Conference on online gambling in the EU

Conference Announcement

If you are interested in consumer protection against remote gambling and want to stay up-to-date with the current developments on this subject, we would like to inform you about the upcoming conference on these issues.

Date: 25 November 2014 

Location: University of London Institute in Paris 

Theme: Regulating Online Gambling in the EU - Recommendation 2014/478/EU on Player Protection - Where Do We Go From Here?

More information: Link to conference website

Online gambling and consumer protection - the Commission's guidelines

Today, the Commission has announced the release of a recommendation on the topic of online gambling (here the provisional text).

The recommendation is not binding. According to the Commission's FAQ's, no legislation should be expected to come in the immediate future either. The recommendation follows and Action Plan of 2012, which had identified the topic of consumer protection in this specific market as sensitive and does not cover all aspects of the regulation of online gambling. In particular, the Commission set out a series of principles which it invites member states to abide in drafting or upkeeping their rules on the subject. These principles, in particular include the following:

- gambling websites should give consumers appropriate information on the risks associated to gambling

- also advertisement of gambling services should be carried out in a responsible way;

- minors should be not allowed to play, and in general their contact with gambling (and related commercial communication) should be limited;

- identification: consumers should provide reliable data and the service provider should take patterns into account and use that information to intervene when problematic situations arise;

- consumers should be able to easily adopt self-restraining measures, including blocking their accounts;

- helplines should be available;

- the employees of gambling service providers should receive training enabling them to understand the risks their clients are facing.

Nein to online hazard - CJEU in Digibet and Albers (C-156/13)

12 June 2014: CJEU in case Digibet and Albers (C-156/13)

We've discussed previously a few Austrian cases where the CJEU was asked to evaluate various prohibitions and limitations in organisation of online gambling in this country (see e.g.: Austrian winners may still take it all). The case Digibet and Albers is a German one and concerns the same topic. Germany allows each federal state to regulate online games of chance and except for Schleswig-Holstein all other federal states prohibited the organisation and facilitation of online games of chance. The more liberal regulation of Schleswig-Holstein was recently repealed but for 13 months it was possible to organise and facilitate online games of chance, as well as advertise them, and the authorisations issued remain valid for a transitional period of several years. The question raised in this case was whether the liberal policy adopted by Schleswig-Holstein undermines the public policy's justification used by other federal states to prohibit online games of chances contrary to the freedom to provide services' principle. The CJEU states that this is not the case, and as long as German laws on games of chance are proportionate to the objective they pursue in limiting the freedom to provide services, which is for German courts to establish, they are compliant with EU law. (Par. 40-41)

Austrian winners may still take it all - CJEU in Pfleger (C-390/12)

30 April 2014: CJEU judgment in Pfleger (C-390/12)

As we have previously mentioned on this blog (Taking a chance on a game of chance...), Austrian government limited a possibility of running gambling establishments by issuing only a limited number of licenses that would allow for it. This legislation was explained to be justified by the need to protect consumers from gambling addictions and to prevent crime related to gambling. However, these justifications clashed with the permitted, aggressive advertising of games of chance, encouraging active participation of consumers in them and presenting a positive image of gambling. This led some unlicensed operators of gambling establishments to question the compliance of the Austrian law with Art. 56 TFEU, which prohibits unjustified restrictions on the freedom to provide services. If Austrian law did not really try to protect consumers but, for example, the introduction of limited licensing would only serve specific tax purposes that could be seen as breaching the protection established by Art. 56  TFEU.

The opinion of AG Sharpston left it to the national courts to decide whether in the given case the restrictions on the freedom to provide services were justified. While on the one hand, limitation of gambling licences should lower the number of gambling opportunities and, therefore, automatically increase consumer protection and lower crime related to gambling, the national court would need to consider whether such measures were proportionate and whether other laws (e.g. allowing advertising of gambling) would not undermine this protection. The CJEU takes these factors into account and since the national court claimed that national authorities did not actually managed to prove that gambling was a significant problem in Austria (Par. 53) and that the increase of tax revenue was really at stake (Par. 54), it concluded that Austrian law is in breach of Art. 56 TFEU if it "does not actually pursue the objective of protecting gamblers or fighting crime and does not genuinely meet the concern to reduce opportunities for gambling or to fight gambling-related crime in a consistent and systematic manner". (Par. 56)

It remains to be seen what the referring court will decide in this matter, but once again it is made clear by the CJEU that in restrictions are placed on one of the freedoms, they need to be justified by real and attainable objectives, such as actual consumer protection that is not just a smoke screen.

Restrictions on hazard

Online gambling is quite a controversial service in Europe. In general, European countries are allowed to put restrictions on provision of online gambling within their borders, due to public interest objectives (such as consumer protection, fraud prevention etc.). However, the justification for applying such restrictions needs to be real and concrete, and applied consistently, since otherwise freedom of provision of services within EU should prevail (see e.g. out post on recent AG's opinion in the CJEU case Pfleger). During the last year, the European Commission was evaluating current national provisions restricting online gambling. Yesterday, it was announced that at the moment Sweden does not apply its national restrictions systematically. While national rules give exclusive rights to certain service providers for providing online betting services and online poker services, the compliance with these restrictions is questionable (at the same time, Finland was seen as properly having enforced compliance). Some other countries were asked to provide more information on possible restrictions and licensing procedures with regards to online gambling services. (see more: Commission requests Member States to comply with EU law when regulating gambling services)

Taking a chance on a game of chance - AG Sharpston in Pfleger (C-390/12)

14 November 2013: AG Sharpston in Pfleger (C-390/12)

Another opinion issued yesterday and related to consumer protection concerned authorisation of gaming machines in Austria. Currently, only a limited number of licence holders may organise games of chance in Austria, and other operators who are prohibited from offering such services may object against it by claiming unjustified restriction on the freedom to provide services as guaranteed by art. 56 TFEU. (Par. 51) By the way, questioning the national policy under art. 56 TFEU seems more reasonable than what parties in these proceedings have done - operating gaming machines without a licence, getting caught, being held criminally liable for it, and then trying to get out of it under the TFEU provisions.

The CJEU considered earlier that certain justifications are allowed to restrict provisions of gambling services, e.g., consumer protection (incl. protecting players from gambling addiction) and crime prevention, as long as they are proportionate, while some other reasons don't suffice, e.g., increasing tax revenue. The Austrian court will need to determine what the objective was in the given case and to adjudicate accordingly. (Par. 54-55) In general, however, the AG Sharpston reminds the national court that a limitation of number of licence holders automatically limits opportunities for gambling, and therefore seems proportionate to achieve the objectives of consumer protection and crime prevention.(Par. 57) There are, however, many factors that only a national court may take into account in trying to establish Austrian authorities' objective, like, scope of a gambling problem in Austria, intensity of controls applied to licensed establishments etc. At the same time, it may be an argument against Austrian government's claim that they pursue consumer protection, the fact that license holders are currently engaging in aggressive advertising campaigns to promote positive image of games of chance and encourage active participation.

"While the Court has recognised that moderate advertising may be consistent with a policy to protect consumers, that is only where the advertising is strictly limited to what is necessary to channel consumers towards controlled gaming networks. Advertising that encourages gambling by trivialising it, giving it a positive image or increasing its attractiveness aims to expand the overall market for gaming activities rather than channelling the existing market to certain providers. Such an expansionist commercial policy is plainly inconsistent with an aim of achieving a high level of protection for consumers. As the Court stated in Dickinger and Ömer: ‘A Member State is not … entitled to rely on reasons of public policy related to the need to reduce opportunities for gambling in so far as the public authorities of that State incite and encourage consumers to participate in games of chance so that the public purse can benefit’." (Par. 60)

Hazardous resolution

On 10th of September the European Parliament adopted a resolution "Online gambling in the internal market" calling upon the European Commission to better regulate online gambling in the EU. As we have mentioned before, online gambling is one of the fastest growing services in the EU. (see post: Easy money) Currently, online gambling' rules differ across the EU, since many European countries have different approaches to gambling in general due to morality issues and different ideas on what's needed to protect public order. It is not quite clear to me what measures the EP expects the Commission to take, since on one hand they argue for more harmonisation of online gambling in the internal market, but on the other they insist that Member States should be able to uphold aforementioned national barriers to market entry. What could be optimised, according to the MEPs, is a good exchange of information among the Member States that could contribute to the European list of banned operators (black list) or licensed operators (white list), European codes of conduct, uniform tax rates, and uniform recognition rules so that operators recognised in one Member States could conduct business in other Member States, as well (unless these specific, national market barriers would oppose that?). Another curious point is the call for a European ban of certain types of wagers that pursuant to the MEPs are more prone to lead to fixing risks in sports, e.g., live sports betting, wagers such as awarding yellow cards, throw-ins, corner kicks etc.

Easy money

In other news the European Commission communicated today its two-year plan to tackle online gambling (sports betting, poker, casino, lotteries, etc.). Apparently, online gambling is one of the fastest growing services in the EU (annual growth rate of almost 15%, estimated 6.8 million consumers participating). There is a definite lack of specific regulation that would protect consumers from unregulated gambling websites, carrying risks of fraud and money laundering. Since online gambling often takes place cross-border, the national legislators cannot effectively guarantee protection to their citizens and European rules are needed. The European Commission does not intend to introduce a regulation. Instead, specific actions and common principles on protection are to be set, e.g. three recommendations are to be adopted on: common protection of consumers; responsible gambling advertising; prevention and fight against betting-related match-fixing.(Commission sets out an action plan for online gambling)

See also FAQ.

HIT and HIT LARIX v Bundesminister für Finanzen: ECJ allows Austria's restrictions on foreign advertising for Casinos

12 July 2012: CJEU's case HIT and HIT LARIX (C-176/11)

In a judgment delivered by the ECJ today, the court made clear that the restrictive rules on foreign advertising for casinos in Austria do not breach the freedom to provide services. In Austria, foreign casinos can only advertise their services if the rules governing the casinos in that country offer at least similar protection (e.g. on legal gambling age, observing gamblers' conduct, etc.) as offered in Austria itself. In order for foreign casinos (in this case from neigbouring state Slovenia) to advertise in Austria, they must obtain prior authorisation by the Austrian state. According to the ECJ, the Austrian rules do limit the freedom of to provide services, but that this limitation is justified by the objective of protecting the population against the risks connected with games of chance. Lacking harmonised rules in the field, Member States are still able to set their own rules as long as they are proportionate. In the case of Austria, this does not pose problems. The ECJ does warn, however, that Member States cannot require foreign casinos to be subject to identical rules. Click here for the full judgment in the case (C-176/11).