EU members can require domestic Internet gambling licenses

The European Union's Court of Justice ruled last week that member nations can exclude Internet gambling sites which are not licensed in that country. The verdict was in sharp contrast to existing policy on online casinos, which is that they may operate anywhere within the Union with a license from a member nation.

Advocate General Paolo Mengozzi had released an opinion earlier this year that online gambling should be an exception to the EU's one-market system, arguing that in order toserve the public interest, prevent problem gambling, and eliminate fraud, countries could demand any foreign companies carry domestic licensing.

The Court agreed with the advocate's opinion, but said legislatures placing restrictions on foreign gaming operations must show that the laws are not based on protectionist methods of preserving revenue.

The test case involved an action by DeLotto claimed Ladsbrokes and Betfair are violating its exclusive gambling rights in the Netherlands by offering illegal sports betting. The Court found that impingement of services may be acceptable if it achieves a higher level of consumer protection.

Betfair and Ladsbrokes say they have no need for permission from the Netherlands, as they are licensed by the UK. But the court decision allows member states to refuse to accept foreign licensing as adequate, even if it comes from another EU nation, putting Internet gambling into a special category of commerce not wholly ruled by EU regulations.