When it comes to gambling European case law is an ass!

May 18, 2015

The European Commission started to get interested in the gambling (and when I write “gambling” I include betting) industry in 1990 when it commissioned Coopers & Lybrand to write a report on the European industry as part of their 1992 Harmonisation program. It did not help that the C&L report was badly flawed; adding gaming table drop, slot handle and betting handle to determine the size of the market. It is a bit like adding kilograms to kilometres; both are a measure of how big something is but are not the same. The Commission determined there were barriers to entry and perhaps action needed to be taken to uphold the founding principle of the European Union; the free movement of services, goods, capital and labour.

The Commission held hearings in Brussels  and many different groups made presentations about the nature of their particular sector or market and why the Commission should leave them alone. Most notable were the lottery groups; they likened their products to addictive drugs and themselves to drug dealers that needed strict controls that only national governments could apply. At the time I also remember having a conversation with a particularly visionary owner of a number of casinos in the UK who when I suggested that harmonisation could mean the ability to operate any number of casino slot machines answered, “Why would I want that? It would mean having to alter or find larger premises!”

This was the time of the Maastricht Treaty and the Commission desperately wanted the Treaty to be approved by the Member States. I believe that to get the Treaty through one of the things that the Commission agreed was to leave the gambling sector alone. Member States did not want the Commission messing with their gambling monopolies.  In its final report the Commission agreed that the principle of “subsidiarity” should apply and the regulation should be left to the Member States for them to determine what should be done. The Commission also noted that they awaited the outcome of the various cases that were making their way through the European Court of Justice. In other words, they weren’t convinced but did not have the political clout to go against the Member States on this one.

So it was left to the ECJ to make judgements and determine how gambling should be regulated in the Member States.   Since then the ECJ has made quite a few judgements; Schindler, Laara, Zenatti, Lindman, ANOMAR, Gambelli, Placanica, Bwin Liga, De Lotto, Sjoberg, Carmen, Winner Wetten, Stoss, Engelmann, Dickinger and HIT. (Sounds like a Champion’s League football team!)

When I was younger, in my naivety, I used to believe that court judgements were about justice and law and not anything to do with political expediency.  But I am sad to say that when it comes to gambling the European Court of Justice is one of the most political courts around. Each of these judgements was highly political; the court has tried to justify the unjustifiable, trying to make national gambling monopolies compatible with the founding principles of the EU.  Even going so far as calling gambling a “social evil” to defend that a Government should be a gambling operator!   Slowly but surely, and we are now almost 25 years since the European Commission first started to investigate gambling, these judgements have chipped away at the ability of National Governments to operate gambling monopolies in a commercial manner.

So what do these judgements mean? Well in broad terms the ECJ has decided that;

  1. Gambling is a commercial activity and therefore subject to the Treaty of Rome; the free movement of services, goods, capital and labour
  2. Member States cannot discriminate on the grounds of nationality
  3. Member States may limit the supply of gambling product but only for social reasons
  4. Member States may determine what type of gambling is allowed
  5. State monopolies are compatible with EU law provided that the protection of the public is the main purpose
  6. Monopolies may advertise so long as the purpose is to channel consumers towards regulated gambling
  7. Restrictions on the number of operators must reflect a “genuine diminution of gambling opportunities”

I certainly disagree with the last five of these but the last point is a nonsense when applied to online gambling. It is true that all European Governments have sought to restrict the number and size of gambling outlets. Generally, where they have left a sector unrestricted that sector proliferates at the expense of the other sectors and flourishes; betting shops in the UK or machine arcades in Germany for example. By limiting the size of the outlet the distance people are prepared to travel is lessened and so the market area is reduced. Reducing the number of outlets reduces access too; some people will find themselves to be a distance from the outlet and not prepared to make the journey. If you put one slot machine in a desert very few people will make the journey but if you put 200,000 machines in a desert and surround it with other activities and call it Las Vegas….. need I say more? Assuming they do not find illegal or other forms of gambling locally, limiting supply may reduce social harms. But in the age of the ubiquity of the internet, mobile phones, tablets it makes absolutely no sense. Gambling is everywhere. By reducing the number or size of land based outlets governments are not reducing gambling opportunities.

Governments could and do argue that by maintaining a monopoly for online gambling or reducing the number of online operators as well as restricting the number of land based outlets they are seeking a “genuine diminution of gambling opportunities”. If you allow only one (or five or ten) online gambling operators in a country how is that a “genuine diminution of gambling opportunities”? The access is everywhere. I only have to go as far as my pocket.

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