Free movement of services for gambling: Additional infringement procedures against France, Italy and Austria

Rechtsanwalt Martin Arendts, M.B.L.-HSG

Arendts Rechtsanwälte
Perlacher Str. 68
D - 82031 Grünwald (bei München)
Gambling services represent a multi billion market. Given the legal barriers still in force, this market is still very much fragmented on national as well as regional levels and far from being able to be called an internal market. The Internal Market and Services Commissioner Charlie McGreevy pleads for the enforcement of the freedom to provide services in this market as well. The European Commission had asked the Swiss Institute of Comparative Law to carry out a study into the sector („Study of Gambling Services in the Internal Market of the European Union“), which was recently published in its final version.

On 4 April 2006, the Commission had already initiated infringement procedures against Denmark, Finland, Germany, Hungary, Italy, the Netherlands and Sweden (IP/06/436) and, as a first step, sent letters of formal notice to the governments concerned, seeking additional information on the matter. These Member States have meanwhile responded within the set time limit of two months, Germany for example responded by a letter set up by the governments of its states (Länder). In case of insurmountable positions, these cases will have to be resolved by the European Court of Justice (ECJ). The Commission’s opinion on the case is expected in the near future.

On 12 October 2006, the Commission initiated infringement procedures against Austria, France and Italy as well. Different aspects of the freedom to provide services are concerned:

Austria is concerned due to its prohibition of advertisement for foreign casinos and because of its discrimination of foreign players by excluding them from the Austrian casinos? obligation of care (protecting them from excessive losses).

France is investigated due to its foreclosing its sports and horse race betting market despite a substantial market growth. The recent arrest of the two bwin’s Co-CEOs may have given the occasion.

Italy is investigated for not allowing sports gaming services legally offered in other Member States. The Commission is examining the accusation that Italy reserved the sports betting market to national operators. New legal provisions aiming at blocking access to websites of foreign operators are an Italian particularity.

The existence of monopolies as such in not (yet) subject matter of the infringement procedures initiated in April and now. However, the EFTA Court will soon have to decide on the legality of sports betting monopolies regarding the gaming market (q.v. German Gaming Law updated no. 44). Monopolies have the problem to be inherently discriminating against all other (potential) operators. In addition, monopolies are frequently not proportional as the good causes that are put forward to justify them, like the protection of minors or consumers, can be achieved by less intrusive means (administrative regulations) and as fiscal grounds must not be prevalent.

In my opinion, additional infringement procedures should be ahead after a thorough evaluation of the study mentioned above. The European Court of Justice will probably have to deal with many sports betting and gambling cases in the next years.