With over 350 online gaming companies registered in Malta, it comes as no surprise that the other EU Member States may be envious of our success. What started as a feeble attempt in 2001 by the Gaming Board to slightly open the door for issuance of limited sports betting licences has slowly led to a full scale policy structure in 2004, paving the way towards full licensing. Naturally, Malta insists that the provision of cross border gaming services over the internet should be protected by articles 43 and 49 of the EU Treaty. This in brief means the provision of free and unrestricted gaming services in the single market. Some EU countries resist competition and have taken an active role to criminalise what they consider as “unauthorised intrusion” in their markets. There has been a string of important cases which ended being decided at the European Court of Justice.
The ECJ has issued various decisions covering the provision of gaming services establishing for instance, in 2008 the Placanica case concerning an Italian court case which attempted to inflict criminal charges on operators who abetted in the taking of online bets with a UK licensed online casino. In this case the ECJ ruled that national licensing procedures cannot be applied in a de facto discriminatory manner against foreign gaming operators. An earlier case in Italy featured an operator in the Gambelli case, where the ECJ ruled that Articles 43 and 49 of the EC Treaty applied to gaming services but any prohibition has to be applied in a proportionate manner. It is interesting here for the Malta based operators to note how in the Placanica case, the ECJ ruling emphasises that regulation cannot be a smokescreen for discriminatory monopolistic practices mainly aimed to safeguard the national coffers. However the ECJ found in some instances that the measures taken by national governments which mainly aimed to protect their monopolies have not been enacted proportionately to the perceived social ills associated with gambling. In their motive to protect revenues , national governments still have considerable latitude to determine how and when to regulate the gaming sector, provided that measures to maintain public order such as the control of addictive, under –age gaming and money laundering aspects. The recent case referred to ECJ namely the Liga Bwin gives a new twist to the saga of monopoly protection in the EU.
The decision is much hyped as starting a windfall of monopoly protection and it makes a U-turn of the pro-liberal ruling in the Gambelli and Placanica cases. In summary the finding in the Liga-Bwin case pointed out that subject to certain public interest conditions EU member states had a right to maintain gambling monopolies despite the ‘free passage of goods and services’ principles. Co-chief executive at Bwin, Manfred Bodner, was outspoken in his criticism that EU law has not kept pace with the growth of the Internet. He opined that the laws governing the E.U would have to be updated if it was to be effective in dealing with real developments in technology and commerce online. In the words of the Bwin executive “there is urgent need to develop a legal framework in tune with the times to warrant the interest of consumers, the state and operators.”
Countries such as Italy, France, Netherlands, Germany and Scandinavia countries have traditionally wielded a strong resistance against any intrusion by foreign operators licensed in third countries and took immediate legal measures to stop them. The latest news by the Germany which fully supports the Inter State treaty against online gambling comes as no surprise. Advocate General Paolo Mengozzi, gave his opinion concerning seven cases referred by different German courts .
His conclusions concerned seven cases (joint cases C 316/07, C 358/07, C 360/07, C 409/07 and C 410/07)referred by different German regional courts ,and he opined that gambling monopolies had the right to advertise their products in an adequate manner in order to present an attractive legal alternative to an illegal offering. In particular he sounded unfavourable against the offshore and extraterritorial licenses granted by Malta and Gibraltar. In his opinion these licenses distorted the mutual trust between member states when it came to gaming laws. Turning to the Carmen Media case, ( see more comments below ) AG Mengozzi noted: “Consistency must always be examined from a national view point, with the result that regional differences within a Member State might render the system inconsistent”. Quoting a prominent law firm Hambach & Hambach who is defending the Carmen Media case recounts how the requirements set by German gambling law are unsuitable from the outset to attain the pursued objective in the public interest, i.e. the combat of gambling addiction. The highly inconsistent system of gambling regulation in Germany appears even more chaotic when looking at the organisational structures of casinos. According to Dr Humbach out of 16 Laender one finds that only 4 are in private hands the rest are State owned. This fact on its own throws a light on the pervasive grip that the State has on the industry and the feeling that the claim to protect the German citizen from the evils of online gambling addiction may not be fully corroborative by the facts of the case. He argues in favour of de-regulation and questions why are his clients prohibited from offering sports bets on the internet in Germany. It appears incongruous how the State boasts that it is able to filter its offers to gamblers and at the same time succeed not to attract gambling addicts. It appears that while the German Inter-State treaty bans all types of competition on the other hand the State-run agencies freely advertise outside Germany for new business. In a rather inconsistent manner we find that the only permitted games that are allowed in Germany from foreign providers are bets on horse races ( a dying trend ) and slot machines. In another example it appears that in one Laender namely Schleswig-Holstein, the ownership of the shares in Nordwest Lotto Schleswig-Holstein GmbH & Co. KG are held entirely by Investitions bank Schleswig-Holstein, an institution owned by the Laender. Typically ,we find that the management is in the hands of a Gesellschaft mit beschränkter Haftung which is in turn is also fully owned by Investitions bank Schleswig-Holstein. This vividly reveals the closely knit structure of the German monopoly riveting the gaming industry. An emblematic case which recently is taxing the consistency of the new Inter-State treaty is the Carmen Media Ltd., in case C-46/08. In 2006, Carmen Media was refused permission to offer internet sports bets to German citizens. Its defense counsel is arguing that this prohibition goes against E.U law and it is actually re-directing players to the more dangerous offers provided on the internet. Instead of total prohibition and maintaining the status quo it is more effective for the German State to allow competition yet improve on the regulatory measures to combat addictive and under-age gambling. To conclude my comments on the movement started by the German to protect their monopolies this will be challenged at the European Court of Justice at least in the Carmen Media Case. As a general comment one can safely conclude that only a regulated online German gaming market with a diversified and attractive line-up of games will provide adequate security against the risks of a black market, which in fact not only opens up the floodgates to crime, but also weakens consumer protection.
