GPWA Times Magazine - Issue 19 - February 2012

Showing its hand – the EU’s involvement in the regulation of online gambling – from enforcement to acquiescence Though the eCommerceDirectivemay have been the EU’s first missed opportunity to harmonize the regulation of online gambling it seemed, by the middle of the last decade, that the EU’s insti- tutions were taking a more proactive role in en- suring that online gambling enjoyed the benefits bestowed by the EU Internal Market. In 2005- 2006, the European Commission embarked on a review of the European Gambling market, conducted by the Swiss Institute of Comparative Law. Subsequently, the Commission initiated in- fringement proceedings against a list of Member States whose gambling legislation was found to be incompatible with EU law. These included Denmark, Finland, Germany, Hungary, Italy, The Netherlands, Austria and France. Indeed, such infringement proceedings had the positive effect of motivating several of these countries to adopt legislation regulating the online gambling market (notable examples in- clude Italy, France and Denmark). More recently, through the mechanism estab- lished by EU Directives 98/34/EC and 98/48/ EC, requiring Member States to inform the European Commission and other Member States of any new legislation or regulation im- pacting various fields of commerce (including online gambling), the Commission (like some Member States) has been influential in shaping local legislation to encourage conformity with EU law standards. According to a 2011 EC doc- ument, since January 2005, and increasingly in the last three years, more than 150 pieces of legislation related to gambling have been no- tified to the European Commission, of which many pertain to online gambling. Similarly, the ECJ has played an important role in the struggle to secure conformity of lo- cal gambling legislation with the principles of EU law. Perhaps the most dominant ex- amples are the ECJ’s September 2010 rulings in the German sports betting cases – Winner Wetten GmbH v. Burgermeisteren der Stadt Bergheim, Carmen Media Group Ltd. v. Land Schleswig-Holstein and Markus Stoss et al. v. Land Baden-Württemberg – which found that the German sports betting and lottery monop- oly regime failed to systematically and coher- ently regulate the gambling industry, rendering it inconsistent with the principles of EU law. However, notwithstanding these important efforts and their generally positive impact on the evolving regulation of online gambling within EU Member States, they have contrib- uted very little to realization of the true ideal of the European Internal Market – namely the creation of a harmonized, uniform, bor- derless market for online gambling services. Signs of cautious optimism in this context came from the European Parliament, which in 2010 adopted a resolution on the integrity of online gambling, calling on Member States to take certain measures toward closer coopera- tion in the context of online gambling regulation. Similarly, the Council of the European Union, the EU’s primary lawmaking body, debated under various presidencies the need to harmonize online gam- bling regulation across the Internal Market. These debates culminated in the Council resolution adopted in December 2010 that recognized “[t]he cross border nature of the dif- ferent issues [pertaining to online gambling] requires Member States to work more closely together . . . in or- der to address them.” It was against this backdrop that the gambling industry wel- comed the announcement by the European Commission indicating its intention to launch a broad consul- tation (“Green Paper”) on online gambling in the European Internal Market. The hope was that the anticipated Green Paper would eventually pave the way for harmoniza- tion of EU gambling law, bringing on- line gambling in line with other forms of cross-border services. The enthusiasm with which the industry await- ed the Green Paper waned with its publication last March when it became pa- tently clear that the scope of the Commission’s consultation was far more modest than some had hoped. Though the Commission was careful to state that the consultation was not prejudiced toward any particular out- come, the manner in which the Commission framed the consultation clearly indicates that, far from advocating harmonization of gam- bling regulation across the Internal Market, the Green Paper embodies the Commission’s tacit acquiescence to the fragmented regula- tory model evolving through local legislation by the various Member States. Though the Green Paper speaks to the need for coher- ence between local legislation and EU law, and calls for “administrative cooperation” between Member States’ regulatory bodies, it also rec- ognizes that “restrictions imposed to [ sic ] on- line gambling by each Member State can be ex- pected to continue to vary considerably, with the effect that what is, or will become, con- sidered a legal offer in one Member State will continue to be deemed ‘unlawful’ . . . in the territory of another Member State.” Mystifyingly, rather than criticizing the segregated approach to the provision of gambling servic- es throughout the allegedly uniform Internal Market, the Green Paper goes on to expressly state that the Commission’s objective is “to con- tribute . . . to the emergence in the Member States of a legal frame- work for on-line gambling providing for greater legal certainty for all stake- holders” (emphasis added). Finally, the Commission states that the entire Green Paper process is “without prejudice to the wide margin of ap- preciation left to Member States as to their regulatory approach to this activity. . . . Member States remain free to deter- mine their approach to this sector within the limits of the principles as set out by CJEU [ECJ, Y.G.] case law.” All in all, the Green Paper is hardly a panacea to the ex- isting potpourri of oft-EU-law-incom- patible gambling leg- islation adopted by EU Member States. Another setback to full harmonization of the European online gambling market came in November from the European Parliament. The Parliament adopted a much- curtailed, non-legislative resolu- tion following the report prepared by German MEP Jürgen Creutzmann in connection with the Green Paper consulta- tion process. While the resolution calls for an EU Directive in the field of online gam- bling, noting the added value to be achieved through a coordinated approach to the regulation of this industry, it also “rejects . . . any European legislative act uniformly regulating the entire gambling market.” “ The enthu- siasm with whichtheindustry awaited the Green Paper waned with its publication last March when it became patent- ly clear that the scope of the Commission’s consultation was far more mod- est than some hadhoped.” 35