EU Member State can't close its gambling market on public policy grounds

Since the French legislator has not considered it necessary to make a distinction between land-based and online distribution channels at the time of the referral, the national courts must assess the consistent and systematic approach of the French legislation as regards the entire horserace betting sector both online and offline.

In particular the CJEU insists that the French jurisdiction verifies whether:

• “the national authorities genuinely sought, at the material time, to ensure such a particularly high level of protection and whether, having regard to the level of protection sought, the establishment of a monopoly could actually be considered necessary” (para.47),

• “the State controls to which the activities of the body benefiting from the exclusive rights are, in principle, subject are actually implemented in the consistent and systematic pursuit of the objectives assigned to that body” (para.72);

• The monopoly is “based on a finding that criminal and fraudulent activities linked to gaming and gambling addiction are a problem in the territory of the Member State concerned, which the expansion of authorised and regulated activities would be capable of solving “(para.72);

• “only advertising that is measured and strictly limited to what is necessary in order to channel consumers towards controlled gaming networks” (para.71) is allowed, already having established that “the PMU makes use of sustained and growing advertising for its products, including on the internet, and is increasing the number of outlets for betting and for the products offered to bettors. It uses, moreover, a commercial strategy that seeks to draw in new audiences for the betting offered” (para.65). (1)

Sigrid Ligné, Secretary General of the EGBA said: ´Today´s ruling confirms that Member States have to choose between either a monopoly with policies which are genuinely designed to reduce gambling opportunities or a well regulated market where also EU operators can provide their services. It is a clear question of consistency.´

The Zeturf case concerns French legislation which has changed since the case was referred by the French Conseil d’Etat – the highest administrative Court – to the CJEU and thus no longer applies, but civil and criminal proceedings are nevertheless still being pursued against the Zeturf Limited, an EU licensed and regulated company providing online gambling services. Now that the CJEU has given clear indications that the former law is not in compliance with EU law, these proceedings are likely to be dropped after an assessment by the national court.

Several complaints against the new French law of May 2010, partially regulating the online gambling market, are still pending both in France and at the European Commission. Separately, the Commission has already opened a State aid investigation against the French parafiscal levy on online horse-race betting, the decision on which is expected in the second half of 2011 (State aid case C 34/10).