Online gaming: ECJ rules in bwin v Santa Casa

Vienna, 08.09.2009 – The European Court of Justice (ECJ) today published its judgment in the preliminary ruling proceedings bwin and Liga Portuguesa de Futebol Profissional v the Portuguese monopoly Santa Casa da Misericórdia de Lisboa. In these proceedings, the ECJ assessed whether the Portuguese sports betting and lottery monopoly and its extension to include the internet is compliant with EU law.

In particular, the ECJ examined “whether the freedom to provide services precludes the Portuguese legislation in so far as the latter prohibits operators such as bwin, established in other Member States where they lawfully provide similar services, from offering games of chance via the internet in Portugal. In its decision, the Court finds “that the Portuguese legislation constitutes a restriction on the freedom to provide services.

The Court also maintains “that restrictions on the freedom to provide services may be justified by overriding reasons relating to the public interest. However, the Court notes that the restrictive measures that Member States may impose must satisfy certain conditions: they must be suitable for achieving the objective or objectives invoked by the Member State concerned, and they must not go beyond what is necessary in order to achieve those objectives. Lastly, in any event, those restrictions must be applied without discrimination.

The ECJ concludes that prohibiting private providers from offering games of chance via the internet is compatible with Community law. However, the Court overlooks the fact that respectable private providers such as bwin are just as able to control gaming in the internet as state monopolies.

Internet warrants greater security than brick-and-mortar gaming
Using this IT-based medium, highest security standards can be met to warrant customer protection and fraud control in particular. As founding member of the European Gaming and Betting Association, bwin helped develop the compulsory Code of Conduct for private online gaming providers. This Code stipulates strict controls which, given the transparency of the internet, have proven more efficient in the internet than in traditional brick-and-mortar gaming and, in particular, conclusively prevent any type of fraud. The European Sports Association, whose efforts also serve to prevent betting manipulation, has successfully been able to implement this.

Internet Gaming is Market Reality – It’s time for legislators to act
Today’s decision once again underscores that a modern regulation of online gaming is indispensable in order to protect consumers. Co-CEO Norbert Teufelberger comments on this ECJ decision: Internet legislation contains technical requirements and the Commission must be notified of these before they come into force. This was not done in the present case. As the national court did not consider the notification issue, the ECJ refrained from addressing the matter. It will therefore have to be resolved in the national proceedings. In so doing, the national court will surely go by the statements of Advocate General Bot who pointed out that no penalties could be imposed as no notification had been made. And he added: A legal vacuum has emerged in the European gaming sector because of the rapid pace of technological progress. Among other things, this is borne out by over a dozen preliminary ruling proceedings still pending before the ECJ as well as numerous infringement proceedings against EU Member States which the European Commission has so far put on hold. As a transparent company listed at the stock exchange, it has therefore always been our ambition to change this situation as quickly as possible and to offer our line-up in a regulated environment marked by legal security.

Co-CEO Manfred Bodner continues: “Online gaming has become a market reality. There is urgent need to develop a legal framework in tune with the times to warrant the interest of consumers, the state and operators. Court rulings will not be able to fill in for a regulation in the medium and long run.

Norbert Teufelberger specifies: “Only a regulated online gaming market with a diversified and attractive line-up of games will provide adequate security against the risks of a black market which in fact not only opens up the floodgates to crime but also passes up on consumer protection. This is why a growing number of Member States, including Great Britain, Italy or France, have reacted. We are confident that Portugal will also set the course for an attractive regulated online gaming market.

Background information on the ECJ proceedings bwin and Liga Portuguesa de Futebol Profissional (LPFP) v the Portuguese monopoly Santa Casa da Misericordia de Lisboa (SCML):
In August 2005, bwin signed a sponsoring agreement with LPFP for a period of four playing seasons. In view of Portuguese law, which grant SCML sole authority to negotiate sports bets, SCML filed a number of lawsuits, including infringement proceedings, against bwin and LPFP. An administrative penalty was imposed on bwin and LPFP and they lodged an appeal. The court entrusted with the case in Portugal referred a list of questions on the interpretation of the Portuguese gaming monopoly under EU law to the ECJ.

What are preliminary ruling proceedings?
The Court of Justice works together with all courts in the Member States. They are responsible for the application of Community law. To ensure the effective and consistent application of Community law and to prevent diverging interpretations, national courts can (and in some cases must) address the Court of Justice and request it to interpret Community law in order to verify compatibility of their national legislation with Community law. A preliminary ruling may also requested for verification of the validity of a Community act.

See Database of the European Court of Justice