First appraisal of the Placanica decision

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

Arendts Rechtsanwälte
Perlacher Str. 68
D - 82031 Grünwald (bei München)
The Placanica decision (Joined Cases C-338/04, C-359/04 and C-360/04), pronounced by the Grand Chamber of European Court of Justice (ECJ) on 6 March 2007, will inevitably liberalise the European Union’s sports betting market. The internal market cross-border provision of sporting bets (that is from one EU Member State to another) must not be criminally sanctioned by the receiving state. Thus the betting monopoly in Germany can not be upheld anymore, since the transfer of sporting bets to other EU Member States must not be prohibited anymore.

The ECJ refers to its Gambelli decision stating that such criminal sanctions constitute an infringement of the freedom of establishment and of the freedom to provide services (par. 42). Limiting agencies of a licensed bookmaker collecting bets in another Member State constitute a barrier for the freedom of establishment. The criminal prohibition of the transfer of sporting bets constitutes an infringement of the freedom to provide services, even if the agent is established in the same member state as the receivers of the services (the betting customers).

The Court explicitly emphasizes that any infringement of these freedoms by Members States must fulfil the requirements laid down in the ECJ‘s case-law as regards their proportionality (par. 48). Every restrictive measure must be analysed as to its proportionality. On no account may the measure be applied in a discriminating way.

In the view of the ECJ, a licensing system may be an effective mechanism to control the commercial operators in the area of gaming in order to prevent the exploitation of such activities for fraudulent purposes (par. 57). Whether this is really aimed at preventing such fraudulent purposes, as invoked by the Italian government, is to be examined by the submitting courts. The Italian way of tendering the licenses was in any way illegal, since it excluded certain types of corporations.

The most important aspect of the ECJ‘s decision concerns the criminal sanctions. The ECJ clearly stresses the limits imposed on the member states by Community law:
„Although in principle criminal legislation is a matter for which the Member States are responsible, the Court has consistently held that Community law sets certain limits to their power, and such legislation may not restrict the fundamental freedoms guaranteed by Community law. The case-law has also made it quite clear that a Member State may not apply a criminal penalty for failure to complete an administrative formality where such completion has been refused or rendered impossible by the Member State concerned, in infringement of Community law.“
The ECJ concludes:
„Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which imposes a criminal penalty on persons such as the defendants in the main proceedings for pursuing the organised activity of collecting bets without a licence or a police authorisation as required under the national legislation, where those persons were unable to obtain licences or authorisations because that Member State, in violation of Community law, refused to grant licences or authorisations to such persons.“