European Union Law, Gambling, and Sport Betting - European Court of Justice, Member States Case Law, and Policy

Abstract

Rien ne va plus. These words by Advocate General R. J. Colomer at the outset of his Placanica opinion left no doubts: it was time the highest court in Europe did its job, and provided clarifications for what had become a remarkably obfuscated environment for the gambling and sport betting industry. His prophetic words resonated with all involved stakeholders in ensuing years.

Carmen Media and Engelmann are the latest in a series of many cases handled by the European Court of Justice (ECJ) on matters dealing with gambling, sport betting practices, and member states’ traditionally-established monopolies. EU Law application on these cases has been problematic and fairly inconsistent among national courts and the ECJ itself. In an era where online gaming, in particular, is rapidly growing into a larger share of the gambling industry, and considering the ease of access and multitude of products, services, and transactions involved, the ECJ, European Commission, and national governments are toiling over the most prudent, balanced, and practical approach and policy directions for the future of the industry in Europe. In this process, the burgeoning industry has been able to lobby and cooperate with political, regulatory, and key legal actors in order to promote interests of the rapidly expanding number of gaming providers. As per European Gaming and Betting Association’s rich vault of resources, there has been an extensive educational effort about the industry’s new players, private operators competing with traditionally established (usually) state-actors or state-supported and/or affiliated exclusive rights holders and monopolies maintained by European state governments. This has been a “myth-busting” exercise, as well as a profound and elaborate research effort on the part of the industry’s private gaming sector, considering how deeply ingrained certain conceptions of gambling and betting have been for centuries, i.e. that gambling is morally reprehensible, that gambling is intimately tied to corruption, fraud, money laundering, criminal elements of society and organised crime networks reaping most of the revenue from it, as opposed to regulated gaming and betting on sport for the benefit of the state, generating revenue which will automatically flow back into the grassroots and the game, on which the betting activity is based. It is reported that both state-run gambling monopolies and private operators are experiencing approximately a 70% growth between 2008-2012, and given the global recession, the fact this number is considered slow progress for industry standards is astounding.

In an eerie coincidence, these most recent ECJ decisions were reached on the one-year anniversary of the Liga Portuguesa judgment by the ECJ’s Grand Chamber, September 8th 2009, a day that delivered a significant blow to the private gaming sector, until Carmen Media, decided on September 8th, 2010. Carmen Media and Engelmann followed a group of other ECJ judgments in June and July 2010, in great part confirming dicta in Liga Portuguesa on challenges that dealt with monopolies and restrictive policies in the Netherlands and Sweden (Betfair and Ladbrokes; Otto Sjöberg and Anders Gerdin v. Swedish State respectively). This timing was three years removed from the Placanica decision by the ECJ, which was then believed to be strong confirmation that there is a clear turn toward liberalisation of the gambling sector in Europe, and against preservation of state monopolies; indeed, as will be elaborated below, Placanica followed the expected progress of legal theory and EU Law application, emanating from several cases that led to Placanica at the time. The most recent cases of the busy 2010 docket came 18 years following Schindler, the first case the ECJ had the opportunity to hear and decide on related issues.

What have we learnt in the process of these two decades of litigation and policy challenges? Has there truly been a dramatic shift in the way European institutions, courts, legislators, and citizens approach the exciting, yet ‘immoral’ subject of gambling? Can sport betting enterprises now freely roam the services market of the European Union? Can member states still run lotteries and betting monopolies in exclusion of competitors, embracing the revenue accrued, chastising the ‘corrupt’ competition, and justify the means under EU Law? Is the gambling market yet another ‘failed’ aspect of European integration, destined to be endlessly epitomised by procedural entanglement, lack of political will, conflicts between member states, and inability or reluctance of European collective bodies to assume initiatives and resolve these conflicts, promoting the European Treaty’s purposes as revisited by the Treaty of Lisbon? Or could it just be that gambling, twisted as it may be, is in the forefront of a common market realisation? These and other questions are entertained by this chapter, one that aspires to unveil certain important concepts from past legal and policy developments in this exhilarating and controversial field. Additionally, this investigation prepares the reader for the ensuing chapters in this valuable contribution and volume of collected works by summarising the important jurisprudence that led to the reality of a regulated and competitive 2011 market.

To answer the questions posed above, this chapter will focus on the legal framework of gambling and sport betting in the European Union, the application of EU Law in what has become a very competitive and lucrative sport betting industry, the evolution of ECJ jurisprudence on the matter, and the ramifications for future policy developments in this controversial sector of EU business.

Putting things in perspective, the Study of Gambling Services in the Internal Market of the European Union , composed by the Swiss Institute for Comparative Law (with the significant strategic approach of outsourcing to the Salford Business School Centre for the Study of Gambling: at the request of the European Commission (EC), reveals interesting findings. For example, whereas in the US the total revenue from gambling (Gross Gaming Revenue or GGR, as used in the study) was calculated at approximately €60.7 billion for 2003, the respective GGR for the EU was €51.5 billion. Interestingly, considering the regulatory differences between the US and the EU, US betting services, including on-track and off-track betting on horses and sports, amounted to only 5% of US GGR, while in the EU, the comparable statistic was 17% of the EU total (Swiss Institute of Comparative Law, 2006, p. 37). This study extended for more than 1,500 pages, and concluded an all-encompassing research effort spanning the course of two years preceding its publication in the Summer of 2006. The timing could not have been more opportune, as the ECJ decision in Gambelli (C-243/01) was already available and under discussion, whilst the deliberations over Placanica (C-338/04) were under way, after the Advocate General’s bold and drastic recommendations, which will be elaborated below.

This chapter commences with fundamental legal principles involved in the governance of the EU gambling and sport betting industry, such as the principle of subsidiarity and pertinent articles from the Treaty of Lisbon (amending the Treaty on European Union and the Treaty establishing the European Community, 2007/C 306/01) and the Treaty on the functioning of the EU, 9.5.2008, C-115/47 et seq. (hereinafter: EC Treaty). The examination will continue with ECJ case law on the matter, leading to the important decisions in Gambelli, Lindman, Placanica, Italian Republic, Liga Portuguesa, Betfair, Ladbrokes, Carmen Media, and Engelmann, which encompassed a legal maelstrom that needs to be investigated for future national courts’ application. In addition, the chapter briefly examines the contribution of the European Ombudsman in regard to complaints from adversely affected sport betting operators against the EC’s handling of such cases, combined with recent policy developments and member states’ case law, the controversy about the Services’ Directive, and the EC inquiries into restrictive practices of EU member states (MS). Finally, an analysis of the present situation in EU gambling and sport betting after the recent ECJ decisions will be attempted, via scenarios from primary (national MS practices, policies, and case law) and secondary (Swiss Institute of Comparative Law, 2006; European Gaming and Betting Association, 2010; GamingLaw.eu, 2010) research.

Keywords: European Union Law, European Court of Justice, Gambling, Law and Policy, Sport Betting

JEL Classification: K00, K10, K19, K20, K23, K29, K30, K39, K40, K41, K49, L12, L40, L41, L43, L44, L49, L83, M00, M20