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EC takes action against seven States over non-compliance with EU law

20th November 2013 1:56 pm GMT

The European Commission has launched formal infringement proceedings against the online gambling legislation of six Member States and issued two ‘reasoned opinions’ against Sweden for failing to comply with EU law.

The Commission sent letters of formal notice to Belgium, Cyprus, the Czech Republic, Lithuania, Poland and Romania with regard to their online gambling legislation. Sweden, which was already subject to an infringement proceeding, was sent two reasoned opinions – formal requests to bring its legislation in conformity with EU law rules and the last step before potential litigation at the Court of Justice.

“Member States are in principle free to set the objectives of their policies on online gambling,” said the EC in a statement Wednesday. “They may restrict or limit the cross-border supply of all or certain types of gambling services on the basis of public interest objectives such as consumer protection or the prevention of fraud and other criminal activities. However, national gambling systems must respect EU law.”

The EC said that Member States must demonstrate the “suitability and necessity of the measure in question, in particular the existence of a problem linked to the public interest objective at stake and the consistency of the regulatory system.”

“Member States must also demonstrate that the public interest objectives are being pursued in a consistent and systematic manner,” the Commission added. “They must not undertake, facilitate or tolerate measures that would run counter to the achievement of these objectives.”

Having previous announced that it would accelerate completion of its assessment of national provisions in the pending infringement cases and complaints, the EC has now made its decisions on a “first series of pending cases.”

The Commission has today requested Sweden to comply with EU rules on the free movement of services with regard to the regulation and supervision of its gambling monopoly; closed an infringement case against Finland on the compliance of the national provisions establishing exclusive rights for the offering of gambling services with EU law; and decided to send to Belgium, Cyprus, the Czech Republic, Lithuania, Poland and Romania an official request for information on national legislation restricting the supply of gambling services.

The Remote Gambling Association said however that it was “regrettable” that no countries have so far been referred to the Court of Justice of the EU when existing infringement proceedings appeared to be sufficiently advanced and substantiated to do that.

Clive Hawkswood, CEO of the RGA, said: “The announcement is a step in the right direction for an online gambling industry that has suffered for too long from legal uncertainty and unjustified market closures. Although we are fully aware that, under certain conditions, market restrictions can be deemed lawful and justified, we are entitled to the free provision of services and due regard must be given to those rights.

“We once again look to the Commission, as guardian of the Treaties, to enforce those provisions and we expect that those countries subject to a proceeding will introduce the required changes as soon as possible.”

The Commission has also closed investigations and proceedings against several Member States which had not reached the stage of a formal infringement proceeding. Proceedings against other Member States remain open (including France, Germany, Greece, Hungary and the Netherlands), either because the national rules in question are still under investigation or in the process of being substantially amended.

“Today’s decision by the Commission is highly significant as it will bring further legal clarity to the online gambling market in the EU,” said Maarten Haijer, Secretary General of EGBA. “We commend Commissioner Barnier and his services for their perseverance and commitment to making sure gambling regulation functions properly.

“EGBA urges Member States to use this opportunity to put in place effective, commercially viable gambling legislation which takes into account the CJEU requirements and to avoid the need for litigation at the Court of Justice.”

Sweden

In two separate proceedings, the EC has requested Sweden to ensure compliance of its national rules establishing exclusive rights for the provision of online betting services and for the provision of online poker services with EU law.

In previous requests the Commission had sought to verify whether the restrictions in question are compatible with Article 56 TFEU, which guarantees the free movement of services, finding that the restrictive policy in the area of gambling services is not applied in a systematic and consistent manner and that the holder of the exclusive right is not subject to strict state control.
 
“The Commission enquiries cover the cross-border provision of online sports betting and poker services, but also deal with issues such as advertising and sponsorship,” it said in a statement. “The Commission requests Sweden, in the form of an additional reasoned opinion on online betting and a reasoned opinion on online poker services, to take action to fully comply with EU rules.”

Concerning restrictions to the provision of online betting services the Commission had already issued a reasoned opinion in 2007. However, in view of the time that had elapsed, developments in Sweden and in the case-law of the Court of Justice of the EU in the area of gambling services in the intervening period, the Commission has deemed it useful to clarify the basis for its argumentation and to allow the Member State concerned to respond to these new developments.

If Sweden fails to act within two months in relation to these two proceedings, the Commission may refer these cases to the EU Court of Justice.

Finland

The Commission has concluded that the Finnish legislation establishing an exclusive right for the offering of gambling services complies with EU law and is applied in a consistent and systematic manner.

The Commission launched infringement proceedings against Finland in 2006, concerning the cross border provision and marketing of sports betting services. The Commission considered that the Finnish law at the time did not serve to achieve the public interest objectives invoked in a consistent and systematic manner.

This process culminated in the adoption of an amended national framework law on gambling which entered into force on January 1st 2012.

The revised Finnish Lotteries Act and related implementing measures establish a statutory gambling monopoly, tighten the rules on the operation of games and the promotion of gambling services and establish revised rules and means for supervision and enforcement of gambling offers and rules.

The Commission therefore concluded that the revised law constitutes a consistent and systematic pursuit of the objective sought by the establishment of a gambling monopoly in a Member State and corresponds to the requirements set by the Court for this establishment.

“The Finnish authorities have sufficiently demonstrated that the revised law and its implementation and application comply with these requirements,” it said. “The Commission has therefore closed the legal case against Finland.”

Six infringement proceedings

The Commission has decided to send official requests for information on national legislation restricting the supply of certain gambling services to Belgium, Cyprus, the Czech Republic, Lithuania, Poland and Romania.

In these cases the Commission wishes to verify whether the measures in question are compatible with Article 56 TFEU, which guarantees the free movement of services, and has asked a number of questions in relation to the licensing procedure and conditions for the provision of gambling services.

The Commission has concerns about the compatibility of national provisions subjecting the provision of online gambling services to establishing a physical presence in the recipient Member State, prescribing a specific legal form on the basis of national law, requesting prior consent of the authorities in relation to any changes in the shareholder structure or banning foreign capital with EU law.

Concerning Belgium, the Commission has also raised questions about the transparency of the Belgian legal framework for gambling, in particular with regard to the rules governing the legal conduct of online gambling business and in view of the grant of a betting licence through Royal Decree to the National Lottery.

With regard to the Romanian legal framework for gambling, the Commission has asked further questions on the coherence of the national gambling policy.

To Cyprus, the Commission has submitted additional questions concerning the scope of the Cypriot Gambling Law with regard to different operators authorised to offer their services in the Member State. The Commission has concerns about the equal treatment of gambling service providers.

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