Anglo-Maltese bookmaker Stanleybet celebrates “its” sixth ECJ gambling ruling, after Gambelli, Placanica and Commission v Italy in 2007, Markus Stoß in 2010 and Costa-Cifone in 2012.

This is the ruling delivered on 24.01.2013 relative to the Greek gambling monopoly, Joined Cases C-186/11 and C-209/11, Stanleybet and others v Ministry of Economy, OPAP and others. Here are the facts.

There is in place, in Greece, a historical monopoly on terrestrial gambling conferred to OPAP, nominally with objectives of protection of public order. OPAP, an erstwhile public entity, was later transformed into a company listed in the Athens Stock Exchange. The Greek State owns 34 of the OPAP stock, while the rest is being held by institutional investors and the public. OPAP features one the three highest market capitalizations in Greece and operates in every respect as a highly successful commercial undertaking. It is self-evident that the status of monopoly-holder under public law and that of listed company aimed at maximizing its profits are hard to reconcile.

Being firmly persuaded that the OPAP monopoly was contrary to Community law, far back in 2004 Stanley sought before the Greek Authorities a licence to accept sports bets in Greece. The application remained unheeded and Stanley filed a challenge against the deemed rejection before the Greek Courts. As a result of protracted litigation, in 2011 the Greek Council of State stayed the case before itself and made a reference to the ECJ, to be enlightened on the compatibility of the Greek gambling monopoly with EU law. In his Opinion of September 2012, Advocate General Mazàk took the view that the monopoly was not compatible.

OPAP carries formidable value in the war theatre of the financial crisis of Greece. Namely, the privatization of 34 of the OPAP stock owned by the Greek State constitutes the most significant component of the Greek fund-raising plan that is under way in order to honour the commitments taken by Greece with the “Troika” (that is, the informal body comprised of the European Commission, the European Central Bank and the International Monetary Fund that is supposed to oversee and govern the reformation of the Greek financial system). Quite clearly, the existence or non-existence of the gambling monopoly is bound to make a formidable difference in the valuation of the OPAP stock owned by the Greek State and the appreciation of international investors expected to participate in the privatization process.

Yesterday’s ruling of the ECJ needs to be placed into context against this complex political background.

In the first place, in the wake of a nearly-twenty years old stream of case-law, the ECJ finds that the provisions of the Treaty guaranteeing the fundamental freedoms of establishment and to render services (now Art.s 49 ff and 56 ff TFEU) are not compatible with domestic legislation such as that of Greece, which grants exclusive rights in the matter of gambling to a single body (that is, a monopolist), unless this satisfies a true intent of the State to significantly reduce gambling opportunities for its citizens in a coherent and systematic manner.
In fact, a monopoly constitutes the most severe restriction to the economic freedoms, and entails that any other Community operators are prevented outright from entering the national market place. However, the case-law of the ECJ says that even a monopoly could in the abstract be justified in the presence of a real strict State control over the gambling sector and its growth and, furthermore, of proof that the monopoly is necessary to effectively pursue goals of prevention of fraud and countering criminal infiltration. Both circumstances, though, need to withstand a strict proportionality test, which was developed by ECJ nearly ten years ago.

The merit of the case is now being returned to the Greek Council State, which remains competent to adjudge the principal action, conforming itself to the ruling of the ECJ. However, the ECJ thought fit to impart precise directions to the national Court.

The reason why it was so, is to be found in the abundant evidence that is present in the principal case, that, instead of reducing gambling supply, the Greek State in reality systematically encouraged its unlimited expansion, even blessing massive advertising and communication policies on the part of OPAP indistinctly aimed at the entire population; that domestic gambling supply in Greece has continuously increased over the years in quality and product diversification, as well as quantity; that the Greek State exercises over OPAP but a “light” supervision, which is of form rather than substance; and that the objectives of prevention of criminal infiltration and public order would appear to be merely invoked by the Greek State in order to gain a safe-conduct or clean bill of health, rather than pursued in earnest. These very reservations had been singled out by the Greek Council or State in its order of reference of 2011. Stanley will very shortly resume the principal case, and has the fullest confidence in the competence and fairness of the supreme administrative court of Greece.
But there is much more to be found in the ruling.

Namely, the ECJ had been expressly seized by the Greek Council of State of a number of questions bearing on the post-Luxembourg transitional period, that is, during the period of time that will inevitably lapse in Greece until the domestic legislation is re-written in order to reflect the legal holdings of the ECJ and make it EU-compliant. The Council of State was doubtless wise in raising those questions. It was imperative to prevent the ECJ ruling from remaining confined in the distant realms of European law, until the gambling sector was re-shaped in compliance with EU law in real life. The issue is obviously bound to prove even more critical in a post-OPAP privatization scenario, lest a bunch of private inventors should be permitted to receive on a silver plate control of an OPAP still endowed with a status extraordinary privilege. Whilst the Greek financial situation is never mentioned, the ECJ addresses to the Greek State a number of highly appropriate, binding directions, on the tacit assumption that, downstream of its ruling, Stanley and other Community bookmakers will want to enter the Greek gambling market, in particular, that of sports bets, seeking a licence or authorization to operate therein through a network of terrestrial agencies. The directions of the Court are twofold.

First, in the light of the sever criticism expressed on the Greek system and on its incompatibility as it stands with EU law, the ECJ says that it will not be permissible for the Greek Authorities to decline receiving, investigating and satisfying the applications for licences and authorizations that will be filed by new entrants, by merely objecting that the sector is undergoing adjustments, reformations, etc., and that the end of that future domestic process should be awaited. The solution given by the ECJ reflects settled case law resting on the principle of primacy, which, in the matter of gambling and transitory regimes pending the adjustment to EU law of national systems, was recently reaffirmed by the Winner Wetten ruling of 2010. It is evident that any different solution would open the doors to an indefinite avoidance of the rulings of the ECJ and, ultimately, defeat the very object and purpose of Community law.

Second, already during the transitional period and until achievement of the domestic legislative reorganization, the Greek Authorities will be obliged to examine and evaluate applications for authorizations and licenses filed by the new entrants based on their merits, namely, having regard to the level of protection of consumers and social order surrounding the offering of their products and services. Moreover, this process will need to rest on non-discriminatory and objective conditions (hence, transparent and capable of knowing in advance). In that way, the Court gives credit to the position expressed by the Greek Government, which repeatedly emphasized the laudable aims supposedly pursued through the grant of special rights to OPAP. It is true that aims such as the one of prevention of criminal infiltration and frauds in prejudice of consumers, if genuinely pursued, could in the abstract make reasonable and proportionate restrictions to the freedoms of establishment and to render services permissible. However, if gambling opportunities are not genuinely reduced in Greece instead (as indeed they are not), and an absolute monopoly, therefore, remains without justification, the new entrants showing to pursue the same laudable aims, will need to be entitled to secure a national licence on transparent and non-discriminatory conditions, and permitted to operate.

Already on a first reading, the solutions offered by the ECJ are notable for the wisdom that permeates them. Namely, the fundamental principles of Union law are safeguarded and reaffirmed without ambiguity; a monopoly granted to a large quoted undertaking pursuing objectives of profit and expansion is – per se, only subject to verification by the National Court – adjudged incompatible with Union law; the entry on the Greek terrestrial gambling market by new operators is clearly foreshadowed, and it is ensured in advance that they should, in fact and at law, be placed in a position to operate in a supervised legal environment (through licensing or authorization mechanisms), but on transparent and non discriminatory conditions; and, last but not least, a generous “assist” is offered to the Greek Government, in order for the privatization campaigns that are in hand being capable of advancing in compliance with Greece’s international commitments, in a regulated, moderately competitive market scenario, in which the new entrants will operate alongside the ex-monopolist OPAP.

Stanleybet sincerely hopes that the Greek Government will make sensible use of the “assist” offered by the ECJ. On its part, Stanleybet is willing to add its personal “olive branch” entering the gambling market in earnest and in a spirit of loyalty, fully guided by the ground rules that have been designed by the Court of Justice.