The European Court of Justice's (ECJ) decision in Placanica on the lawfulness of restrictions in Italian gaming law has generated a lot of comment on the gambling markets in Europe. However what implications does the judgment really have in the liberalisation of the market for gambling services?
There has been much said about the implications of the ruling in Placanica. Certain organisations are hoping that the European Commission use the ruling " to press ahead with its efforts to open the gaming market. Some however view the ECJ's ruling as putting a "final nail in the coffin of the state-monopoly model in the gambling sector…". Against this are those commentators who have suggested that the ECJ's judgement in fact consolidates and enhances the practise of restricted markets.
The European Commission recognises the laws of Member States, while pursuing public interest objectives, vary considerably and often lead to unlawful barriers to the freedom to provide services and the freedom of establishment. However on a political level, the Commission appears to consider (quite realistically) that the likelihood of any legislative liberalisation is remote. Indeed it is at pains to emphasise that any potential court action against Member States in relation to unlawful barriers does not have any implications for the liberalisation of the market for gambling services generally.
In Placanica, to a large extent the ECJ follows its previous rulings in Zenatti, and Gambelli. However, the judgement is stronger in certain respects.In Gambelli the ECJ ultimately left it for the national court to decide whether the Italian gaming rules were discriminatory against non-Italian operators. However, in Placanica the ECJ simply decides that, independent of the question of discrimination, the licence restrictions go beyond what is necessary in order to achieve, what the ECJ considered to be, the legitimate objective of preventing criminal activities in the sector. In the absence of a procedure for the award of licenses that is open to operators who have previously been unlawfully barred, operators cannot be sanctioned in Italy for operating without a licence.
However, the ECJ then re-affirms its ruling in Zenatti and Gambelli that restrictions on the number of operators can be justified, to the extent the restrictions reflect a concern to bring about a genuine reduction of gambling opportunities and to limit the activities in that sector in a consistent and systematic manner. The ECJ does note that the aim of increasing tax revenue (one of the Italian aims) cannot justify a restriction.
However, the ECJ does recognise the objective of preventing the use of betting and gambling activities for criminal or fraudulent purposes. It remarks that "it is possible that a policy of controlled expansion in the betting and gaming sector may be entirely consistent with the [legitimate] objective of drawing players away from clandestine betting and gaming": and further, that a licensing system "may constitute an efficient mechanism enabling operators active in the betting and gaming sector to be controlled with a view to preventing the exploitation of those activities for criminal or fraudulent purposes."
Conceptually it is rather difficult to reconcile "controlled expansion" with a reduction in gambling opportunities - it almost provides a Member State with the necessary terminology to cloak what otherwise could be viewed as protectionist or revenue raising measures.
It remains to be seen how "possible" it is for a Member State to justify such a policy before the national courts and before the ECJ, particularly should the Commission proceed with its infringement actions or should a national court refer the matter to the ECJ for guidance.
It also remains to be seen how the ECJ's comments can be reconciled with those in Gambelli, that "[I]n so far as the authorities of a Member State incite and encourage consumers to participate in lotteries, games of chance and betting to the financial benefit of the public purse, the authorities of that State cannot invoke public order concerns relating to the need to reduce opportunities for betting in order to justify" measures that would otherwise restrict the freedom of establishment/to provide services.
In Placanica the justification was proffered almost as an after-though and the cynic may wonder whether the ECJ is, almost without precedent, offering a helping hand to those Member States currently defending their regulatory systems before the Commission.
On balance, the ECJ's ruling in Placanica probably offers more comfort to a Member State looking to insulate its national market from competition than operators looking to expand across the EU. The ECJ once again shows a great deal of deference to governmental policy objectives in relation to gaming and appears to expand the possible justifications that can be asserted to justify what would otherwise be unlawful restrictions.