EU Court Advisers at Odds Over Gambling Restrictions

By MIKE GORDON and CAROLYN HENSON

wsj.com

LUXEMBOURG-Advisers to Europe's highest court delivered different responses Tuesday in conflicts over gambling restrictions in European Union countries.

In legal opinions prepared for the European Court of Justice, Advocate General Jan Mazak recommended that an Austrian law which restricts casino licenses to companies set up in Austria be found incompatible with EU laws that ensure companies can provide goods and services freely across the bloc's borders.

Fellow Advocate General Yves Bot, however, who dealt with a Swedish lottery law restricting gambling licenses to a Swedish non-profit association which uses the funds raised for socially beneficial purposes in Sweden, recommended in his opinion for the court that this be found in keeping with EU laws.

The two cases are among a slew before the court involving Internet-based gambling firms which hotly dispute operating bans imposed by numerous European governments.

The different findings highlight the fine line drawn between restrictions that are justifiable and those which are not. Legal opinions are presented months in advance of the final ruling in a European Court of Justice case, reviewing evidence and proposing a judicial outcome. The judges hearing the case aren't bound to follow the opinion, though they often do.

In the Austrian case, a German citizen, Ernst Engelmann, was prosecuted for operating two casinos in Austria without obtaining a license. Advocate General Mazak said the requirement for companies to be established in Austria with no subsidiaries elsewhere amounted to direct discrimination against other EU nations. A public interest defense doesn't hold, he said, as gaming activities could be scrutinized in other ways to protect citizens from fraud and criminality.

In the Swedish case, the editors of two Swedish newspapers Expressen and Aftonbladet were prosecuted for publishing advertisements for a variety of foreign bookmakers, including Ladbrokes PLC and Centrebet International Ltd. These companies, based outside Sweden, were aiming their lotteries at the Swedish market via the Internet. The editors were sentenced to 50 daily fines of 1,000 Swedish kronor ($139).

Advocate General Bot said in his legal opinion that Sweden could use the public interest defense to prohibit the promotion of lotteries organized outside Sweden. But he also criticized the harsher penalties attached to gambling infringements outside Sweden compared with inside the country and said the different treatment appeared incompatible with EU law.

Judges at the European Court of Justice have ruled gambling restrictions can be justified if the aim is to protect citizens from addiction, fraud or criminal activity, and as long as any restrictions are consistent and proportionate.

Last September, the ECJ found a Portuguese state-run gambling monopoly was legal if it aims to combat criminal activity, but earlier it said an Italian law preventing Italians from placing bets with bookmakers who weren't licensed by the Italian government was illegal. This was because the Italian government was actively promoting gambling to raise money for the Treasury at the time, it said.

Numerous other countries will have their gambling restrictions scrutinised in cases to be heard by the ECJ in coming months, including Germany and the Netherlands. Final decisions on the Austrian and Swedish cases are expected in two to three months time.