Dutch Council of State refers legitimacy and tendering of a sports betting monopoly to the European Court of Justice for review

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

Arendts Rechtsanwälte
Perlacher Str. 68
D - 82031 Grünwald (bei München)
Tel.: +49 89 649111-75
Fax: +49 89 649111-76
E-Mail: martin.arendts@anlageanwalt.de
In addition to the Dutch reference to the European Court of Justice (ECJ) by the Supreme Court of the Netherlands in the case of Ladbrokes (cf. German Gaming Law updated no. 106), the Raad van State, in its capacity as the highest administrative court of the Netherlands, has referred a case to Luxembourg (decision of 14 May 2008, file-no. 200700622/1). This reference has been filed with the ECJ as Case C-203/08. The referral is based on administrative proceedings between the world’s largest betting exchange Betfair (Sporting Exchange Ltd.) and the Dutch Minister of Justice.

Hence, within one month, two last instance courts have referred questions relating to the admissibility of the Dutch sports betting monopoly to the ECJ. National last instance courts are obliged to refer Community law related preliminary questions to the ECJ, which has the monopoly on the interpretation of EU law, provided that these legal question are not yet resolved (acte clair theory). Due to these references, a planned reorganisation of the gaming law in the Netherlands was put off. It was planned i.a. to grant Holland Casinos an exclusive online gaming license.

As it was the case in several pending proceedings, there is the question of the relevance of a license issued in another Member State in this case as well. The reference by the Raad von State does, by the way, concern the tendering of a gambling license as well. In particular, Betfair applied for two gambling licenses after the Minister for Justice had refused to declare the UK based betting exchange’s access to the market to be unobjectionable. On the one hand side, Betfair applied for the 5-year sports betting license, currently held by the monopoly operator De Lotto (Stichting de Nationale Sporttotalisator), while on the other hand applying for the license currently held by Scientific Games Racing B.V. However, the Ministry took the view that the licenses were to be extended as long as the current license holder wished to continue.

Betfair considered this to be in breach of Community law and an undue discrimination and, in particular, invoked the freedom to provide services as guaranteed by the EC Treaty. Commenting on the reference order, Betfair pointed to the fact that I was a strictly regulated, tax paying, UK based company which was a global leader in terms of fraud prevention and customer protection. One should therefore allow fair competition within the EU.

The Raad von State referred following questions to the ECJ:
Should Article 49 EC be interpreted as meaning that, where a closed licensing system is applied in a Member State to the provision of services relating to games of chance, the application of that article precludes the competent authority of that Member State from prohibiting a service provider to whom a licence has already been granted in another Member State to provide those services via the internet from also offering those services via the internet in the first Member State?

Is the interpretation which the Court of Justice has given to Article 49 EC, and in particular to the principle of equality and the duty of transparency arising therefrom, in a number of individual cases concerning concessions applicable to the procedure for the granting of a licence to offer services relating to games of chance under a statutorily established single-licence system?

(a) Under a statutorily established single-licence system, can the extension of the licence of the existing licence-holder, without potential applicants being given an opportunity to compete for that licence, be a suitable and proportionate means of meeting the imperative requirements in the general interest which the Court of Justice has recognised as justifying restriction of the freedom to provide services in respect of games of chance? If so, under what conditions?

(b). Does it make a difference to the answer to Question 3(a) whether Question 2 is answered in the affirmative or the negative?