EU court backs right to restrict online gambling

The European Union Court of Justice (ECJ) issued rulings on two separate challenges involving online gambling in the Netherlands.

Websites from British firms Ladbrokes and Betfair had been made inaccessible to Dutch residents, a move that the companies argued in two different cases flouted EU rules designed to allow firms to provide goods or services anywhere in the bloc.
 
They argued that by blocking their sites the country was working to protect the Dutch national lottery firm, De Lotto, a Dutch non-profit-making foundation which offers games of chance, which has a monopoly on sports betting, from competition. De Lotto had asked a Dutch court to stop residents from using British bookmaker Ladbrokes' online gambling operation as it was not licensed in the Netherlands.

In its ruling, which covers the whole of the EU, the court however said that member states could indeed block access if such laws meet "the objectives of consumer protection and the prevention of both fraud and incitement to squander money on gambling, as well as the need to preserve public order."

"A member state can prohibit the operation of games of chance on the internet," it said. The Dutch gambling outfit cheered the ruling, saying public welfare took precedence over the free market.

"Ongoing attempts by the commercial gambling lobby to undermine the restrictive Dutch policy have at last been called to a halt by the European Court," De Lotto director Tjeerd Veenstra said in a statement. "The principles of the free market are subordinate to overriding principles of public policy aimed at preventing addiction and fraud."

European gambling firms however reacted by calling for the European Commission to propose new legislation for the sector.

Sigrid Ligne, of the European Gambling and Betting Association said: "The internet raises new questions and challenges that cannot be resolved through the judicial process. It is for the European legislator to ensure that this IT-based medium which allows for the highest security standards warrants consistent customer protection and fraud control throughout the EU."

"As confirmed by internal market commissioner Barnier, there is momentum to take action at EU level in the context of a Green Paper and - whenever necessary - through infringement procedures against Member States that do not comply with EU law. "We are confident that reform of the gambling laws will take place in the Netherlands, as they already do throughout the EU," she added.

In the second challenge, Betfair, the world's largest online gaming exchange, took its case to a Dutch court after Dutch authorities refused to grant it a license similar to others given to two Dutch companies. The court subsequently sought guidance from the ECJ. The ECJ backed the position of the lower Dutch court on Ladbrokes.

"Such a restriction may be justified, in particular, by the objectives of consumer protection and the prevention of both fraud and incitement to squander money on gambling, as well as the need to preserve public order," it said. It cited the same rationale for the Betfair case.

"The grant to such an operator of exclusive rights to operate games of chance, or the renewal of such rights, without any competitive tendering procedure would not appear to be disproportionate in the light of the objectives pursued by the Netherlands legislation," it said.

Lobbying group the European Gaming & Betting Association (EGBA) said the judicial process could not resolve Internet issues and urged the European Commission to take action on a pan-European level.

A host of online gambling companies have taken several European countries to court in a bid to break into lucrative markets but have found it a tough battle. Last September, the ECJ said countries could ban gambling websites in order to fight crime.

Consultancy H2 Gambling Capital estimates the European interactive market could be worth as much as 12.6 billion euros (us$ 15.50 billion) by 2012, up from 8.3 billion euros last year.