CJEU rules on issue that prevents UK betting companies from entering Greek market

Out-Law News | 25 Jan 2013 | 11:40 am | 3 min. read

Greece may be required to either change the way a state-backed gambling monopoly operates so that it meets social goals or open the betting market in the country to competition from foreign operators following a ruling by the Court of Justice of the European Union (CJEU).

The CJEU ruled on Thursday that EU member states cannot generally prevent EU betting operators from competing in their national market. It said, though, that restrictions on free trade in a national betting market can be put in place if those arrangements can be shown to reduce gambling opportunities in the country and if they are necessary to crack down on illegal betting practices.

Greek laws provide OPAP, a Greek public limited company in which the state owns a share, with an "exclusive right" to "run, manage, organise and operate games of chance" in the country. Greece has argued that the rules have been put in place to reduce the opportunities people have to gamble in the country and to combat criminal betting activities which have risen to "epidemic" proportions in recent years, according to the CJEU's ruling.

However, UK betting operators, including William Hill, challenged those monopoly arrangements and said that the Greek laws unfairly impinge on their right to set up business in the country. Under the Treaty on the Functioning of the European Union (TFEU) EU businesses have a general 'freedom of establishment' right that allows them to set up operations anywhere across the EU free from restrictions on them doing so.

The CJEU said, though, that the TFEU free trade rules were not absolute and that restrictions on businesses' 'freedom of establishment' rights could be put in place on grounds of public policy, public security, public health or if it was in the public interest to do so.

The CJEU has left it up to a national court to decide whether Greek laws providing for the monopoly meet its stated aims and are legitimate. If the court decides to the contrary, the Greek Government will be obliged to consider applications by other gambling operators in the EU that are seeking to set up business in the country.

"[The free trade provisions under the TFEU] must be interpreted as precluding national legislation ... which grants the exclusive right to run, manage, organise and operate games of chance to a single entity, where, firstly, that legislation does not genuinely meet the concern to reduce opportunities for gambling and to limit activities in that domain in a consistent and systematic manner and, secondly, where strict control by the public authorities of the expansion of the sector of games of chance, solely in so far as is necessary to combat criminality linked to those games, is not ensured," the CJEU said in its ruling. "It is for the national court to ascertain whether this is the case."

"In the event that the national legislation governing the organisation of games of chance is incompatible with the Treaty provisions on the freedom to provide services and the freedom of establishment, the national authorities may not refrain from considering applications ... for permission to operate in the sector of games of chance, during a transitional period," the Court said.

"In circumstances such as those of the main proceedings, the competent national authorities may examine applications for permission to organise games of chance submitted to them according to the level of consumer protection and the preservation of order in society that they intend to uphold solely on the basis of objective, non-discriminatory criteria," it added.

According to the CJEU's ruling the "majority" of members of Greece's national court believe that the Greek law giving OPAP its monopoly "cannot be upheld as justified" under the terms of the TFEU.

"They consider that there can be no justification for the national legislation giving rise to [the monopoly] on grounds of the need to reduce the supply of games of chance in a coherent, effective manner and to restrict related activities," according to the CJEU's judgment. "Nor can such a restriction be justified by the stated objective of combating criminality linked to games of chance since, in the view of the majority of the members of the national court, the expansion of the supply of games of chance in Greece cannot be said to be controlled."

The CJEU said that the Greek court should review factors such as the "rights and privileges" OPAP "enjoys" around advertising in the country and the fact OPAP places a maximum betting limit on each form not on a "per player" basis, when coming to its final view on the issue.

"Although the CJEU has left the Greek courts to come to a ruling on whether Greek laws in fact meet Greek concerns about reducing gambling opportunities and combating criminality, it looks likely that the Greek state will be required to take action: either to reform OPAP’s monopoly and to enforce the revised arrangements so these are consistent with the objectives of Greek law; or to liberalise the Greek market, in which case it cannot discriminate in favour of OPAP and against non-Greek providers," gambling law expert Susan Biddle of Pinsent Masons, the law firm behind Out-Law.com, said. "But we all know that the Greek state is short of money, so where will the funds to take such action come from?"