it did not repeal the gambling monopoly for violating the principle of equal treatment.

The Austrian Constitutional Court (Verfassungsgerichtshof [VfGH]) in two recent cases (VfGH 15 October 2016, G 103/2016; 15 October 2016, E 945/2016) was asked to examine the question whether the Austrian gambling monopoly infringes upon EU law and/or constitutional law.

Initially, the Austrian Supreme Court (Oberster Gerichtshof [OGH]) had brought one of the cases to the Constitutional Court by making an application for repeal of sec. 3 of the Gaming Act (Glcksspielgesetz), which lays down the gambling monopoly, and other provisions of the Gaming Act, as well as in eventu for repeal of the Gaming Act in its entirety, on grounds of unconstitutionality (OGH 30 March 2016, 4 Ob 31/16m, see our Newsletter 3/2016). Citing pertinent case law of the European Court of Justice, the Supreme Court held that the gambling monopoly represented a restriction of the freedom to provide services, which could only be justified if it pursued a legitimate aim (such as consumer protection, fraud prevention or the prevention of incitement to place excessive bets) in a consistent and systematic manner. According to the Supreme Court, this was not the case since the two concessionaires sterreichische Lotterien GmbH and Casinos Austria AG aggressively advertised gambling, and thus the gambling monopoly should be qualified as an infringement of EU law. In its view, the fact that Austrian residents (in a purely domestic case) could not directly rely on fundamental freedoms, constituted a reverse discrimination which may contravene the principle of equal treatment laid down in art. 7 of the Austrian Federal Constitution (Bundes-Verfassungsgesetz). Unfortunately, the Constitutional Court rejected the application for procedural reasons (VfGH 15 October 2016, G 103/2016).

However, in the second case the Constitutional Court decided on the merits (VfGH 15 October 2016, E 945/2016 ua): Contrary to the Supreme Court, the Constitutional Court argued that the gambling monopoly indeed serves legitimate aims in a consistent and systematic manner, as the expenditures on gambling have not increased in Austria during the last few years. The fact that the total gambling market in Austria has not grown was seen as proof that the advertising campaigns of the concessionaires do not infringe upon EU law and therefore the Constitutional Court did not repeal any of the provisions of the Gaming Act for unconstitutionality.

A repeal of the Gaming Act in its entirety would have had significant consequences on the taxation of all gaming providers that offer games of chance in Austria. It should, however, be noted that there are currently other cases pending before the Constitutional Court in which an argument has been raised that was not yet dealt with.