Landmark ECJ Judgment on online gambling and freedom of services
The ECJ issued its Judgment in Case C-42/07, in what was a reference for a preliminary ruling by a Portuguese Court regarding a case where the Portuguese Football League and Bwin challenged fines imposed against them for organizing and operating illegal gambling on the Internet. The defendant was Santa Casa, a Portuguese agency entrusted by statute with the task of exercising the monopoly of organization and operation of games of chance on the Internet in Portugal. The freedoms of establishment, to provide services and free movement were invoked by the claimants in the national proceedings.
The national court made a reference for a preliminary ruling to the ECJ on the interpretation of Articles 43, 49 and 56 of the EC Treaty with respect to the Portuguese legislation conferring a monopoly of exploitation of gambling on the Internet to Santa Casa. The ECJ followed an approach under which it deemed necessary to only examine the freedom of provision of services in the Community. In that regard, it found the Portuguese legislation as being incompatible with the said freedom.
The ECJ noted that online gambling is not subject to harmonziation in the Community and held that Member States are entitled to consider that the mere fact that an operator, such as Bwin, offers legal services in this sector through the Internet in another Member State where it is located and where it is in principle already subject to legal conditions and controls by the competent authorities of that State, cannot be considered a sufficient guarantee of national consumer protection against the risks of fraud and crime. Moreover, the Court noted that due to a lack of direct contact between the consumer and the operator, gambling accessible via the Internet may carry risks of different nature and greater importance in comparison with traditional markets with regard to possible fraud committed by operators against consumers.
As such, the ECJ held that the examined restriction of the freedom to provide services was, due to the particular facts of the case, justified by the objective of fight against fraud and crime. Therefore, the ECJ has held that Article 49 of the EC Treaty does not preclude the laws of a Member State which prohibit operators established in other Member States, where they legally provide similar services, to offer gambling over the Internet on the territory of that Member State.
Related links
- Full Judgment of the Court (Case C-42/07, Liga Portuguesa de Futebol Professional and Bwin v. Santa Casa)
- European Commission’s website on Freedom of Services
- EU Lawyers in Cyprus
so no online gambling in games in a country other the one you stay?
In the Judgment commented in the post above the ECJ has ruled that it does not preclude the laws of a Member State to prohibit gambling through the Internet to other Member States. That means a Member State can, for reasons that might fall under the justification of fighting fraud and crime, legislate to prohibit such cross-border provision of online services.