Biasci ECJ Ruling
The Italian Courts referred the matter of Biasci and others (C-660/11 and C-8/12) to the CEJ for a preliminary ruling on matters concerning Italy’s national gambling legislation and whether or not it breached Articles 43 and 49, (freedom of establishment and freedom to provide services).
The case was brought to the Italian courts by a data transfer centre (DTC) based in Italy, who forwarded bets from the public in Italy to Goldbet Sportwetten GmbH (a licensed operator in Austria) to facilitate placing of bets in Austria. The DTC alleged in the main proceedings in Italy that Italian legislation infringed the principle of mutual recognition as it unable to obtain a licence in Italy to provide its services, despite it already being authorised by another member state to carry on its gambling activities.
A licence is required to collect and manage bets in Italy. Prior to 2002 only companies whose shares were listed on regulated markets could apply for a licence, however this was held to be in breach of EU law, and so in 2006 changes were introduced to remedy this breach.
These changes were the subject of the Biasci case, for a number of reasons:
- Police authorisation is now required in addition to a gambling licence in Italy;
- The new legislation protects the market positions of those operators that already held a licence by restricting the number of gambling outlets in areas according to number of inhabitants, and also specifying certain minimum distances between gambling establishments, effectively preventing new licensees from establishing themselves in Italy;
- The body responsible for licensing (AAMS) was to withdraw licences from licence-holders where it was found that they marketed data transmission sites (directly or indirectly) that were located outside Italian territory. Therefore preventing providers of cross-border gambling from obtaining a licence. (Incidentally, such providers could also not obtain the required police authorisation, as a pre-requisite condition to applying for such authorisation, was the holding of a gambling licence).
Questions for the court
The main issues that the court was asked to determine were:
- Do Articles 43 and 49 prevent a member state from imposing its own licensing regime?
- Should Articles 43 and 49 be interpreted as preventing the new Italian legislation which imposes restrictions on, (amongst other things), the number of gambling outlets within municipalities according to number of inhabitants, and also distances between gambling outlets?
- Is the clause within licence agreements stating that the licence can be withdrawn if the licence-holder is engaged in cross-border activities incompatible with Articles 43 and 49 EC?
The ECJ ruled:
- Police authorisation IS NOT precluded by Articles 43 and 49 EC;
- The new legislation which protected the market position of existing licence holders IS contrary to Articles 43 and 49 EC, and the principle of equal treatment and effectiveness; and
- National legislation preventing cross –border activity IS contrary to Articles 43 and 49; and
- The fact that an operator holds a licence in the member state in which it is established, DOES NOT prevent another member state from imposing its own authorisation requirement to offer betting and gaming, provided that the requirements are compliant with EU law.
Given the current context of the European Parliament’s recent report on online gambling, and the UK’s proposals for introduction of a new licensing regime and point of consumption tax, this decision is interesting. The question on whether operators should be able to rely on their gambling licence from their country of incorporation or establishment, instead of having to apply for licences in territories to which they market, appears determined.
“Articles 43 EC and 49 EC, must be interpreted as meaning that, under the current state of EU law, the fact that an operator holds, in the Member State, in which it is established, an authorisation permitting it to offer betting and gaming does not prevent another Member State, while complying with the requirement of EU law, from making such a provider offering such services to consumers in its territory subject to the holding of an authorisation issued by its own authorities”.
It should be noted however that this ruling is conditional upon EU law remaining in its current state, and also any licensing regime that is introduced has to be compliant with EU law – including in relation to ensuring that any licensing requirement and conditions meet solid public policy grounds and are justified, proportionate and consistent.
The European Parliament’s report on online gaming spearheaded by Ashley Fox, MEP, also confirms the Court’s position in its section on “Compliance with EU law”, noting that Member States have the right to impose whatever measures they feel are justified and necessary (albeit within the parameters of EU law) to ensure consumers are protected, and that operators must respect individual nations’ rights to set their own rules.
The decision regarding cross-border activity and use of intemediaries is however extremely important and will be a welcome one for all remote gambling operators within the EU.
“National legislation which in fact precludes all cross-border activity in the betting and gaming sector, irrespective of the form in which that activity is undertaken… is contrary to Articles 43 EC and 49 EC”
For operators with land based outlets in Italy, the ruling should enable further retail gambling outlets to be opened, where they were previously prohibited.
The current piecemeal approach to licensing online gaming operators within the EU is fundamentally flawed. To protect consumers and give effect to EU cross border rights operators must be authorised in their home state for all of their licensable activities irrespective of the location of the consumer. The EU has adequate proven structures in place to deal with sensitive areas of e-commerce (e.g. financial services), it is now time to extend them to online gambling.
Senior Associate, Ramparts
25 September 2013