UK based bookmaker Stanley Leisure appealed against arcane Italian laws precluding publicly quoted companies from seeking bookmaker’s permits. Stanley’s challenge reached the ECJ and Nick Johnson analyses its final judgment and the implications.
Topic: Betting and gaming
Who: European Court of Justice, Stanley International Betting Limited, Massimiliano Placanica
When: March 2007
The ECJ has ruled that Italy's licensing regime for betting services breached EU principles of freedom of establishment and freedom to provide cross-border services.
Massimiliano Placanica, Christian Palazzese and Angelo Sorricchio operated a local data transmission centre in Italy pursuant to a contract with Stanley International Betting Limited. Their services allowed Italian betting customers to place bets via remote access to Stanley's servers.
However Stanley had no betting licence in Italy. When 671 new licences had been issued by the Italian authorities as part of a shake-up of the existing Italian regulatory regime in 1999, Stanley had not applied. The call for applications prohibited companies from applying if not all their ultimate shareholders could be ascertained. This effectively ruled Stanley out as its parent company Stanley Leisure plc is listed on the London Stock Exchange.
This aspect of the Italian regulations was amended in 2002, but no new licences were issued. So Stanley could still not obtain an Italian licence.
Placanica, Palazzese and Sorricchio were prosecuted for facilitating betting without a licence. The court referred the case to the European Court of Justice on the issue of whether the Italian national legislation was compatible with Community principles.
The ECJ held that:
1. Where a national licensing regime for betting services limits the number of licensed operators, this limitation must not go beyond what is necessary to achieve the objective of preventing criminal or fraudulent exploitation.
2. It is not permissible for national legislation to exclude from the betting and gaming sector operators whose shares are quoted on the regulated markets.
3. To the extent that a member state's gambling laws are inconsistent with Community law, any criminal sanctions under those gambling laws will be invalid.
Why this matters:
The date for implementation of the Gambling Act 2005 (1 September 2007) in Great Britain is fast approaching. Under the Act, advertising in Great Britain for betting services lawfully provided from within other EEA states will be permitted – this marks a significant move from the position under the current law, where advertisements for non-UK bookmakers provided in a "material form" are prohibited (see the Victor Chandler case).
In the face of continuing pressure from Brussels, various member states have been moving down a similar road of opening up their markets to betting and gaming operators from other member states.
But the extent and pace of change has varied considerably from EU country to EU country, and a number of member states still operate protectionist systems that effectively amount to state monopolies. This has a very real impact on sports sponsorships by gambling brands – as executives of Bwin found when they were arrested in France last year in connection with a football team sponsorship.
The Placanica judgment sees the ECJ continuing to recognise that restrictions on cross-border provision of betting and gaming services may be justified where the objective is consumer protection, prevention of fraud and for public order purposes. However it underlines that the ECJ does have jurisdiction over gambling services and that any such restriction must be proportionate, must be applied without discrimination, and must not go beyond what is necessary to achieve the particular legitimate objective. These principles are likely to be just as applicable in relation to cross-border advertising and marketing as they are to cross-border provision of services.