Going to a bookmakers and placing a bet on the outcome of a lottery (known as 'secondary betting') is distinct from participating in a lottery by buying a lottery ticket. The distinction is important as it is currently unlawful under Section 95 of the Gambling Act 2005 for a licensed bookmaker to offer betting on the outcome of any of the games which comprise the National Lottery in the UK.
Included within those games is the EuroMillions lottery.
However, because of its international dimension, EuroMillions is different from the other National Lottery games. It is a co-ordinated lottery licensed and promoted in nine European jurisdictions with a common draw which takes place in Paris twice a week. It is in fact nine different lotteries with a common draw and prize fund.
This structure created a loophole with respect to section 95, under which although it was illegal to accept a bet on the UK EuroMillions draw, it was not unlawful to accept a bet on a non-UK EuroMillions draw - even though in substance the two are one and the same.
The government sought to close that loophole through the Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2018 (the 'Regulations') by amending bookmakers' licences to make it unlawful to accept a bet on the outcome of any EuroMillions lottery in any jurisdiction.
In R (EU Lotto Limited & Ors) v Secretary of State for Digital, Culture, Media and Sport the Regulations were the subject of a judicial review challenge brought by a group of gambling businesses who wished to preserve their ability to accept secondary bets on non-UK EuroMillions draws.
It was accepted by both the claimants and the government that the Regulations would place a restriction on the former's freedom to offer services under Article 56 of the Treaty on the Functioning of the EU. In order to be lawful such a restriction had to be justified on public policy grounds and be proportionate.
Whether the Regulations met that test was the main question on which the Court focused.
A secondary question was whether the failure by the government to mention one of its justifications for the Regulations in the consultation on its proposals rendered that consultation unlawful.
The justification for closing the loophole
The government put forward a number of justifications for the Regulations, including -
- the desire to eliminate confusion amongst the general public regarding the difference between participating in the EuroMillions game and secondary betting on its outcome,
- the desirability to clearly separate the (more onerous) regulatory regime for the National Lottery from that for gambling generally,
- the desire to prevent a reduction of the amount of money collected through the National Lottery as this is provided to a range of good causes, whereas funds generated by secondary betting are not, and
- the need to avoid the risk of secondary betting leading to other 'harder' forms of gambling (the 'lead-in justification').
The Court accepted that all four reasons were valid justifications for restricting the claimants' right to provide services.
This was despite the fact that the fourth was raised by the government only during the proceedings and did not form part of the reasons articulated in the consultation prior to making the Regulations.
The Court stated that, although the government was entitled to rely on an ex post facto reason, the evidential justification for it would be subject to greater scrutiny than would otherwise be the case as it had not been subject to scrutiny by Parliament or through consultation. However, despite that enhanced scrutiny and the submissions by the claimants to the contrary, the same margin of appreciation would be granted to the decision-maker with respect to the 'new' lead-in justification.
The Court also accepted that the Regulations were proportionate as there existed no less onerous means of achieving the four public policy aims cited by the government.
The claimants argued that the consultation undertaken before the Regulations were made was unlawful as the failure to mention the lead-in justification was misleading where that was part of the rationale behind proposing the Regulations at the time.
The Court held that although the issue had been raised at the time, it had only assumed importance following the submission of the claimants' evidence in the judicial review proceedings. This was because, in making the case for the financial damage that the Regulations would do, the evidence demonstrated that, far from being a theoretical risk, moving people from secondary betting to other forms of gambling was an important part of the claimants' business models. It was therefore not a point on which consultation was required at the time that consultation was held.