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Advocate General Mengozzi of the European Court of Justice said in an Opinion issued Thursday that neither the freedom of establishment nor the freedom to provide services gives gaming licence holders the right to offer gambling on the territory of other Member States, especially in relation to a purely ‘off-shore’ licence.
Mengozzi takes the view that a Member State may prohibit, under certain conditions, games of chance on the internet and may provide for a state monopoly on sports betting even if those games are actively promoted and if games involving a greater risk of addiction may be offered by private operators.
The Advocate General’s Opinion relates to seven joined cases from Germany currently before the ECJ, in which the German courts have asked the Court of Justice to rule on whether the laws on games of chance in Germany are compatible with European Union law.
The Administrative Courts in Gießen and in Stuttgart are to rule on disputes between sports betting intermediaries and the German authorities, which prohibited those intermediaries from offering sports betting in the states of Hesse and Baden-Württemberg for the Austrian companies Happybet Sportwetten and web.coin, the Maltese company Tipico and the British companies Digibet and Happy Bet. All those companies hold licences to organise sports betting in their respective countries. (Joined Cases under Case C-316/07)
The Schleswig Holstein Administrative Court must, by contrast, decide whether the state of Schleswig Holstein was entitled to reject Carmen Media Group’s application to be allowed to offer sports betting over the internet in Germany, when in Gibraltar, where it is established, it already holds an ‘off-shore’ licence authorising it to organise gambling outside Gibraltar. (Case C-46/08)
According to the Advocate General, the case-law of the Court “openly and unambiguously accepts, albeit subject to certain conditions, monopolies and other restrictions on operators in the gaming sector”.
Mengozzi said that although a prohibition of certain games of chance or a restriction on their operation to a limited number of licensees restricts the freedom to provide services, the Court authorises such national restrictions “where they do not lead to discrimination based on nationality or country of establishment, where they pursue a public-interest objective such as reducing gambling opportunities or the fight against fraud and crime, and where they are proportionate and consistent in relation to the objective pursued”.
Mengozzi states that the fact that monopoly-holders induce people to participate in games of chance is not sufficient to rule that the legislation concerned is inconsistent, if the promotion is moderate and is genuinely intended to prevent crime or to channel the propensity for gaming into a regulated and controlled system, and not to increase the revenue of the public purse.
Secondly, he states that allowing private operators to offer gaming services involving a risk of addiction which is probably equivalent to or greater than that of games subject to a monopoly is likewise not, in itself, inconsistent in relation to public-interest objectives and does not make the decision to bring betting and lotteries under a State monopoly disproportionate, provided that the public authorities guarantee sufficient supervision of the private operators, and the forms of gaming on offer which are covered by the monopoly are fewer than those which might exist with a private provider.
With regard to the German sports betting game ODDSET, Mengozzi said it would appear from the judgment of the German Federal Constitutional Court that the monopoly in question did not meet the consistency criterion at the time of the material events in the main proceedings. According to that judgment, the advertising used was not sufficiently moderate and was not intended to limit opportunities for gaming and to prevent addiction to gaming, but was intended to obtain tax revenue for the public purse.
As regards the prohibition of the organisation and brokering of public games of chance on the internet, the Advocate General considers that it is consistent with the freedom to provide services, provided that that measure is proportionate and consistent with the public-interest objective pursued.
The Judges of the Court of Justice are now beginning their deliberations in these case and judgment will be given at a later date. The Opinion of the Advocate General is not binding on the Court.
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