HIT and HIT LARIX challenged the Austrian authorities’ refusal to issue a permit allowing them to advertise their Slovenian casinos in Austria. Whatever happened to the Single Market, they said as the casinos operated quite legally in Slovenia. Did the Court of Justice of the European Union agree? Manana Shrimpling reports
Topic: Betting and Gaming
Who: HIT and HIT LARIX vs Bundesminister fur Finanzen (Austria) C-176/11
Where: European Court of Justice (CJEU)
When: 12 July 2012
Law as stated at: 1 August 2012
The Court of Justice of the European Union ("CJEU") ruled that restrictions in the laws of a Member State which prevent advertising in that State of casinos located in another Member State are permissible so long as the purpose of the restrictions is to ensure that the protection of gamblers is in essence equivalent in that other Member State.
HIT and HIT LARIX hold licences to operate casinos in Slovenia. They applied for permits in Austria (as required under Austrian legislation) to advertise in Austria their gaming establishments located in Slovenia.
Austria's Federal Minister for Finance rejected the application on the basis that HIT and HIT LARIX had not proved that the Slovenian legal provisions concerning games of chance ensured a level of protection for gamblers comparable to the level provided for in Austria.
This was a condition of the permit under Austrian legislation. In particular, Austrian law contains limits on the minimum age of persons entitled to enter casinos and obligations on the casino's management to protect gamblers (e.g. by requesting information from and interviewing gamblers who appear to be addicts and implementing bans on entry), with customers being able to bring civil action against the casino management for breaches of these obligations. The Minister argued that the casino operators had not established that the Slovenian legislation contains such detailed rules.
HIT and HIT LARIX brought an action against the Minister contending that the decision was in breach of the right under Article 56 of the Treaty for the Functioning of the European Union which requires the abolition of all restrictions on the freedom to provide services within the Union.
Reference to CJEU
The Austrian Administrative Court applied to the CJEU for a preliminary ruling the question of whether it was permissible and compatible with the freedom to provide services within the EU for legislation of a Member State to only permit the domestic advertising of casinos located abroad where the legal provisions for the protection of gamblers in those locations corresponded to local laws.
The CJEU has previously held that national legislation whose effect is to prohibit the promotion in a Member State of gambling organised legally in other Member States constitutes a restriction on the freedom to provide services.
Such restrictions may be justified, however, by overriding reasons in the public interest, such as consumer protection and the prevention of both fraud and incitement to squander money on gambling. This is on condition that any restrictions imposed by Member States satisfy the principle of proportionality and must not go beyond what is necessary in order to achieve the required objective.
The CJEU ruled that the Austrian scheme of requiring marketing authorisations to advertise gaming establishments was in principle capable of being proportional if it was limited to making the authorisation conditional on the legislation of the Member States in which the establishments were established being "in essence equivalent" to those of the national legislation with regard to the legitimate aim of protecting its residents against the risks associated with games of chance.
Legislation would, however, be regarded as disproportionate if it required the rules in the other Member State to be identical to the national legislation or if it imposed rules not directly related to protection against the risks of gaming.
The Austrian courts must now assess whether as a matter of fact the Austrian domestic legislation is proportionate for the purposes of consumer protection or whether it imposes conditions which go beyond this.
Why this matters:
Operators of gaming establishments need to take account of the relevant national legislation if they wish to advertise their establishments in other countries and should be aware of the fragmentation in the approach of the various EU Member States on this issue.
The ECJ has repeatedly held that legislation of games of chance is one of the areas in which there are significant moral, religious and cultural differences between Member States. In the absence of harmonisation, each Member State may therefore determine what is required to protect consumer interests in line with its own local values and gaming operators will need to be mindful of this.
While Member States cannot require for advertisers based in other Member States to demonstrate that their country offers identical protections to customers, it remains to be seen what would be considered to be an "equivalent" level of protection and how the protection offered by different jurisdictions will in practice be compared.