The High Court has upheld a prohibition on offering bets on the outcome of a non-UK EuroMillions draw to UK consumers. The court found that the prohibition pursued legitimate aims that could only be achieved by an outright ban, and followed a fair and lawful consultation

Background

In the UK, betting on the National Lottery has long been prohibited by section 95 of the Gambling Act 2005. One of the games offered by the National Lottery is “EuroMillions”, which is a multinational lottery spread across a number of different states in Europe. The prohibition covered UK EuroMillions draws. However, licensed betting operators identified a way around the prohibition by offering UK consumers betting on the outcome of EuroMillions draws run from outside the UK.

In order to close this loophole and “maintain the clear blue water between the National Lottery and commercial gambling products”, the Secretary of State introduced Regulation 4 of the Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2018. The Regulation came into force on 6 April 2018 and prevents any licensed betting operator from offering bets on the outcome of a non-UK EuroMillions draw or a EuroMillions lottery in any jurisdiction (regardless of how that lottery is described) to UK consumers.

Challenge to the Regulation

In R (EU Lotto Ltd and others) v Secretary of State for Digital, Culture, Media and Sport [2018] EWHC 3111 (Admin), three betting operators sought judicial review of the Secretary of State’s decision to lay the Regulation before Parliament. They put forward two grounds of challenge:

  • the Regulation imposed an unlawful restriction on their freedom to provide services, contrary to Article 56 of the Treaty on the Functioning of the European Union; and

  • the Secretary of State did not disclose during the consultation process that the risk of people being induced to move from playing the National Lottery to harder forms of gambling, known as “lead-in risk”, had been a justification for the Regulation and, therefore, failed to conduct a fair and lawful consultation.

Alongside denying these challenges, the Secretary of State argued that two of the betting operators did not have standing to bring the claim for judicial review. One was said to have no right to seek to apply Article 56 to its activities, as it was based in Gibraltar. The Court of Justice of the European Union had recently declared Gibraltar to be part of the UK, and Article 56 did not apply to situations confined to a single member state. The activities of the other were said to be too remote from those which would be caught by Article 56, as it had not applied for any betting licence in the UK.

Decision

Infringement of Article 56

The Secretary of State accepted that the Regulation amounted to a restriction on the provision of services within the EU contrary to Article 56, but put forward four arguments to the effect that the restriction was justified on legitimate and recognisable public policy grounds:

  1. elimination of confusion to ensure that consumers gamble in an informed and transparent manner;

  2. maintenance of clear blue water to safeguard the distinction between the regulatory regimes for the National Lottery and those for other forms of gambling;

  3. preservation of funds for good causes to protect the humanitarian and socially beneficial aims of the National Lottery; and

  4. avoidance of lead-in risk to prevent potentially young and vulnerable adults being induced to partake of harder and higher-risk forms of gambling.

The claimant’s challenge on this ground failed. Whilst the court considered that the Secretary of State’s margin of appreciation was narrowed by the fact that the UK was not opposed to all gambling on religious or moral grounds, it accepted that the Regulation pursued legitimate aims and that there was no less intrusive way of achieving those aims. Only an outright ban would be effective in addressing the Secretary of State’s real and substantial public interest concerns.

Fair and lawful consultation

This ground of challenge also failed. The court accepted the operators’ arguments as to the importance of a fair consultation process, but found that the Secretary of State’s consultation was conducted fairly and lawfully. At the time the Regulation was laid, lead-in risk was not an operative justification for the Regulation; it was only identified as a concern during the litigation (being relevant to the court’s proportionality assessment).

Standing

Given that at least one of the betting operators had undisputed standing, the court found it unnecessary to spend time addressing an academic issue. However, it did note that:

  • the Gibraltar company had a sufficient relationship with the operator whose standing was undisputed to evidence its own standing to proceed; and

  • the public law right to declaratory relief was not limited to those who may rely on a directly effective provision of EU law.

Conclusion

The court granted permission to seek judicial review, but rejected the claims on their substantive merits and evidence.