EU law allows for bans on foreign online gambling operators

The EU was founded on the principle of free trade across its borders, but allows some restrictions to that trade to apply. Sweden bans the promotion of online gambling based outside of its borders, and also bans the operation of any lottery not licensed by it.

Two newspapers ran adverts for online gambling and lottery sites based in the UK and Malta on their sports pages.

Otto Sjöberg was editor in chief and publisher of Expressen and Anders Gerdin was editor in chief and publisher of Aftonbladet. The two men were found to infringe Swedish betting law and fined 1,000 Swedish Krona, about 100 euros a day for 50 days.

They appealed against the ruling and the Stockholm Court of Appeal asked the Court of Justice if Swedish law was in line with EU law. Yves Bot is an Advocate General, a legal advisor to the Court who issues an opinion on a case which can then be followed by its judges or ignored. He has said that Sweden is entitled to ban foreign-based online gambling because it had a good reason to do so.

"The prohibition on promoting internet gaming offered by companies established in other Member States can be regarded as justified by the objective of the fight against fraud and criminality," said a Court-produced summary of the advice. The full advice is not available in English.

"Community law does not preclude Swedish legislation which reserves the right to organise gambling only to licensed operators which carry on their activities under the strict supervision of the public authorities," said the summary.

Bot said, though, that while the basic principle of Sweden's law did not run counter to EU rules, the way it penalised infringements did. "While a Member State is entitled to restrict activities associated with gambling within its territory, the measures which it adopts for that purpose must not be discriminatory," said the summary of his findings. "In the present case, although Swedish legislation prohibits, without distinction, the promotion of gambling organised abroad and the promotion of gambling organised in Sweden without a licence, the penalties laid down for infringement of that prohibition are different."

The law could only comply with EU laws if those who operate foreign gambling operations and those who operate domestically without a licence are punished in the same way, the advice said. This prevents discrimination against foreign-based operations, it said.

"Whereas penalties of a fine and imprisonment for up to six months are laid down for persons who advertise gaming organised abroad, those who advertise gaming organised in Sweden without a licence do not incur equivalent criminal penalties, but only administrative penalties," said the summary of Bot's opinion. "Therefore, such legislation involves treating comparable situations differently, to the detriment of companies established in other Member States."

"That difference in treatment could not be justified by significant differences between the two categories of offence in terms of the disruption caused by them or the conditions under which they may be found to have been committed," it said. "Internet gaming organised by a company established in another Member State does not necessarily pose greater risks of fraud and crime to the detriment of consumers than gaming organised clandestinely by a company established within the national territory."

The Court of Justice had previously ruled that Italian practice barring companies whose shares were traded on regulated markets from operating online betting were in line with EU law. The Court said that the law was not and that it restricted the fundamental freedoms guaranteed by EU law.