EU Commission demands end to state sports betting monopoly

Denmark, Finland and Hungary have not been able to document that the restrictions in the free supply of betting services are “necessary, proportionate and non-discriminatory,” a press release from the Commission said. Therefore the EU Commission has stated reasoned opinions against them.

The three countries cannot claim to be protecting consumers from gambling, if they also encourage them to play state lotteries that pay proceeds to their governments. The Commission investigated whether the restrictions are compatible with the guaranteeing of free movement of services in EU. If the three countries do not comply with the EU warning, they will face EU court.

The warnings from EU came after a number of betting companies filed complaints with the EU commission.

"The Commission has received a number of complaints from operators in the area of sports betting, and it feels obliged to respond. I don’t underestimate the sensitivities that exist in many member states on the question of gambling. In sending these letters of formal notice, we are not seeking to liberalise the market in any way," said Internal Market and Services Commissioner Charlie McCreevy to Euactiv.

One of the strongest arguments in favour of keeping national gambling monopolies is the fact that the revenue from gambling go to society. The state monopoly in European countries is upheld for the state to channel money from gambling, lotteries and betting into support of sports and cultural organisations.

This is not recognised as a legal argument by the European Court of Justice. The EU commission does not regard the domestic gambling monopolies as charitable organizations as they often use commercial sales venues and have strict goals of revenue. 

Difficult to keep the monopoly

Of the 30 countries in the European Economic Area (EEA), around 50% of the countries have a monopoly license on sports betting, while 50 % of the EEA countries have free licenses or a number of licenses offered, according to Jean Jørgensen, a consultant to the Finish and Norwegian government in Brussels.

“It will be difficult to keep the monopoly on the sports betting games in future. Some fear that it might spread to other games as lotto as well, but my judgement is that a lot of countries think games and betting constitute a legitimate machine to support good purposes, and they don’t want to destroy that,” Jørgensen said to Play the Game.

The European Commission put Italy, Germany, Hungary, the Netherlands, Sweden, Denmark and Finland on notice in April 2006 for allowing state lotteries to offer online sports betting, while barring rivals from the business.

The reason Holland, Germany and Sweden was not included in the reasoned opinion was technical according to the Commission.

“The cases were not dropped, they will come later. Unless the governments agree to take steps to change their legislation - either by liberalizing sports betting or cut down on national operator's activities putting more strings on the monopoly operator by less marketing, fewer outlets, etc. In other words they have to show they mean it seriously, when they say their gambling legislation is meant to curb gaming opportunities to protect consumers,” Jørgensen said.

Sweden has averted further legal threats from EU, as the country is to change its gambling law before August, the Swedish Secretary of State, Per Jansson, said to the news agency TT.

This came as a surprise as the Swedish state gambling monopoly is regarded as one of the strongest monopolies.

According to commission spokesman Oliver Drewes, both Germany and the Netherlands have invoked changes in their gambling markets, which mean the commission must extend its investigation. The EU court has stated that betting monopolies can be upheld if their primary task is to limit gambling and control the ways the gambles are offered.

Italian case in between

The EU court has in early March 2007 overruled parts of the Italian gambling legislation in the so-called Placanica case. The European Court of Justice (ECJ) ruled that "the Italian criminal penalties for the collecting of bets by intermediaries acting on behalf of foreign companies are contrary to Community law."

The organization European Lotteries sees it as a recognition that national gambling monopolies are in agreement with EU laws. Yet, the betting companies see it as a step toward liberalising the European market.

The case creates uncertainty about the fallout of possible cases of Hungary, Denmark and Finland, if it comes to legal procedure at the EU court. Because of the countries distinct national gambling systems, it seems a matter of interpretation what will be the outcome of a possible EU trial, and uncertain if foreign gambling companies are allowed to market their product in the countries.