European Court of Justice delivers blow to Europe’s Internet gambling operators

In a blow to Europe’s Internet gambling operators, the European Court of Justice has ruled that EU Member States may engage in protectionist gambling policies as long as their primary purpose is to ensure that gambling is conducted in a socially responsible manner and potential harms are minimized.

The ruling, which is consistent with previous decisions defining the legal scope of the continent’s longstanding gambling monopolies, most of which are government-owned, came in response to a complaint brought by Portugal’s lottery and betting monopoly, Santa Casa de Misericórdia de Lisboa, against Austria-based bwin, one of Europe’s largest privately owned bookmakers, and Portugal’s football league.

Santa Casa claimed that a sponsorship, advertising and marketing agreement between bwin and the league was a violation of Santa Casa’s state-sponsored monopoly. But private operators like bwin contend that most of the EU’s national monopolies operate to maximize government revenues, not to protect their citizens, and therefore their anti-competitive practices are illegal restrictions of trade under Community law.

The ECJ disagreed with that view, at least in the case of Santa Casa.

“The prohibition imposed on operators such as bwin of offering games of chance via the Internet may be regarded as justified by the objective of combating fraud and crime.”

The ruling was hailed by proponents of national monopolies.

“This strengthens the hand of national governments and lotteries in controlling what gambling takes place on the Internet,” said Rupert Hornig of the European Lotteries and Toto Association.