Commission requests Member States to comply with EU law when regulating gambling services

Press release of the European Commission

 

Brussels, 20 November 2013

 

Today, the European Commission has called on a number of Member States to ensure compliance of their national regulatory frameworks for gambling services with the fundamental freedoms of the Treaty on the Functioning of the EU. Member States are in principle free to set the objectives of their policies on online gambling. They may restrict or limit the cross-border supply of all or certain types of gambling services on the basis of public interest objectives such as consumer protection or the prevention of fraud and other criminal activities. However, national gambling systems must respect EU law.

 

Member States must demonstrate the suitability and necessity of the measure in question, in particular the existence of a problem linked to the public interest objective at stake and the consistency of the regulatory system. Member States must also demonstrate that the public interest objectives are being pursued in a consistent and systematic manner. They must not undertake, facilitate or tolerate measures that would run counter to the achievement of these objectives.
 

In its Communication “Towards a comprehensive European framework on online gambling”, adopted on 23 October 2012 (see IP/12/1135), the Commission announced that it would accelerate completion of its assessment of national provisions in the pending infringements cases and complaints and take enforcement action wherever necessary. After consultation of the Member States concerned, decisions on a first series of pending cases have now been taken. Concretely, the Commission has today:

• requested Sweden to comply with EU rules on the free movement of services with regard to the regulation and supervision of its gambling monopoly;
• closed an infringement case against Finland on the compliance of the national provisions establishing exclusive rights for the offering of gambling services with EU law;
• decided to send to Belgium, Cyprus, the Czech Republic, Lithuania, Poland and Romania an official request for information on national legislation restricting the supply of gambling services.

The Commission has also closed investigations and proceedings against several Member States which had not reached the stage of a formal infringement proceeding. Proceedings against other Member States remain open – either because the national rules in question are still under investigation or in the process of being substantially amended.

 

Swedish rules for the establishment of an exclusive right for the offering of gambling services do not comply with EU internal market rules

In two separate proceedings the European Commission has requested Sweden to ensure compliance of its national rules establishing exclusive rights for the provision of online betting services and for the provision of online poker services with EU law. In previous requests the Commission had sought to verify whether the restrictions in question are compatible with Article 56 TFEU, which guarantees the free movement of services. The Commission found that the restrictive policy in the area of gambling services is not applied in a systematic and consistent manner and that the holder of the exclusive right is not subject to strict state control. The Commission enquiries cover the cross-border provision of online sports betting and poker services, but also deal with issues such as advertising and sponsorship. The Commission requests Sweden, in the form of an additional reasoned opinion on online betting and a reasoned opinion on online poker services, to take action to fully comply with EU rules.

 

Concerning restrictions to the provision of online betting services the Commission had already issued a reasoned opinion in 2007 (IP/07/909). However, in view of the time that had elapsed, developments in Sweden and in the case-law of the Court of Justice of the European Union in the area of gambling services in the intervening period, the Commission has deemed it useful to clarify the basis for its argumentation and to allow the Member State concerned to respond to these new developments.

If Sweden fails to act within two months in relation to these two proceedings, the Commission may refer these cases to the EU Court of Justice.

 

Commission confirms compliance of Finnish gambling law with EU rules

The European Commission has concluded that the Finnish legislation establishing an exclusive right for the offering of gambling services complies with EU law and is applied in a consistent and systematic manner.

 

The Commission launched infringement proceedings against Finland in 2006 (IP/06/436). These proceedings concerned the cross border provision and marketing of sports betting services. The Commission considered that the Finnish law at the time did not serve to achieve the public interest objectives invoked in a consistent and systematic manner. This process culminated in the adoption of an amended national framework law on gambling which entered into force on 1 January 2012.

The revised Finnish Lotteries Act and related implementing measures establish a statutory gambling monopoly, tighten the rules on the operation of games and the promotion of gambling services and establish revised rules and means for supervision and enforcement of gambling offers and rules. They provide the necessary structure to ensure that the activity of the monopoly is limited to a policy of controlled expansion in the betting and gaming sector, aiming to channel the propensity to gamble into controlled activities, and does not incite and encourage consumers to participate in games of chance – in terms of the supply and marketing of gambling services. The responsible Finnish authorities have been provided with the means to effectively supervise the activities of the gambling monopoly and to enforce the national gambling rules. The Finnish Government furthermore provided substantive information and evidence on the implementation and application of the amended rules and a first evaluation of their impact.

 

The Commission therefore concluded that the revised law constitutes a consistent and systematic pursuit of the objective sought by the establishment of a gambling monopoly in a Member State and corresponds to the requirements set by the Court for this establishment. The Finnish authorities have sufficiently demonstrated that the revised law and its implementation and application comply with these requirements. The Commission has therefore closed the legal case against Finland.

 

Commission enquires into the licensing procedure and conditions for the provision of online gambling services in Belgium, Cyprus, the Czech Republic, Lithuania, Poland and Romania

The European Commission has decided to send official requests for information on national legislation restricting the supply of certain gambling services to Belgium, Cyprus, the Czech Republic, Lithuania, Poland and Romania. In these cases the Commission wishes to verify whether the measures in question are compatible with Article 56 TFEU, which guarantees the free movement of services, and has asked a number of questions in relation to the licensing procedure and conditions for the provision of gambling services.

 

The Commission has concerns about the compatibility of national provisions subjecting the provision of online gambling services to establishing a physical presence in the recipient Member State, prescribing a specific legal form on the basis of national law, requesting prior consent of the authorities in relation to any changes in the shareholder structure or banning foreign capital with EU law.

 

Concerning Belgium the Commission has also raised questions about the transparency of the Belgian legal framework for gambling, in particular with regard to the rules governing the legal conduct of online gambling business and in view of the grant of a betting licence through Royal Decree to the National Lottery.

 

With regard to the Romanian legal framework for gambling the Commission has asked further questions on the coherence of the national gambling policy.

 

To Cyprus the Commission has submitted additional questions concerning the scope of the Cypriot Gambling Law with regard to different operators authorised to offer their services in the Member State. The Commission has concerns about the equal treatment of gambling service providers.

eGR: Demystifing Germany

Artikel demystifying germany_ma from Martin Arendts

State aid: Commission refers Greece to Court for failure to recover incompatible aid from certain Greek casinos and from Aluminium of Greece SA

The European Commission has referred Greece to the European Court of Justice (ECJ) for failing to comply with two distinct Commission decisions that ordered Greece to recover incompatible state aid from three Greek casinos (see IP/11/635) and from Aluminium of Greece SA (see IP/11/864) In both cases, over two years after the Commission decisions, the full aid amounts have still not been paid back.

"Member States have numerous possibilities to support business in line with EU state aid rules. However, when subsidies procure distortive advantages to selected companies without furthering any common interest goal they must be recovered swiftly. This is necessary to restore a level playing field and to preserve the effectiveness of the rules themselves." said Joaquín Almunia, Vice President of the Commission in charge of competition policy.

Greek casinos

In 2009 the Commission received a complaint about the taxation of admissions to casinos in Greece. Indeed, a €12 admission tax per person was imposed on private casinos, while the public casinos of Mont Parnès and Corfu and the private casino of Thessaloniki were only paying €4.8. The Commission considered that this different fiscal treatment provides a selective advantage to certain casinos and causes the State to forgo revenues which it would otherwise have collected. In May 2011, the Commission therefore ordered Greece to recover the aid granted through this advantage since 1999 and to end the incompatible scheme.

Aluminium of Greece

In July 2011, the Commission requested Greece to recover incompatible state aid in the form of preferential electricity tariffs from Aluminium of Greece. The aid amount is calculated as the difference between PCC's revenues from the standard tariff between January 2007 and March 2008 and the revenues from the tariff that was actually applied to Aluminium of Greece SA in the same period. According to information provided by Greece, the Commission calculated the aid principal as amounting to €17.4 million.

Background

In both cases, Greece had four months from the decision to ensure its implementation. In November 2012, one and a half years after the decision, Greece abolished the measure in favour of the casinos. For the casino of Mont Parnès and for the casino of Thessaloniki, the recovery orders are (for their largest part, i.e. approximately 85%-90%) suspended by national courts, in violation of applicable EU rules. For the casino of Corfu, no payment at all has been reported.

Regarding Aluminium of Greece SA, the aid has not been recovered up to date. The recovery procedure has been suspended by a national court, in clear violation of EU law.

In both cases, the beneficiaries and (in the case of the Greek casinos only) Greece have appealed the Commission's 2011 decisions before the EU General Court. However, no interim measures have been requested (nor granted) and the appeals have no suspensive effect.

Background on recovery

Member States have to recover state aid that has been found incompatible by the Commission, within the deadline set in the Commission decision. This is very important because delays in the recovery of unlawful subsidies maintain the distortion of competition created by the aid. That is why Article 14 of Regulation n° 659/99 and the Notice on the implementation of decisions ordering the recovery of unlawful or incompatible aid (see IP/07/1609) provide that Member States should effectively recover the aid from the beneficiary without delay.

If a Member State does not implement a recovery decision, the Commission may refer the matter to the Court of Justice under Article 108(2) of the Treaty on the Functioning of the EU (TFEU) that allows the Commission to directly refer cases to the Court for violations of EU state aid rules.

If a Member State does not comply with the judgment, the Commission may ask the Court to impose penalty payments under Article 260 of the TFEU.

Press release of the European Commission, 17 July 2013 

State aid: Horserace betting levies must be fully compliant with EU state aid rules

Brussels, 19 June 2013: The industry bodies representing the leading European online betting operators are concerned about today’s European Commission decision (C 34/10) that confirms a French levy to fund ‘the improvement of the equine species and the promotion of horse breeding’ is in line with EU state aid rules.

According to the European Commission: ‘State aid is prohibited under the Treaty on the Functioning of the European Union. Nevertheless, some strict exceptions authorise aid justified by common interest objectives, i.e. for services of general economic interest, as long as they do not distort competition in such a way as to be against the public interest.’

Against that background, the RGA and EGBA would make the following points:

• Under the EU Treaty, state aid remains as a matter of principle forbidden and exceptions can only be granted in well defined and limited circumstances
• It is essential that when aspects of certain levies, such as the French horserace betting levy, are deemed by the European Commission to constitute justifiable state aid that the rationale for that decision is transparent and legally robust.
• The Commission’s decision in the French horserace betting levy case has only just been made and will be reviewed thoroughly by the betting industry and other stakeholders. The industry will seek assurances from the Commission where it has cause for concern and subsequent legal challenges have not been ruled out. The industry will scrutinize previous Commission decisions and standing case-law to see if horse breeding can indeed be categorised as a service of general economic interest (SGEI).
• In general terms, levies or parts of levies can only be justifiable if they are truly serving common interest objectives. That might, for instance, include veterinary research or treatment.
• However, a clear distinction must be made between that and the funds being extracted by law from one industry and transferred to another industry for commercial or quasi-commercial purposes. This would distort competition between sectors and Member States and, as such, would be a breach of State Aid rules and liable to legal challenge.
• In that respect, we take note of the fact that France proposed the introduction of this levy in 2010 because it feared that the opening to competition of the online horserace betting sector would threaten the sport’s revenues. In fact recently published figures show that not only has this not happened but that the overall stakes on online horserace betting increased by 9% between 2011 and 2012 from €1034 million to €1124 million (see link) and that the overall stakes bet online (see link) with the French incumbent operator (PMU) have increased by 11.1% between 2011 and 2012 totalling €971.1 million and so keeping an online market share of 86%. The French incumbent operator (PMU) still enjoys a monopoly in the retail market and competition in the online market remains limited due to the fact that only pool betting was allowed in 2010 which requires high financial liquidity to be competitive and hence constitutes a material market entry barrier.

press release of Remote Gambling Association (RGA) & European Gaming & Betting Association (EGBA)

RGA/EGBA: Remote gambling industry challenges Greek protectionist law

Press release of 28 May 2013

The Remote Gambling Association (RGA) and the European Gaming and Betting Association (EGBA) have today filed a complaint with the European Commission regarding the regulations recently notified by the Greek State which restrict the online gambling market. The complaint details a range of non-EU compliant barriers to new market entrants and requests that the Commission, as guardian of the EU Treaties, to address this as a matter of urgency.

The complaint sets out how Greece has failed to comply with EU law in respect of:

• The regulations allow for the introduction of internet blocking following the introduction of a blacklist of unlicensed gambling operators. This is in direct violation of Article 56 of the Treaty on the Functioning of the EU and of the fundamental right
  to give and receive information.
• Extending OPAP’s offline gambling monopoly to an online monopoly of gambling and
  betting rights, with exclusivity being granted to OPAP until 2020 for online sports betting and on certain aspects of online gambling (i.e. poker and casino gaming) until 2030.

• The repeal of temporary licences that were applied for by commercial gambling operators and were granted by the Hellenic Gambling Commission in the expectation that full licences could be applied for at a later date.

This failure by the Greek State to authorise online gambling is disproportionate and inconsistent, and thus in violation of EU law because:

• The Gambling Act makes it clear that online gambling is, in principle, allowed, subject to the requirements of the Gambling Act.
• However, since 5 August 2011, when the Gambling Act was adopted, no full online gambling licenses have been granted or any licensing provisions announced, started, been consulted on etc.
• The draft regulations will lead the HGC to publish a blacklist containing the names of all online gambling websites which are accessible in Greece, thus meaning that EU- licensed operators are effectively prevented from operating in Greece using their EU licences despite the fact that they are presently unable to apply for licences to provide their services in Greece.

Before the new technical regulations can come into effect there has to be time for the European Commission to look at the proposals and for complaints to be assessed, this is the “standstill period”. The Hellenic Gambling Commission has announced that it will start internet blocking of unlicensed websites the day after the closure of the “standstill period”. This does not take into account the serious concerns of operators and may result in the Greek Government being in breach of European Law if the regulations are not approved.

 

As part of a wide-ranging review of online gambling regimes across Europe, the European Commission is considering the compatibility of the Greek system with the Treaty. This is an opportunity for the Commission to ensure that citizens and companies get the full benefit of an open, secure and competitive online gambling market in Greece.

 

According to Maarten Haijer, Secretary General of EGBA, “Greece and its gambling monopoly OPAP have a long history of non compliance with EU law as recalled by the CJEU in January 2013. The latest notification to the European Commission contains a range of amendments, which are clearly anti-competitive and protectionists. It is high time for the Commission to act and take firm action against Greece.

 

Clive Hawkswood, Chief Executive of the RGA added: “The actions of the Greek State in first opening up and then closing down the online gambling market suggests that they are making decisions in the interests of OPAP rather than the citizens of Greece. Where a regime is contrary to the provision of the Treaties, challenges are unfortunately necessary and unavoidable. We therefore look to the Commission, as guardian of the Treaties, to enforce those provisions in relation to gambling, as the European Parliament has recently requested.”

RGA: European Commission told that if Greece gives OPAP an online gambling monopoly it would breach EU law

Brussels, 11 March 2013

 

The RGA has complained to the European Commission about the Greek Government’s plans to extend OPAP’s land based monopoly to online gambling products.

 

The complaint focuses on the extension of OPAP’s off line monopoly to online products, including sports betting and other gambling products such as casino and poker. The main arguments are that the Greek Gambling Act allows for the licensing of online gambling operators but the Ministerial Decisions and administrative measures undertaken prevent any operator other than OPAP from being granted a full licence. In effect the Government has granted an exclusive right to OPAP and that infringes Article 56 of the Treaty on the Functioning of the European Union (TFEU).

 

The complaint criticises the failure of the Greek state to implement fully the Gambling Law of 2011 which provides for the regulation of the Greek online betting and gambling market. This failure means that operators who currently have licences in other EU Member States will not be able to apply for licences in Greece until 2020 at the earliest.

 

Clive Hawkswood, CEO of the RGA said: “We believe that the failure to offer licences for online gambling is not because of any concerns about consumer protection but is rather to ensure that from the privatisation of OPAP the Greek government gets the highest possible price for its 33% shareholding.

 

Again and again the Greek Government has failed to comply with basic EU law. As recently as Friday 1 March, they made significant revisions to the draft Law and yet these have not even been notified to the European Commission. We have written to the Commission asking them to intervene and get this latest draft notified to them in accordance with the provisions of Directive 98/34/EC.

Until the Hellenic Republic complies fully with EU law, the Greek people will not get the benefits of a regulated and competitive market; the Government will miss out on long term revenues; and legitimate online gambling operators will be excluded from the market.”

 

The RGA had previously complained to the European Commission about the internet and payment blocking mechanisms that have been set up to protect this monopoly. These mechanisms disproportionately restrict the freedom to provide services, the free movement of capital and payments, and the fundamental freedoms to conduct a business, provide and receive information and of respect for privacy, in violation of EU law.

 

Hawkswood went on to say: “Members of the RGA expect all operators to be offered a level playing field across Europe. No one could suggest that is unreasonable. In Greece we have OPAP’s monopoly being protected and extended for a short term gain when in the long run the Greek people will benefit from additional choice and better value if the remote gambling market is opened up.”

CJEU: GREEK GAMBLING MONOPOLY VIOLATES EU LAW

Brussels, 24 January 2013
 
The Court of Justice of the European Union (CJEU) today delivered its ruling confirming that the Greek gambling monopoly violates EU law. Today's ruling provides additional support for the European Commission's (EC) to take direct legal action against those Member States failing to comply with EU law, including Greece.

Today the CJEU ruled in the joined Greek cases (C-186/11 and C-209/11) that Greek gambling monopolist OPAP does not comply with the strict requirements under EU law to justify its monopoly. The ruling confirms in particular that:
 

• EU law precludes “the exclusive right to run, manage, organise and operate games of chance to a single entity, where, firstly, that legislation does not genuinely meet the concern to reduce opportunities for gambling and to limit activities in that domain in a consistent and systematic manner and, secondly, where strict control by the public authorities of the expansion of the sector of games of chance, solely in so far as is necessary to combat criminality linked to those games, is not ensured” - (para.36)


• “The fact that OPAP is a listed public limited company and the finding that the Greek State’s supervision of OPAP is merely superficial, tend to suggest that the requirements […] might not be satisfied” (para.3)


• As long as national gambling legislations are found incompatible with EU law “national authorities may not refrain from considering applications […] for permission to operate in the sector of games of chance, during a transitional period” (para.37) until national legislation is compatible with Treaty provisions (para. 46).


• When the reform of an existing monopoly to making it compatible with Treaty provisions is not feasible and that a liberalisation of the market in games of chance is considered the better measure for ensuring the level of consumer protection “the introduction in that Member State of an administrative permit scheme […] must be based on objective, non-discriminatory criteria which are known in advance, in such a way as to circumscribe the exercise of the national authorities’ discretion so that it is not used arbitrarily” (para.47)

Greece has a long history of non-compliance with EU requirements and its gambling monopoly, OPAP, has remained a private company focused on generating profit: OPAP is listed on the Athens Stock Exchange, the Greek State holding only 34% of the shares. Extensive advertising and expansion are further proofs of the merely superficial control exercised by Greek authorities. Neither a Reasoned Opinion issued by the EC in 2008(1) nor continued litigation have prevented Greece from continuing to violate EU law. The latest cosmetic reforms to its gambling laws have triggered new complaints, including by EGBA, on a national and at the EU level.

Sigrid Ligné, Secretary General of EGBA, commented: ”We welcome the CJEU ruling that confirms that Member States must adhere to the requirements of EU law. Given the factual setup of OPAP’s monopoly which clearly fails to meet the CJEU test we hardly expect effective control to be implemented in the future. Therefore, Greece should follow the Court's clear advice to liberalise the market. The ruling is highly relevant and gives the EC yet more jurisprudence to put an end to non-compliant gambling policies across the EU.”

Ligné adds: “The ruling provides the EC with new impetus in pursuing Member States that violate EU law. At this stage only the EC, as the Guardian of the Treaties, can restore legal security by acting directly on the many complaints it has received, not only against Greece, but also against many other Member States. The EC can now take firm action on all pending infringement cases in order to ensure all Member States are in full compliance.”

On 23 October 2012 the EC in its Communication “Towards a comprehensive European framework on online gambling” confirmed that ”ensuring compliance of national law with the Treaty is […] a prerequisite of a successful EU policy on online gambling”(2)  and that it would take action against all Member States whose legislation does not comply with EU law. The EC decided to re-launch infringement proceedings – and, where necessary, also referrals to the CJEU – against 9 Member States(3) , including Greece, and to investigate the gambling legislation in no less than 20 Member States(4) that are subject to recent complaints. The EC has publicly committed to decide on further steps regarding infringement cases, including legal action before the CJEU, by early 2013.

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(1) See Link to EC website
(2) Communication, see link, p.5
(3) Including Germany, Greece, the Netherlands, Hungary, Greece, Sweden and Finland, see link to EC website
(4) Commission memo ‘Online Gambling in the Internal Market, FAQ”, see link, page 3