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| Updated on 3 December 2009 | 1. Introduction | · As principal party in the landmark Gambelli[1] and Placanica[2] European Court of Justice rulings, Stanleybet has taken the lead in the legal battle against betting restrictions that are incompatible with the law of the European Union. · Stanleybet's right to provide sports betting services across Europe is enshrined in the EC Treaty. Articles 49 and 56 of the EU Treaty are the two key legal benchmarks in that respect. | 2. Freedom to provide and receive services (Article 56 of the EC Treaty) | · Article 56 states "Within the framework of the provisions set out, restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of member states who are established in a State of the Community other than that of the person for whom the services are intended." · Article 56 is applicable to companies of one Member State providing or receiving a service in another Member State and can be invoked by both the provider and the receiver of services. Stanleybet provides a cross-border service in a number of Member States. · Article 56 expressly prohibits any discrimination based upon nationality. As a consequence, any national measure that explicitly or effectively discriminates against a foreign service provider must be examined as regards to its conformity with EU law. | 3. "Freedom of establishment" (Article 49 EC of the Treaty) | · Article 49 states "within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 54, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital". · Article 49 guarantees the rights of individuals and companies from other Member States to exercise their profession on a permanent basis in another member state in the same manner as the Member State's own nationals. Moreover non-discriminating restrictions concerning the access of nationals of a Member State to the market of another Member State are prohibited, including restrictions in the setting-up of agencies, branches or subsidiaries and all restrictions limiting access to certain professions. | 4. Role of the European Court of Justice (ECJ) in relation to sports betting | · Because gambling and lotteries are excluded from the Services Directive 2006/123/EC, there have been a growing number of cases in the European Court of Justice on the interpretation of Articles 49 & 56 of the EU Treaty which apply directly as primary law of the EU to the sports betting sector. · In ECJ Case law, a common formula has been developed for the analysis of the EU law compatibility of national measures. Any objective justification of the restriction of fundamental freedoms of the EU treaty must satisfy a cumulative four-part test: (i) the measure must not be discriminatory (ii) the measure must meet an appropriate overriding public interest objective (iii) the measure must be suitable for securing the achievement of the objectives (iv) the measure must not go beyond what is necessary in order to achieve them. · The European Court of Justice (ECJ) has confirmed that any restrictions which seek to protect general-interest objectives, such as the protection of consumers, must be 'consistent and systematic' in how they seek to limit activities. Therefore, a member state cannot invoke the need to restrict citizens' access to gambling services if at the same time it encourages them to participate in state games of chance or betting offered by national operators or a monopoly. | 5. The ECJ Gambelli ruling Case C-243/01 - November 2003 | · On 6 November 2003, the European Court of Justice (ECJ) released its long awaited judgement in Case C243/01 Gambelli. The judgment, which upholds the opinion submitted by Advocate General Alber on 13 March 2003, departed dramatically from the established restrictive history within the European Union on gaming and betting services, and has had far-reaching consequences for betting in the EU. · The ECJ held that the Italian legislation - which punishes, as a criminal offence, all collection, acceptance, booking and forwarding of sports bet proposals within or from Italy, except for holders of a licence or authorisation issued by the authorities - is contrary to Articles 49 and 56 of the EC Treaty. · The Gambelli case was referred to the ECJ by an Italian court following a criminal action brought against a number of agents affiliated to Stanleybet. The Court stated that "where a company established in a Member State (such as Stanley) pursues the activity of collecting bets through the intermediary of an organisation of agencies established in another Member State (such as the defendants in the main proceedings), any restrictions on the activities of those agencies constitute obstacles to the freedom of establishment". · The Court added that "a prohibition, enforced by criminal penalties, on participating in betting games organised in Member States other than in the country where the bettor is established constitutes a restriction on the freedom to provide services". · The Gambelli decision made it clear that restricting gambling activities to state-licensed undertakings is unlawful if such a decision is based on purely financial grounds. Restrictions can only be justified on public policy grounds if there is an overriding public interest: any restrictions need to be justified, proportionate and applied in a consistent manner. | 6. The ECJ Placanica ruling Case C-338/04 - March 2007 | · On 6 March 2007, the European Court of Justice (ECJ) found in favour of a Stanleybet agent who had been prosecuted by Italian authorities for processing bet proposals in Italy. · The judgement reinforced the ECJ ‘Gambelli' ruling of November 2003 which clearly recognised the right of sports betting businesses legally established in one Member State to offer those services in another Member State. · The ‘Placanica' ruling stated that legislation on sports betting must not contain provisions which, in its words, "constitute a restriction on the freedom of establishment and the freedom to provide services, provided for in Articles 49 EC and Articles 56 EC respectively." · The Placanica ruling yet again validates what Stanleybet has said all along: consumers in Europe deserve, and are legally entitled under Articles 49 and 56 of the Treaty to, a choice in where they place bets. In addition, it clearly demonstrates that Stanleybet's operations are carried out using its rights as set out in the EU Treaty. | 7. Other key legal milestones | ECJ · On 13 September 2007, the ECJ again condemned the restrictive Italian practices in the betting sector with Case C-260/04. The ECJ upheld the European Commission's view of the situation by condemning a 1999 Italian ministerial decree which, by renewing a number of licenses without a tendering procedure, infringed the general principle of transparency and advertising of concessions for public services. This ruling has important implications for European national betting systems because it reiterates the need for national regulatory frameworks to be fully compliant with EU law. · On 8 September 2009, the ECJ issued its ruling on the case involving bwin and the Portuguese football league versus the Portuguese monopolist Santa Casa da Misericórdia de Lisboa (Santa Casa, Case C-42/07). In this ruling the ECJ upheld the right of a very restrictive non-profit state monopoly to maintain its monopolistic status online. This case has been a clear application of the principles outlined in Gambelli and Placanica. However this application can only be considered strictly within the Portuguese gaming model with restricted offers and purely non-profit purposes. It cannot be applied under any circumstances to other non EU-compliant restrictive markets in EU member states like Greece, for instance, where the monopoly is held by OPAP, a private profit-making company listed in the Athens stock exchange with overseas investors and in which the Greek government owns only a third (34%) of the company's shares. European Free Trade Association (EFTA) Court · On 30 May 2005, in a verdict that follows on from both the earlier EFTA Court decision on the proposed Norwegian slot machines monopoly and the ECJ's ruling on Placanica, the Court upheld the right of European Economic Area (EEA) member states to draw up their own national legislation and restrictions on gambling services. According to the Court's Advisory Opinion, state gambling monopolies which restrict economic freedoms under the EEA Treaty are justifiable only on the condition that they "must pursue legitimate aims such as fighting gambling addiction and maintaining public order." · If a Member State wishes to uphold a monopoly on these grounds it must be able to demonstrate that the monopoly, as opposed to a licensing system, will "provide for a lower level of gambling addiction in society than would be the case without restrictions on free movement in relation to gambling services" and "ascertain that there are genuine risks arising from or connected to the different games of chance." · Drawing on the ECJ's Gambelli verdict, the EFTA Court agreed that monopolies cannot be justified purely on other social grounds such as securing funds for social or charitable causes or, in the specific case of horseracing, funding agriculture and horse breeding. | 8. The way forward | · Recent years have been marked by a number of important legal developments in the European sports betting sector. Both European and national courts have repeatedly stressed that sports betting is a service. National restrictions on operators can only be justified if they pursue a genuine public interest and if they are proportionate and non-discriminatory. · Despite positive developments, a number of Member States continue to maintain restrictions which are clearly incompatible with the provisions of the EU Treaty. The Commission has investigated a number of these cases and has warned of the incompatibility. However, the situation has still not been rectified. To check which Member States continue to maintain unlawful restrictions, please visit www.fairplayforsportsbetting.eu |
EU Infringement Proceedings | Article 258 EC grants the European Commission the right to initiate infringement proceedings against member states that have failed to fulfill a Treaty obligation. The proceedings specified in Art. 258 EC Treaty consists of six subsequent stages. Stage 1: Suspected Infringement Suspected infringements refer to instances in which the Commission has some reason to believe that a member state has violated Community Law. Such suspicions can be triggered by different sources including complaints lodged by citizens, corporations, and NGOs, by own initiatives of the Commission, and by petitions and questions by the European Parliament about non-communication of the transposition of Directives by the member states. Stage 2: Letter of Formal Notice A Formal Letter of the Commission defines the subject-matter and invites the member state to submit its observations. Member states have between one and two months in which to respond. Unlike their name suggests, Formal Letters are not part of the official proceedings. The Commission considers them as a preliminary stage, which serves the purpose of information and consultation, which afford a member state the opportunity to regularize its position rather than bringing it to account. Stage 3: Reasoned Opinion The Reasoned Opinion is the first official stage in the infringement proceedings. The Commission sets out the legal justification for commencing legal proceedings. It gives a detailed account of how it believes Community Law has been infringed by a member state and states a time-limit, within which the matter is expected to be rectified. The member states have one month in which to respond. Stage 4: Referral to the European Court of Justice The ECJ Referral is the ultimate means to which the Commission can resort in cases of persistent non-compliance. Before bringing a case before the ECJ, the Commission usually attempts to find some last minute solution in bilateral negotiations with the member state. Stage 5: ECJ Judgment The ECJ acts as the ultimate adjudicator between the Commission and the member states. First, it verifies whether a member state has actually violated European law as claimed by the Commission. Second, it examines whether the European legal act under consideration requires the measures demanded by the Commission to rectify the position. And finally, the Court decides whether to dismiss or grant the legal action of the Commission. Stage 6. Post-Litigation Infringement Proceedings These apply in cases where although the ECJ has ruled against the existing legislation of a Member State and that Member State has refused to comply. In such cases, the European Commission may again refer the Member State to the ECJ via a fast-track procedure and the ECJ usually imposes a fine that can be supplemented by an additional daily fine. This is usually withheld from amounts of money the Member State receives from the EU. | Infringement proceedings: state of play (as of Nov 2009) | Countries | Reference | Field | Letter of formal notice | Reasoned Opinion | ECJ referral | Denmark | 2003/4765 | Sport betting services | 4-Apr-2006 | 21-Mar-2007 | | Finland | 2004/4062 | Sport betting services | 4-Apr-2006 | 21-Mar-2007 | | France | 2005/4953 | Provision of remote sports gaming services by licensed operators | 12-Oct-2006 | 27-Jun-2007 | | Germany | 2007/4866 | Sport betting services
State treaty | 4 - Apr -2006
31-Jan-2008 | | | Greece | 2007/4094 | Sport betting services | 27-Jun-2007 | 28-Feb-2008 | | Greece | 2002/4769 | Compliance with ECJ C-65/05 on gaming machines | | 27-Jun-2007 | | Hungary | 2004/4814 | Sport betting services | 4-Apr-2006 | 21 March 2007 | | Italy | 2003/4616 | Sport betting services | 4-Apr-2006 | | | Italy | 2006/4179 | Provision of remote sports gaming services by licensed operators | 12-Oct-2006 | | | Italy | 1999/5352 | Compliance with the ECJ C-260/04 judgment | 3-Apr-2008 | | | The Netherlands | 2002/5443 | Sport betting services | 4-Apr-2006 | 28-Feb-2008 | | Sweden | 2004/4087 | Sport betting services | 4-Apr-2006 | 27-Jun-2007 | | Sweden | 2006/4160 | Poker games and tournaments | 31-Jan-2008 | | |
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