The European Commission yesterday set out its action plan for online gambling in a Communication entitled 'Towards a comprehensive European framework for online gambling' click here. The Communication identifies the key challenges arising from the co-existence of differing national regulatory frameworks for online gambling within the Internal Market and draws from the themes highlighted in the Commission's Green Paper which was launched in March 2011 and in the Creutzman report ( click here). The Commission's action plan stops short of proposing EU-wide legislation but does represent a step forward in creating greater clarity for gambling consumers, operators and retailers alike. Operator trade associations such as the Remote Gambling Association ("RGA") and the European Gambling and Betting Association ("EGBA") have welcomed the Commission's plans, seeing them as a move in the right direction for online gambling regulation.
The Communication identifies five "priority areas" which the Commission intends to tackle in order to address the regulatory challenges faced by online gambling in the EU:
National regulatory frameworks must comply with EU law
Unlike other services provided across borders, the EU has always shied away from introducing legislation to harmonise the provision of online gambling. As a result, any EU law intervention has had to rely on the so-called "fundamental freedoms" of the EU Treaty, i.e. that national gambling legislation infringes either Articles 49 and/or 56 of the Treaty by imposing unjustifiable restrictions on the freedom of establishment of nationals of one Member State in the territory of another or imposing unjustified restrictions on the freedom to provide services throughout the EU. However, the Treaty does permit restrictions on the basis of legitimate public interest objectives of the Member State concerned. Much of the legal controversy has turned on where one draws the line between a country's legitimate concerns to protect its consumers against, for example, problem gambling and the unjustified use of public interest objectives as a disguised means of maximising tax revenues and protecting national, often State-owned, monopolies.
There are two ways in which this issue can be clarified. First, by operators bringing proceedings before the relevant national court which then refers questions of interpretation to the European court (CJEU) and second, by infringement proceedings brought by the European Commission against a Member State, either on its own initiative or as a result of complaints made by third parties. Whilst the Commission opened a whole series of infringement proceedings against various Member States between 2006-2008 whilst Charlie McCreevy was the European Commissioner for Internal Market and Services, nothing substantive has happened in any of those proceedings since February 2008. It has therefore been left to the European court to give guidance on where the balance should be struck and the European court jurisprudence has seen the pendulum swing back and forth over the years with probably the high point from an open market perspective being represented by the Gambelli case in 2003 (where the European court ruled that Italian gambling legislation infringed the fundamental freedoms) with the pendulum swinging back in favour of national monopolies with the 2009 Santa Casa da Misericordia case where the European court upheld Portuguese gambling legislation.
In yesterday's communication, the Commission pushes the pendulum back a notch or two by reactivating its infringement proceedings and says that where infringement cases are open or complaints have been registered, the relevant Member States will be asked to provide information to enable the Commission to complete its assessment of compatibility with EU law. The document states that "the Commission will, wherever necessary, take action to enforce the relevant Treaty provisions in respect of any national rules not complying with EU law, taking into account the latest case law of the CJEU".
Another priority area identified in the Communication is the need to increase cross-border administrative cooperation. It is noted that for such cooperation to work efficiently it is essential that all Member States have an efficient regulatory authority in place. It is hoped that such cooperation will lead to a greater exchange of information between Member States and consequently, that a greater understanding of each other's regulatory framework will lead to the establishment of best practice on enforcement measures as well as the creation of a framework that will allow authorities to bring coordinated actions for cross-border infringements. Greater cooperation should also allow the Commission to properly explore the benefits of responsible enforcement measures (e.g. payment blocking and disabling illegal websites).
Protection of consumers and citizens
The protection of consumers and citizens is a wide ranging objective that seeks to protect minors and vulnerable groups, encourage responsible advertising of online gambling and prevent gambling addiction. The Communication sets out the Commission's intention to adopt Recommendations for consumer protection and responsible advertising in 2013. The Commission will also consider research initiatives into gambling disorders; these will include research on detection and treatment. The development of measures that prevent minors and vulnerable groups from accessing gambling sites will play an important role in the Commission's strategy.
Prevention of fraud and money laundering
In relation to fraud and money laundering, the Commission concludes that the most effective form of prevention is an international approach. With a view to preventing fraud and money laundering the Commission is working towards a coordinated effort and in the Communication states that it will consider extending the scope of the Anti-Money Laundering Directive to cover all forms of gambling (it currently only applies to casinos), as well as looking into the possible development of an EU standard for gambling software.
Prevention of match fixing
The final priority set out in the Communication is safeguarding the integrity of sport and preventing match fixing. The Commission wants Member States and stakeholders to work together to develop anti-match fixing measures (e.g. the creation of a whistle-blowing mechanism) as well as developing effective deterrents. The Commission plans to adopt a Recommendation on this subject in 2014.
Towards greater cross-border cooperation
A key element to the success of the objectives set out in the Communication is cooperation between Member States. In order to facilitate the information exchange foreseen in the Communication the Commission plans to establish an expert group on gambling. The first meeting, made up of representatives from each Member State, is provisionally scheduled for December 2012 and will serve as a forum for the exchange of expertise and best practices. A stakeholder conference is also planned for 2013. The Commission intends to evaluate all the measures set out in the Communication in two year's time.