In 1992, the Member States discussed for the first time the issue of gambling in the internal market following a report prepared by Coopers & Lybrand for the EU Commission. At the European Council meeting of 11–12 December in Edinburgh, they agreed not to pursue any harmonisation of gambling activities at European level.2
As a result of this decision, the EU gambling debate shifted to a large extent towards the Court of Justice of the European Union (the Court). The Court has provided rulings in more than 70 cases. New cases are still regularly referred from national courts throughout the EU. The importance of preliminary referrals has even increased given the European Commission's decision of 7 December 2017 to close all infringement procedures and pilot cases, and to reject all complaints in the gambling sector. The Commission considers that complaints in the gambling sector can be handled more efficiently by national courts and encourages the use of national remedies when facing problems with EU law in the gambling sector.
This chapter will address a number of important aspects related to gambling following from the most relevant case law of the Court.
Taxation3 will not be discussed in depth in this chapter, and neither will the existing secondary legislation be reviewed, as in most relevant matters gambling services have explicitly been excluded from the scope of application.4
The competition law aspect in the gambling sector relates to a variety of issues such as state aid but will not be discussed in further detail.5
II Gambling as an economic activity of a peculiar nature
The first landmark gambling case was referred in 1992. A British law imposed a ban on national lotteries, following which lottery tickets for the German lottery sent by mail to citizens living in the United Kingdom were seized by the customs authorities. This was put into question insofar as the law prevented companies established in other Member States from providing such services in the United Kingdom. The Court's ruling in Schindler rendered in 1994 was extremely important for the discussion on gambling in the internal market.6
The Court considered gambling to be an 'economic activity' within the meaning of the EEC Treaty, thus falling under the freedom to provide services, today provided in Article 56 of the Treaty on the Functioning of the European Union (TFEU).7 Nonetheless, it is an economic activity of a peculiar nature given the particular moral, religious and cultural aspects of lotteries, like other types of gambling, in all the Member States. Lotteries involve a high risk of crime or fraud and are an incitement to spend, which may have damaging individual and social consequences.8
In light of the peculiar nature of gambling, the Court affirmed several times that free, undistorted competition in the market of games of chance can have severely detrimental effects. The general approach, as used for other services on the internal market, of promoting free competition to the benefit of the consumer in terms of quality and price is not maintained when it comes to gambling services. Operators of games of chance would be led to compete with each other in inventiveness to make what they offer more attractive, thereby increasing consumers' expenditure on gaming as well as their risk of addiction.9
III The organisation of gambling in the member states i Restrictions and their justifications General
In the absence of EU harmonisation in the field, Member States are free to set the objectives of their policy on betting and gaming in accordance with their own scale of values and, where appropriate, to define in detail the level of protection sought. This also holds true for online gambling.10
As a consequence, holding a licence to offer gambling in a Member State will not suffice to be entitled to provide similar services in another Member State. The Court has explicitly denied the application of the principle of mutual recognition in the field of gambling, meaning that a Member State must not recognise the controls and rules set in place by another Member State. The EFTA Court takes the same view.11
However, this does not mean that Member States are not subject to any limitations in how they organise their gambling markets. When a Member State implements legislation restricting the free movement principles, notably the freedom to provide (gambling) services, then this is to be considered a derogation from the general principle and it must meet certain conditions in order to be justified.
Basically, any national measure that creates a framework in which gambling services cannot be offered freely throughout the internal market of the EU, can be considered a restriction of the freedom to provide services enshrined in Article 56 TFEU.
Such limitation to the freedom to provide services can be justified under the following conditions:
- either they are imposed for reasons of public order, public security or public health (Article 62 TFEU iuncto Article 52 TFEU);
- either they are imposed for 'overriding reasons in the public interest',12 which includes consumer protection, combating fraud and crime, but also combating the squandering of money. In this case, the measures in question may not be discriminatory.13
In addition, restrictive measures imposed must be proportionate, meaning they are suitable for the objectives pursued and not go beyond what is strictly necessary. Moreover, national legislation is appropriate only if it genuinely reflects a concern to attain it in a consistent and systematic manner.14 This condition is an assessment also known as the proportionality test.
The proportionality test has been clarified in the abundant case law of the Court, and whether a restrictive measure complies with this proportionality test is generally for the national courts to assess on the basis of the Court's findings.
The mere fact that a Member State has opted for a system of protection that differs from that adopted by another Member State cannot affect the assessment of the need for and proportionality of the relevant provisions. Those provisions must be assessed solely by reference to the objectives pursued by the competent authorities of the Member State concerned and the level of protection that they seek to ensure.15
In Carmen Media the Court held that, in the matter of games of chance, it is, in principle, necessary to examine separately for each of the restrictions imposed by the national legislation whether they comply with the proportionality test.16
When looking at national restrictive measures, it is important to take into account that the Court does not recognise standalone fiscal objectives pursued by Member States in their gambling policy, without a consistent and protective regulatory framework in place.17
Recently, in Gmalieva e.a., the Court confirmed that the mere aim of increasing public (tax) revenue cannot serve as a justification of restrictions on the freedom to provide services.18
Incidentally, a restriction on gambling activities may benefit the budget of the state.19
Moreover, restrictions must also serve to limit betting and gaming activities in a consistent and systematic manner. Member States' authorities cannot invoke public order concerns relating to the need to reduce opportunities for betting in order to justify restrictive measures, while at the same time inciting and encouraging consumers to participate in lotteries, games of chance and betting to the financial benefit of the public purse.20 The Court confirmed this in Berlington Hungary e.a.21 The concern to reduce opportunities for gambling or to fight gambling-related crime must not only be met at the time of its adoption, but also thereafter. National courts must thus adopt a dynamic approach when assessing the proportionality and consistency of a measure.22
It is thereby for the Member State wishing to rely on an objective capable of justifying a restriction to supply the court called on to rule on that question with all the evidence of such a kind as to enable the court to be satisfied that the measure does indeed comply with the requirements deriving from the principle of proportionality.
It has recently been confirmed by the Court that it is for the national courts to carry out a global assessment of the circumstances in which restrictive legislation was adopted and implemented.23 If a Member State is not able to produce studies serving as the basis for the adoption of the legislation at issue, it does not deprive that Member State of the possibility of establishing that an internal restrictive measure satisfies those requirements.24 Within this context of a restrictive market approach, the theory of 'controlled expansion' developed in Placanica came as a correction. The objective of drawing players away from clandestine betting and gaming – and, as such, activities that are prohibited – to activities that are authorised and regulated, may be entirely consistent with a policy of controlled expansion. But, in order to make the operators active in the sector subject to control and channelling the activities of betting and gaming into the systems thus controlled, authorised operators must be able to represent a reliable, and at the same time attractive, alternative to a prohibited activity. This may as such necessitate the offer of an extensive range of games, advertising on a certain scale and the use of new distribution techniques.25 This was later confirmed in Pfleger.26
The Court later confirmed the possibility of controlled expansion with a view to protecting consumers to the extent that there is a large illegal market.27 This was previously also held, but in a slightly different way, by the EFTA Court.28
ii The monopoly and licence systems
Both the conferral of exclusive rights to a single body29 (the monopoly system) and the attribution of licences30 (the licence system) have been recognised by the Court as potentially proportionate measures to reach the objectives of limiting exploitation of the human passion for gambling in order to avoid the risk of crime and fraud related to games of chance.
Limited authorisation of gambling must indeed reflect a concern to bring about a genuine diminution in gambling opportunities.31 Equally, the coexistence of a monopoly for certain games of chance and concessions to private operators for other games of chance can be a proportionate measure in light of the objectives pursued.32
A monopoly system can be in conformity with EU law, as is clear from the following case law of the Court.
The conferral of exclusive rights to operate gambling to a single public body can be a proportionate measure in order to reach the objectives of limiting exploitation of the human passion for gambling and to avoid the risk of crime and fraud related to games of chance.33
It has even been held, both by the EFTA Court34 and the Court,35 that a monopoly system sometimes serves the aim of fighting addiction related to gambling more effectively than would be the case with a system authorising the business of operators that would be permitted to carry on their business in the context of a non-exclusive legislative framework.
When seeking a particularly high level of protection, a Member State is entitled to take the view that it is only by granting exclusive rights to a single entity – which is subject to strict control by the public authorities – that it can tackle the risks connected with the gambling sector, thereby pursuing the objective of preventing incitement to squander money on gambling and combating addiction to gambling with sufficient effectiveness.36 However, when it comes to combating criminality and in order to be consistent with this objective, national legislation establishing a gambling monopoly must be based on a finding that criminal and fraudulent activities linked to gaming and gambling addiction are a problem in the territory of the Member State concerned, which the expansion of authorised and regulated activities would be capable of solving.37 It has been confirmed by the Court that it is for the national courts to carry out a global assessment of the circumstances in which restrictive legislation was adopted and implemented on the basis of the evidence provided by the competent authorities of the Member State, seeking to demonstrate the existence of objectives capable of justifying a restriction of a fundamental freedom guaranteed by the TFEU and its proportionality.
In Dickinger and Ömer, the Court specifically recognised the legality of a monopolistic gambling model with regards to online gambling.38
In Markus Stoss, the Court held that a monopoly will only satisfy the requirement of proportionality, insofar as the said monopoly is accompanied by a legislative framework suitable for ensuring that the holder of the said monopoly will in fact be able to pursue, in a consistent and systematic manner, such an objective by means of a supply that is quantitatively measured and quantitatively planned by reference to the said objective and subject to strict control by the public authorities.39 In Sporting Exchange, the Court elaborated on the notion of strict control, and stated that this can comprise either a public operator whose management is subject to direct state supervision, or a private operator whose activities are subject to strict control by the public authorities.40
In the same respect, any advertising issued by the holder of a public monopoly must remain measured and strictly limited to what is necessary in order to channel consumers towards authorised gaming networks (policy of 'controlled expansion').41 In Markus Stoss, Carmen Media42 and Winner Wetten,43 the Court further clarified the conditions under which a monopoly system can be compliant with EU law. A monopoly may be considered not suitable for achieving the objective for which it was established when at the same time advertising measures emanating from the holder of such a monopoly and relating to other types of games of chance that it also offers are not limited to what is necessary in order to channel consumers towards the offer emanating from that holder, but are designed to encourage the propensity of consumers to gamble and stimulate their active participation in the latter for purposes of maximising the anticipated revenue from such activities.44
In Gmalieva e.a., the Court relied on the judgment in Pfleger to say that restrictive legislation must actually pursue the objective of protecting gamblers or fighting crime and must genuinely meet the concern to reduce opportunities for gambling or to fight gambling-related crime in a consistent and systematic manner.45 It then gave an important guidance based on its previous case law to assess whether the regime at stake is coherent with EU law. If the national court finds that gambling addiction does not represent a societal problem justifying state intervention, then, after carrying out a global assessment of the circumstances in which restrictive legislation was adopted and implemented, it would have to conclude that the system is incompatible with EU law. It must also be noted that, even if the monopoly system is found to be incompatible with the provisions on free movement, this does not necessarily lead to an obligation for the Member State concerned to liberalise the market in games of chance if it finds that such a liberalisation is incompatible with the level of consumer protection and the preservation of order in society that the Member State intends to uphold. Member States remain free to undertake reforms of existing monopolies in order to make them compatible with the Treaty provisions, inter alia by making them subject to effective and strict controls by the public authorities.46 This has been confirmed by the Court in Ince.47
Recently, the question of the role of the national courts in the determination of the compatibility of a monopoly system with EU law was raised in the case Landespolizeidirektion Steiermark.48 The case is about the proportionality of national criminal penalties for infringements of the monopoly. More specifically, the referring court tries to determine if, in criminal proceedings for the protection of monopolies, it is required to assess the standard of criminal penalties to be applied by it in the light of the freedom to provide services in the case where it has already examined the monopoly arrangement in advance in accordance with the guidelines of the Court of Justice and that examination has shown that the monopoly arrangement is justified. The response of the Court of Justice will have an impact on the national courts' assessment of the penalties provided for in the event of infringement of a gambling monopoly. If the Court considers that national courts must necessarily assess the sanctions provided for illegal operators in the light of Article 56 TFEU in addition to the overall review already carried out to examine the compatibility of the monopoly with that same Article 56 TFEU, this means that Member States cannot freely determine the way in which they protect their monopoly and guarantee its integrity.
Licence or concession system
A licensing or concession system can also be in conformity with EU law. A licensing system that restricts the number of operators in the national territory is capable of being justified by general interest objectives.49 This kind of limitation on the freedom to provide services must also comply with the proportionality test as set out above and must reflect a concern to bring about a genuine diminution of gambling opportunities.50
It is consistent case law that national legislation that prohibits operating activities in the betting and gaming sector without a licence or police authorisation issued by the state constitutes a restriction on the freedom of establishment and the freedom to provide services.51 However, the Court confirmed in Biasci and Rainone that Member States are allowed to set out the obligation to be granted a concession and a police permit in order to open betting activities.52
In Engelmann, the Court ruled that a limitation on the number of concessions can be justified as it enables a limitation on gambling opportunities, and thus allows for the attainment of a public interest objective. Limiting the licence duration for a casino to 15 years can also be justified having regard to the concessionaire's need to have a sufficient length of time to recoup the investments required by the setting up of a gaming establishment.53
As regards licensing in a semi-monopolistic system, the Court held in Sporting Exchange that competition in the market of games of chance would be detrimental and therefore limitations can be justified. Restrictions regarding the procedures for the grant of a licence to a single operator, or for the renewal thereof, may be regarded as being justified if the Member State decides to grant a licence to, or renew the licence of, a public operator whose management is subject to direct state supervision of a private operator whose activities are subject to strict control by the public authorities. In this case, the grant or renewal of exclusive rights without any competitive tendering procedure was not disproportionate.54
It is also possible that a Member State subjects certain types of games of chance to a public monopoly, while others are subject to a system of authorisations granted to private operators. This has recently been confirmed by the Court in Stanley International Betting Ltd. The Court stated there that national legislation that allowed a sole concessionaire model for management of the computerised Lotto and other fixed-odds numerical games, whereas for other games, prediction games and betting a multiple concessionaire model applied, is compatible with Articles 49 and 56 TFEU.55
Still, such a system of dual organisation of the market for games of chance may be contrary to Article 56 TFEU if it is found that the competent authorities pursue policies seeking to encourage participation in games of chance other than those covered by the state monopoly, rather than reduce opportunities for gambling and limit activities in that area in a consistent and systematic manner so that the aim of preventing incitement to squander money on gambling and of combating addiction to the latter, which was at the root of the establishment of the said monopoly, can no longer be effectively pursued by means of the monopoly.56
Such a system of dual organisation of the market for games of chance exists in many Member States, where there will often be the coexistence of a monopoly lottery operator with licence holders for other types of games of chance (e.g., casinos or sports betting).
iii The allocation of exclusive rights and licences
The manner in which gambling rights are granted or refused must equally be in line with the rules of the EU. This means, most notably, when issuing gambling licences (or similar authorisations), public authorities are bound to comply with the fundamental rules of the Treaties in general, including Article 56 TFEU and, in particular, the principles of equal treatment and of non-discrimination on the ground of nationality and with the consequent obligation of transparency.57
In Costa and Cifone, the Court held that the obligation of transparency applies if the licence in question may be of interest to an undertaking located in a Member State other than that in which the licence is granted. Without necessarily implying an obligation to call for tenders, that obligation of transparency requires the licensing authority to ensure, for the benefit of any potential tenderer, a degree of publicity sufficient to enable the licence to be opened up to competition and the impartiality of the award procedures to be reviewed.58
The principle of equal treatment requires that all potential tenderers be afforded equality of opportunity and accordingly implies that all tenderers must be subject to the same conditions. If there is unequal treatment by discriminating certain operators, justification must be based on reasons of public order, public security or public health (see Article 62 TFEU iuncto Article 52 TFEU). It is thereby settled case law that grounds of an economic nature, such as the objective of ensuring continuity, financial stability or a proper return on past investments for operators who obtained licences, cannot be accepted as overriding reasons in the public interest.59
Rules on granting gambling licences apply equally to the renewal of existing licences.60 In the same vein, it was considered that the renewal of old licences without putting them out to tender was not an appropriate means of attaining the objective pursued, going beyond what was necessary in order to preclude operators in the horse-race betting sector from engaging in criminal or fraudulent activities.61
The right to offer gambling services can be granted through a licence, but also by way of a service concession. Until recently, service concessions were not governed by any of the directives by which the EU legislature has regulated the field of public procurement.62 The applicable rules for authorities granting concession were grounded on the above-mentioned principles derived from Article 56 TFEU and the Court's case law on that subject.
Currently, however, the Concession Directive applies to certain gambling service concessions, but not to lotteries.63 Still, the granting of concessions for lottery services should be in accordance with the Court's case law. In that respect, a referral has been recently made to the Court in Sisal, case C-721/19 and Stanleybet Malta and Robotech, case C-722/19. The referring court – the Italian Council of State – wishes to know, provided that the Concession Directive is applicable, if the renewal of the concession at hand is compatible with that Directive that provides that the design of the concession award procedure, including the estimate of the value, shall not unduly favour or disadvantage certain economic operators; and whether it complies with specific conditions under which concessions may be modified without a new concession award procedure. In his opinion, delivered on 21 January 2021,64 Advocate General Campos Sánchez-Bordona's stated that, the applicability of the Concession Directive depends on whether substantial amendments to the terms of a concession are made and thus, if a new call for tenders is necessary. The call for tenders must be governed by the provisions in force on the date on which it is announced and not by those in force when the original concession was awarded. He also specifies that operators wishing to bid for the award of the concession have legal standing to challenge the continuation of the concession contract with the concessionaire, arguing that the conditions to which that continuation is subject constitute a substantial modification of the original concession.
Nevertheless, if a Member State opts to grant, for instance, a state-owned or directly controlled company the right to exclusively offer certain gambling services, it is not required to comply with the principles of non-discrimination and transparency. It may simply appoint the service provider of its choice.65
IV Online gambling
In Liga Portuguesa, the Court established the core principles of the Member States' discretionary power in the field of online gambling. A key element in the reasoning of the Court is that games of chance accessible via the internet involve different and more substantial risks of fraud by operators against consumers compared to the traditional markets for such games. This is because of the lack of direct contact between consumer and operator. The Court thus found internet games to be more dangerous than physically offered games, even when regulated and controlled by the competent authorities of the Member State of residence of the consumer. Member States are therefore allowed to impose proportionate restrictions on the offer of online gambling services.
The fact that the principle of mutual recognition does not apply is especially relevant for online gambling. Simply because an operator is licensed in one Member State does not mean that this licence should be recognised in another Member State.66 The consequence is that cross-border services provision, which is notably done via the internet when it comes to gambling, is as such not allowed. Even passive provision of games of chance can be prohibited or restricted, meaning that the mere accessibility of online gambling products from a Member State can be sufficient to be regarded as providing services there.67 Member States are hence allowed to block all unauthorised websites of operators offering online gambling services accessible to its consumers.
In Carmen Media, the Court clearly recognised again the added dangers of games of chance over the internet, which should be taken into account in assessing the proportionality of the measures put in place by the Member States. A stricter approach may be considered required and a prohibition measure covering any offer of games of chance via the internet may, in principle, be regarded as suitable for pursuing the legitimate objectives determined, such as the protection of young persons, even though the offer of such games remains authorised through more traditional channels.68 The responsibility for an effective enforcement system and tackling illegal online gambling lies with the Member States.
In Biasci and Rainone, the Court continued on the notion of 'direct contact'. The fact that an operator must have both a licence and a police authorisation in order to access the market in question is not, per se, disproportionate in the light of the objective pursued by the national legislature, which is to combat criminality linked to betting and gaming. However, precluding all cross-border activity (in particular business-to-business) in the betting and gaming sector, irrespective of the form in which that activity is undertaken and, in particular, in cases where there is the possibility of direct contact between consumer and operator and where physical checks for police purposes can be made of an undertaking's intermediaries who are present on national territory, is contrary to the provisions of Articles 49 and 56 TFEU.69
However, recently, the Court ruled in Sporting Odds that in order to link land-based to online gambling, it could in some circumstances be considered disproportionate to reserve the grant of a licence to organise online games of chance exclusively to operators of games of chance holding a concession for a casino situated on national territory. The Court finds that this a discriminatory rule that can only be justified if it is covered by an express derogating provision, such as Article 52 TFEU, namely public policy, public security or public health. It is thus not enough to argue that online gaming, which involves higher risks than traditional games of chance, can only be reserved to trustworthy operators running a casino on national territory that satisfy the requirements of consumer protection and public order.70
V Other issues
The Court has at regular intervals been asked to pronounce on the scope of advertising in the context of a Member State's gambling policy.
In the context of the policy of 'controlled expansion', operators should be allowed to extend their games of chance, advertise on a certain scale and use different kinds of distribution channels in order to compete against illegal operators. This is to be able to offer a reliable alternative to illegal gambling.71
Advertising is allowed when it is necessary to attract players to the controlled channels of games of chance, but it cannot incite players to excessive gambling.72 It must thus remain measured and strictly limited to what is necessary to channel consumers. Stimulating active participation, such as by trivialising gambling or giving it a positive image because of the fact that revenues derived from it are used for activities in the public interest, or by increasing the attractiveness of gambling by means of enticing advertising messages depicting major winnings in glowing colours, is not allowed.73
In HIT LARIX, the Court stated that Member States may prohibit advertising for foreign (land-based) gambling establishments and make an exception only for those operators that can demonstrate that the level of protection in their country of establishment is similar to the level of protection in the Member State where they want to make publicity. However, the Court also added that such a condition could be seen as disproportionate if it would require the rules to be identical (even in the case such rules would have been pursuing the objective of player protection) or alternatively, if the rules were not directly related to risks inherent to gambling (regardless of the objective of the legislation).74
In Sjöberg and Gerdin, the Court found that the freedom to provide services precludes legislation of a Member State subjecting gambling to a system of exclusive rights, according to which the promotion of gambling organised in another Member State is subject to stricter penalties than the promotion of gambling operated on the national territory without the due authorisation. Also here, the Court ruled that advertising to residents of that state can be prohibited if gambling is prohibited and where gambling is organised for the purposes of profit by private operators in other Member States.75
In Gmalieva e.a., the Court ruled that advertising cannot aim to encourage consumers' natural propensity to gamble by stimulating their active participation in it, such as by trivialising gambling or increasing its attractiveness. However, moderate advertising may be consistent with the objective of protecting consumers, provided that it is strictly limited to what is necessary to channel consumers' desire towards controlled gambling networks.76
In Fluctus and Fluentum, the referring court had doubts as to the conformity with EU law of the advertising practices of the holder of the gambling monopoly in Austria. According to the referring court, the advertising policy is not measured and strictly limited to what is necessary to channel consumers to controlled gaming networks. The case is still pending before the Court.77
In Placanica, the Court ruled that it is not compliant with EU law to apply criminal sanctions against the concerned operator for not abiding by the administrative conditions linked to the concession system if such conditions are found to be disproportionate.78 In other words, if an operator did not have the possibility to acquire a licence, and this was a result of a restriction that is not compliant with EU law, this operator cannot be sanctioned for offering gambling services without a licence. This has been confirmed in the Pfleger case.79
The role of the national courts in the determination of the compatibility of the protection of the monopoly with EU law was recently raised in the pending case Landespolizeidirektion Steiermark.80 The referring court tries to determine if, in criminal proceedings for the protection of monopolies, it is required to assess the standard of criminal penalties to be applied by it in the light of the freedom to provide services in the case where it has already examined the monopoly arrangement in advance in accordance with the guidelines of the Court of Justice and that examination has shown that the monopoly arrangement is justified.
Another way in which gambling operators may dodge sanctions for offering gambling services without the necessary licence is by invoking, as the case may be, that the legislation on the basis of which they would be sanctioned was not notified to the European Commission under the Notification Directive81 when this was actually required. If legislation had to be notified, but that did not happen, it is not possible to rely upon the provisions of that legislation against an individual.
iii Notification under Directive 2015/1535
Whether or not provisions of national legislation regarding gambling services constitute 'technical regulations' and fall under the notification obligation of Directive 2015/1535 has been the subject of numerous Court judgments.
In Fortuna, the Court ruled that the prohibition on issuing, renewing or amending authorisations relating to limited-win automated gaming activities outside casinos was likely to directly affect the trade in gaming machines, and therefore their marketing. Provisions that can significantly influence the nature or the marketing of the product are capable of constituting 'technical regulations' within the meaning of then applicable Directive 98/34.82
In M and S, however, the Court referred to Ince by concluding that provisions of national law that merely lay down conditions governing the establishment or provision of services by undertakings, such as provisions making the exercise of a business activity subject to prior authorisation, do not constitute technical regulations within the meaning of Directive 98/34.83 That was confirmed by the Court in Falbert and Others, where the issue concerned publicity for illegal games and compliance with the free movement principles.
On 25 September 2019, the Austrian Administrative Court referred the question to the Court whether the rules on the levying of a tax on betting terminals constitute 'technical rules' within the meaning of the Directive 2015/1535 and should have been notified to the European Commission. Contrary to the Fortuna case, the measure in question is not, prima facie any prohibition, but simply a taxation measure. The Court indeed ruled that the measure at issue does not fall under any of the categories of technical regulations and, therefore, was not a technical regulation that needs to be notified under the Notification Directive.84
In Sportingbet and Internet Opportunity Entrainment,85 several questions were raised regarding the interpretation of the notion of 'technical regulation'. Since 1926, Santa Casa da Misericordia de Lisboa has had the exclusive right to offer games of chance in the form of lotteries, lottery games and sports betting on Portuguese territory (i.e., offline). The question was whether not-notified Decree-Law No 282/2003, which confers on Santa Casa an exclusive right for the operation by electronic means (the internet and GSM) of games, can be considered a technical regulation. In its ruling, the Court explains that the land-based monopoly does not fall under any type of technical regulation and therefore was not a technical regulation that needs to be notified under the Notification Directive.86 However, the Court decided that the online monopoly was a 'technical regulation' that is only valid if notified to the Commission under the Notification Directive. The Member State concerned may have to adopt a new law and notify the draft law to the Commission before its online monopoly can be secured. The Court stated that 'such provisions come under the fourth category covered by the notion of “technical rule” in Article 1(11) of Directive 98/34, that is to say, “laws . . . prohibiting the provision . . . of a service” '.87
Thus, the ruling makes it clear that any online monopoly imposed by law should have been notified ever since the first Notification Directive 98/34. This even holds true if the online monopoly is merely the confirmation of a pre-existing general monopoly. Without notification it cannot be invoked against third parties. With a reference to the Falbert and Others case, the Court underlined that 'the notification obligation . . . is an essential means for achieving the scrutiny by the European Union aimed at protecting the free movement of services and the freedom of establishment'.88
iv Financial payment mechanisms
In Rasool,89 the Court found that a cash withdrawal service through a cash terminal located in an officially authorised gaming arcade does not constitute a 'payment service' within the meaning of the (first) Payment Services Directive 2007/64/EC.90 Since the main operations are carried out by an external network provider, the service offered by the gaming operator cannot be considered as falling into the scope of the Directive. The latter only applies to payment service providers whose 'main activity' consists of the provision of payment services to payment service users. Operators are therefore not required to obtain a specific authorisation to implement this service.
v Market access and gambling in the post-Brexit era
The European Union has systematically and coherently excluded market access for third-country gaming services. In the final days of December 2020, the United Kingdom and the European Union came to a Trade and Cooperation Agreement91 (the Brexit Agreement) which they agree to apply provisionally starting from 1 January 2021 to 28 February 2021.92
When it comes to the position of Gibraltar in its relations with the UK, in the GBGA and Fisher cases, the Court declared that, from an internal market perspective, Gibraltar and the United Kingdom form part of one single Member State, meaning that the free movement provisions of the EU Treaties do not apply to services provided between Gibraltar and the United Kingdom.93 However, the Brexit Agreement specifies that it 'shall neither apply to Gibraltar nor have any effects in that territory'.94 Consequently, Gibraltar is currently on WTO trading terms with the EU and is free to pursue arrangements separate from the UK.
On the market access of gambling services issue, the Brexit Agreement provides for 'reservations' that are exceptions to obligations imposed by some parts of the Agreement. Both, the EU and the UK made a reservation95 as regards 'gambling and betting services', which are defined in this Agreement as: '[t]he supply of gambling activities, which involve wagering a stake with pecuniary value in games of chance, including in particular lotteries, scratch cards, gambling services offered in casinos, gambling arcades or licensed premises, betting services, bingo services and gambling services operated by and for the benefit of charities or non-profit-making organisations'.96
This means that the EU can maintain or impose any new rules that would limit market access, national treatment or require local presence for gambling services from the UK in the sphere of the freedom of establishment. The EU can also maintain or impose any new rules that would limit market access, national treatment or require local presence in the sphere of the freedom to provide services. Hence the UK effectively becomes a third country with respect to gambling services both in the establishment and services sphere. The same goes for the UK for which the EU effectively becomes a third country with respect to gambling services.
In addition, gambling is given some specific attention in the provisions of the Brexit Agreement concerning digital trade.97 Article DIGIT.9(2) specifically excludes gambling services from the prohibition for both the EU and the UK to require prior authorisation of the provision of a service or any measure having an equivalent effect. This means that the UK and the EU are free to impose prior authorisation for the provision of gambling services via electronic means. Article DIGIT.10(2)(b) furthermore excludes gambling services from the prohibition to create legal obstacles for the conclusion of electronic contracts solely because they are concluded by electronic means. This means that under the Brexit Agreement, legal obstacles can be created for the conclusion of gambling contracts.
With its decision to close all infringement cases,98 the Commission now essentially restricts itself to non-binding or soft law instruments to regulate gambling on the EU market. It has published a recommendation on consumer protection and advertising in the online gambling sector.99 This recommendation was the subject of an annulment proceeding brought by Belgium. The Court ruled here that, following the order of non-admissibility by the General Court, the recommendation is, in light of the wording, the content and the purpose of the contested recommendation, not intended to have binding legal effects, with the result that it cannot be classified as a challengeable act for the purposes of Article 263 TFEU.100
According to the Court, recommendations are intended to confer on the institutions a 'power to exhort and to persuade', distinct from the power to adopt acts having binding force. The Court further stated that it is not sufficient that an institution adopts a recommendation that allegedly disregards certain principles or procedural rules in order for that recommendation to be amenable to an action for annulment.101
There are however numerous regulatory initiatives that could horizontally impact the gambling regulatory framework. The Commission is for instance working on a comprehensive policy to address taxation in the digital single market, which may very well affect taxation on online gambling services.102 Due to the absence of unanimity, the EU Council rejected the proposals, which may ultimately lead to Member States imposing different levels of taxation. Therefore, in July 2020 the Commission presented a new package for fair and simple taxation103 and floated the idea to use Article 116 TFEU. This work at the EU level contributes to the global discussions on digital taxation within the OECD/G20, which is also still pending due to the absence of consensus.104
On 6 November 2018, the Council adopted the revised Audiovisual Media Services Directive (AVMSD).105 The gambling services are not explicitly excluded from the scope of the Directive. The only reference to gambling can be found in the preamble.106
The Commission is currently working on a new supranational risk assessment of anti-money laundering, which will include all gambling services. In the supranational risk assessment of the money laundering and terrorist financing risks, published by the European Commission on 24 July 2019,107 the Commission identified certain gambling products as significantly exposed to money laundering risk. For online gambling, there is a high-risk exposure due to very large numbers of transaction-flows and the lack of face-to-face interaction. Although casinos present inherently high-risk exposure, their inclusion in the anti-money laundering/countering the financing of terrorism framework since 2005 has had a mitigating effect, the report concludes. Lotteries and gaming machines (outside casinos) present a moderate level of money laundering/terrorist financing risk. The Commission published its action plan on money laundering on 7 May 2020.108 Action is, therefore, expected in 2021.
While currently not directly relevant for gambling, it has to be noted that in the first short-term review of the geo-blocking Regulation109 European Commission officials called for an extension of scope of the Regulation to include new sectors, as well as online content – in particular, non-audiovisual copyright protected content, such as online music, e-books or games.
On 19 February 2020, the European Commission published several initiatives related to artificial intelligence and data as well as a regulatory framework proposal on artificial intelligence on 21 April 2021.110 Even if not directly applicable to gambling, the proposed initiatives will have a profound impact on all the digital services. In addition, on 25 November 2020, a Data Act aiming to facilitate the creation of a common data space in the EU was proposed by the EU Commission.
Finally, one of the most important pieces of proposed European secondary legislation released at the end of 2020 is the Digital Service Package adopted by the European Commission on 15 December 2020. The Commission proposed an ambitious reform of the digital space, which is made up of two pieces of legislation: the Digital Services Act111 (DSA) updating the e-Commerce Directive and the Digital Markets Act.112 Importantly, the e-Commerce Directive excludes gambling services from its scope.113 In the DSA proposal, the Commission underlines that the proposal is without prejudice to the e-Commerce Directive.114 Thus, it can be assumed that the clear exclusion of the gambling activities of information society services of the e-commerce Directive115 still applies under the DSA.