September 11, 2010

ECJ rules against Austrian gaming laws

The European Court of Justice (ECJ) has ruled that Austrian legislation requiring gaming operators to locate their seat in the country is not compliant with EU law.

In a judgement published yesterday, the ECJ found that “the obligation on persons holding concessions to operate gaming establishments to have their seat in Austria constitutes a restriction on freedom of establishment.”

Casinos Austria AG is currently the only company with permission from the Austrian Government to organise and operate gaming in the country, with 12 concessions granted and renewed without a public tender process.

The court said in its ruling that the absence of a competitive process allowing operators from other EU countries to apply for a casino license in the country “is contrary to the principle of equal treatment” and “constitutes indirect discrimination on grounds of nationality prohibited by EU law.”

Further, held the court, while restriction of operators located in other countries could be justified on the basis of “preventing those activities from being carried out for criminal or fraudulent purposes...the categorical exclusion of operators whose seat is in another Member State is disproportionate, as it goes beyond what is necessary to combat crime.”

The court was ruling on the questions raised by German national Ernst Engelmann on the compatibility of Austrian legislation on games of chance with freedom of establishment and freedom to provide services. This followed Engelmann appealing the decision of the Linz regional court of unlawfully organising games of chance after he operated two gaming establishments in Austria without having applied for a concession.

The ECJ judgement went on to say that in the absence of any transparency around the tender procedure, Austria’s grant of a concession to a local operator “constitutes difference in treatment to the detriment of operators located in other Member States, who have no real possibility of manifesting their interest in obtaining the concession in question.”

The court stated in its ruling that Austria had the choice of “various less restrictive measures” to monitor the activities and accounts of egaming operators located in other Member States.

Sigrid Ligné, secretary general of the European Gaming and Betting Association said: “Today’s ruling against the Austrian gambling laws confirms clearly that Member States cannot require EU licensed online operators to be physically present on their territory. In the Digital age there are obviously other and more efficient means available to monitor the activities of the operators.”

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