The ECJ delivered today a landmark ruling in the case Liga Portuguesa de Futebol Profissional. The above-mentioned ruling is briefly analyzed below.

Factual Context:

The Portuguese Football League and Bwin were punished by fines - for organization and operation of illegal gambling on the Internet - by Santa Casa (Portuguese agency entrusted, by a legislative act, with the task of exercising the monopoly of organization and operation of games of chance on the Internet in Portugal). Bwin and the Portuguese Football League have brought proceedings before a national court to challenge the fines imposed on them. Before the national court, Bwin and the Portuguese Football League have invoked the principles of freedom of establishment, freedom to provide services and free movement of capital within the EU to cancel the fines.

Accordingly, the national court made a reference for a preliminary ruling to the ECJ on the interpretation of Articles 43, 49 and 56 of the EC Treaty with respect to the Portuguese legislation conferring a monopoly of exploitation of gambling on the Internet to Santa Casa.

ECJ’s assessment:

As a preliminary remark, the ECJ refused to consider the interpretation of the principles of freedom of establishment and free movement of capital within the EU. As regards the freedom of establishment, suffice it here to say that the ECJ deemed that it is not applicable to the present case. As regards the free movement of capital, the ECJ is of the opinion that this freedom is secondary to the free provision of services, thus it is not necessary to consider it in the present case.

As regards the violation of the principle of free provision of services, the ECJ considers that the Portuguese legislation in question is incompatible with the principle referred to above, in accordance with settled case law of the ECJ (Gambelli, Placanica).

As regards the potential justification of the violation of the principle of free provision of services, the ECJ first refers to its earlier case law (Gambelli, Placanica, Schindler and Läärä) and then recalls the principles laid down by it. Second, the ECJ held, in a statement of principle, that it should be noted that the field of gambling offered on the Internet is not subject to Community harmonization. According to the ECJ, Member States are entitled to consider that the mere fact that an operator, such as Bwin, offers legal services in this sector through the Internet in another Member State where it is located and where it is in principle already subject to legal conditions and controls by the competent authorities of that State, cannot be considered a sufficient guarantee of national consumer protection against the risks of fraud and crime, given the likely difficulties which could be encountered in such a context for the authorities of the Member States of establishment to assess the quality and integrity of online operators.

In addition, according to the ECJ, due to a lack of direct contact between the consumer and the operator, gambling accessible via the Internet may carry risks of different nature and greater importance in comparison with traditional markets with regard to possible fraud committed by operators against consumers.

Moreover, according to the ECJ, one cannot rule out the possibility that an operator, who is sponsoring some sporting events on which it takes bets and some of the teams participating in these competitions, is in a situation that allows it to directly or indirectly influence the result of the latter and thus increase its profits.

In view of the foregoing, the ECJ therefore considers that it follows from these considerations that the restriction at issue is, given the peculiar characteristics related to the provision of gambling via the Internet, to be regarded as justified by the objective of fight against fraud and crime.

Therefore, the ECJ is of the opinion that Article 49 of the EC Treaty does not preclude a legislation of a Member State, such as that at issue, which prohibits operators, such as Bwin, established in other Member States, where they legally provide similar services, to offer gambling over the Internet on the territory of that Member State.

Critical analysis of the ECJ’s ruling:

It is our understanding that the above-mentioned ruling is more balanced than it seems at first sight, even though it is delivered by the Grand Chamber of the ECJ. Indeed, the ECJ seems to attach a great deal of importance to the particular regime in Portugal in relation to gambling. In this regard, the ECJ pointed out, in recital number 66, that it appears from the national legal framework, described in recitals 12 to 19 of the above-mentioned ruling, that the organization and functioning of the Santa Casa are governed by considerations and requirements pursuing public interest objectives. The ECJ made, in fact, a detailed description of the considerations pursued by awarding a monopoly to operate games of chance on the Internet to Santa Casa: financing of hospitals, funding for centers for the disabled, charitable foundations and, among other things, the existence of Santa Casa for five centuries in Portugal. In light of the foregoing, the ECJ’s ruling should not be given a too broad interpretation and remains, above all, a ruling stating on the peculiar legal regime applicable in Portugal to online gaming operators. Therefore, our understanding is that online gaming operators can still rely successfully on the freedom to provide services, as enshrined in Article 49 of the EC Treaty, to challenge national measures in the field of online gaming.