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ECJ Decision on Austria Online Gambling

By: Joan Peppin, Saturday September 17th 2011
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An online gambling court case in Austria involved the authorities and is a multinational group started by two Austrians. The group has several subsidiaries that have been licensed by the government by Malta. The Austrians claimed that the Maltese online gaming rules were adequate to protect consumers. The Austrian authorities disagreed and accused the two of breaking the country's online gambling laws. The Austrian court hearing the case asked the European Court of Justice (ECJ) for their opinion on compliance with European Union (EU) law. The amazing aspect about the ECJ decision was that both parties to the dispute claimed that the ECJ supported them.

The ECJ opined that because of the fragmented regulatory system across the 27 nations in the EU the member states could take steps they considered necessary to protect their citizens. This has been welcomed by European Lotteries. Friedrich Stickler, president of the group said that this opinion heralded the end for those who want uniform online gambling laws with mutual recognition of gambling licenses. The Reuters news agency reported that the existence of the Austrian gambling monopoly had been justified provided it met certain criteria and that Austria could exclude foreign licensed operators.

However, the online gambling trade body European Gaming and Betting Association (EGBA) interpreted the ruling differently, commenting that that the ECJ had called for tighter rules on state gambling monopolies. It referred to the conditions under which the ECJ had justified the existence of state gambling monopolies. The laws must ensure a particularly high level of online player protection. Only moderate and limited advertising is permissible. The judges pointed out that protecting players from problem gambling is not consistent with a policy of creating and advertising new online casino games.

The EGBA pointed out that EU nations operating state owned gambling monopolies have failed to guarantee the high level of consumer protection, which is required to justify the existence of a monopoly. According to the EGBA's interpretation, the ECJ has noted that the Austrian referring court has already expressed its doubts that adequate consumer protection exists and that the criminal charges against the promoters are sure to be dismissed.

The EGBA also referred to the ECJ comment on the lack of harmony between the regulations of the different EU countries. Rather than interpreting this as a liberty to regulate online gambling on an individual basis for perpetuity, the EGBA saw this as a call for the "urgent need for a comprehensive EU framework taking fully into account the cross border dimension of online gambling".

The European Commission (EC) is seized of this divergence of interpretations and has through its Green Paper initiative engaged in a massive data collection exercise. The data will be analyzed comprehensively this year and the EC will decide next year whether to propose any reform.

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