Schleswig - Holstein could tempo temporarily allow games of chance without infringing EU law.
>> German legislation prohibitted the organisation and facilitation of games of chance on the Internet and the advertising of games of chance on television, the Internet and via telecommunications networks. However, the use of the Internet for those purposes may be authorized in exceptional circumstances for lotteries and sporting bets, the aim of which is to combat the development and spread of illegal gaming. For this reason, Schleswig - Holstein authorized the organisation and facilitation of games on chance on the Internet from 1 January 2012 until 8 February 2013. That authorisation was granted to any person who, in the EU, was able to demonstrate that it complied with certain conditions. Even though this legislative exception had now been repealed, authorisations issued to operators of games of chance on the Internet remained valid for a transitional period of several years.
Digibet is authorised to organise games of chance under a licence issued by the authorities in Gibraltar. Thus, it offers games of chance and sports betting in German via its Internet site ‘digibet.com’. Following an action brought by the Westdeutsche Lotterie (a public lottery company
in North Rhine - Westphalia) a German court ordered Digibet and its managing director Mr Albers to cease to offer the possibility of playing games of chance via the Internet to persons in Germany. Digibet and Mr Albers challenged that judgment before the referring Court, which asked whether Article 56 TFEU must be interpreted as meaning that it precluded legislation common to the majority of federal entities of a Member State having a federal structure which prohibited, in principle, the organisation and facilitation of games of chance via the internet, where, for a limited period, a single federal entity maintained in force more liberal legislation coexisting with the restrictive legislation of the other federal entities and that that entity issued authorisations to operators in order to supply games on the internet which remained valid for a transitional period after the repeal of that more liberal legislation.
Interestingly, Digibet and Mr Albers inter alia relied on the famous Winner Wetten case (Case C-409/06 Winner Wetten (EU:C:2010:503), according to which rules of national law, even of a constitutional order, cannot be allowed to undermine the unity and effectiveness of EU law.
The Court first of all reiterated that it was not disputed that legislation of a Member State such as that at issue in the main proceedings constituted a restriction on the freedom to provide services guaranteed by Article 56 TFEU (see Joined Cases C‑316/07, C‑358/07 to C‑360/07, C‑409/07 and C‑410/07 Stoß and Others EU:C:2010:504).
The Court held that it was necessary, however, to determine whether such a restriction might be allowed as a derogation, on grounds of public policy, public security or public health, as expressly provided for under Articles 51 TFEU and Article 52 TFEU, which were applicable in the area of freedom to provide services by virtue of Article 62 TFEU, or justified, in accordance with the case-law of the Court, by overriding reasons in the public interest. The Court has consistently held that restrictions on betting and gaming might be justified by overriding requirements in the public interest, such as consumer protection and the prevention of both fraud and incitement to squander money on gambling (see Joined Cases C‑186/11 and C‑209/11 Stanleybet International and Others EU:C:2013:33, on which I wrote this post).
In that context, the Court has repeatedly stated that the legislation on games of chance is one of the areas in which there are significant moral, religious and cultural differences between the Member States. In the absence of harmonisation in the field at EU level, it is for each Member State to determine in those areas, in accordance with its own scale of values, what is required in order to ensure that the interests in question are protected the identification of the objectives which are in fact pursued by the national legislation falls, in the context of a case referred to the Court under Article 267 TFEU, within the jurisdiction of the national court (see e.g., Case C-347/09 Dickinger and Ömer EU:C:2011:582, on which I wrote this post).
The referring court asked however about the requirement that restrictions imposed by the Member States must satisfy the conditions of proportionality and non-discrimination which applied to them, as laid down in the case-law of the Court of Justice and, in particular, the condition according to which national legislation is appropriate for ensuring attainment of the objective pursued only if it genuinely reflected a concern to attain it in a consistent and systematic manner. The referring court therefore wishes to know whether the proportionality and consistency of the restrictive legislation at issue in the main proceedings, seen as a whole, is called into question given the existence, for a limited period, of more liberal legislation only in the Land Schleswig-Holstein.
The Court of Justice in that regard stressed the particular nature of the gambling, where, unlike the establishment of free, undistorted competition in a traditional market, the presence of that kind of competition in the very specific market of games of chance was liable to have a detrimental effect owing to the fact that those operators would be led to compete with each other in inventiveness in making what they offered more attractive than their competitors and, in that way, increasing consumers’ expenditure on gaming and the risks of their addiction.
Therefore, national authorities enjoyed a wide measure of discretion which enabled them to determine what was required in order to ensure consumer protection and the preservation of order in society and — provided that the conditions laid down in the Court’s case-law are in fact met — it was for each Member State to assess whether, in the context of the legitimate aims which it pursued, it was necessary to prohibit, wholly or in part, betting and gaming or only to restrict them and, to that end, to lay down more or less strict supervisory rules.
Next, it should be recalled that, when provisions of the Treaties or of regulations conferred powers or impose obligations upon the Member States for the purposes of the implementation of EU law, the question of how the exercise of such powers and the fulfilment of such obligations might be entrusted by Member States to specific national bodies was solely a matter for the constitutional system of each State (Case C-428/07 Horvath, EU:C:2009:458, paragraph 49).
The Court added that in the present case, the division of competences between the Länder could not be called into question, since it benefitted from the protection conferred by Article 4(2) TEU, according to which the Union must respect national identities, inherent in their fundamental structures, political and constitutional, including regional and local self-government. The Court added that even assuming that the existence of legislation of one Land, which was more liberal than that in force in the other Länder, might damage the consistency of the legislation at issue as a whole, it must be observed that, in the circumstances of the case in the main proceedings, such damage to consistency was limited ratione temporis and ratione loci to a single Land. Therefore, it could according to the Court not be argued that the derogating legal situation in one Land seriously affected the appropriateness of the restrictions on games of chance applicable in all the other Länder to achieve the legitimate public interest objectives that they pursued.
The Court also took into account that the more liberal legislation on games of chance adopted by the Land Schleswig-Holstein was in force from 1 January 2012 until 8 February 2013. After that date, that Land applied the more restrictive rules already in force in the other Länder.
In those circumstances, the Court found that the restriction on the freedom to provide services constituted by the legislation on games of chance at issue in the main proceedings was capable of satisfying the requirements of proportionality as laid down in the case-law of the Court.