ECJ Rejects Austrian Gaming Legislation

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Immediately after ruling against the German monopolistic online gambling laws on grounds that the German monopolies were engaging in excessive promotional activities, the European Court of Justice (ECJ) ruled against the gaming legislation in Austria for a slightly different reason.

The Austrian case has its genesis in matter of a German national Ernst Engelmann. Engelmann operated two gaming establishments in Austria without having applied for a license. The Austrian regional Linz court ruled that Engelmann’s establishments were illegal. The matter then came to the ECJ, which was to decide on whether the Austrian gambling legislation was compatible with the European Union position on freedom to provide gambling services across borders.

Currently the Austrian government has given one company, Casinos Austria AG, a monopoly over gambling services. Casino Austria has been given 12 licenses all of which have been renewed without a public tender process. The ECJ order said that the absence of a competitive process that permitted online gaming operators from other European Union countries to apply for casino licenses in the country "is contrary to the principle of equal treatment" and "constitutes indirect discrimination on grounds of nationality prohibited by EU law." Referring to some of its earlier decisions the ECJ acknowledged that banning online gaming operators located in other countries could be permitted for preventing the possibility of criminal or fraudulent activities. However it could not agree to ban such operators only on the grounds that their seat of operation is located in another member state. Being located in another state cannot automatically be construed as inability to combat crime. The judgment specifically stated, "the obligation on persons holding concessions to operate gaming establishments to have their seat in Austria constitutes a restriction on freedom of establishment."

The ECJ elaborated that the Austrian government could adopt a number of "less restrictive measures" to monitor the online gambling operators located in other member states to ensure that they are acting in public interest. The ECJ also criticized the lack of transparency in the Austrian online gaming legislation. The court said that granting licenses to a single local operator "constitutes difference in treatment to the detriment of operators located in other Member States, who have no real possibility of manifesting their interest in obtaining the concession in question."

Sigrid Ligné, secretary general of the EGBA, welcomed this decision. However the ECJ has ruled in five matters related to online gambling in the recent past. Three of the cases, those of Portugal, Sweden and Holland, have gone in favor of state owned monopolies. Only two have gone against state owned monopolies but these are the last two. Therefore the situation seems evenly balanced and without doubt the ECJ will be repeatedly tested in the near future.

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