The European Commission has started investigating seven EU member states over claims they are preventing online betting companies established in other member states, such as Malta, from profiting from the EU basic principle of free movement of services.
Commissioner Charlie Mc Creevy, responsible for the EU's internal market rules, said the Commission has started investigating a large number of complaints from gambling operators regarding their right to free movement of services under Article 49 of the EC Treaty.
Replying to questions put by Nationalist MEP Simon Busuttil and Labour MEP Louis Grech, Mr Mc Creevy said: "The Commission decided recently to send letters to seven member states in relation to restrictions which they impose in the sports betting service sector. The Commission wishes to verify if the restrictions in question are compatible with Article 49 of the EC Treaty and with the case law of the European Court of Justice.
"The member states in question may seek to protect the general interest, but the Commission wishes to verify that this is being done in a manner consistent with EU law. Any measures are necessary only if they are proportionate and non-discriminatory."
The letters of formal notice are the first step in an infringement procedure under the rules of the EC treaty. The member states in question have been given two months within which to respond. The sources said that Italy is among the countries being investigated following the accusations made by the Maltese MEPs.
In an unprecedented political move by Maltese standards, Dr Busuttil and Mr Grech joined forces to put pressure on the EU to take action against EU member states who they say have legislated to limit the free movement of services in regard to Maltese online betting companies.
The MEPs said that by virtue of the Italian 2006 Finance Act, the Italian authorities are now requiring all Italian Internet Service Providers (ISPs) to block access to all gambling websites not authorised by the Italian authorities, including those of Malta-based companies.
In his reply, Commissioner Mc Creevy acknowledged the problem raised by the two Maltese MEPs.
"The Commission can confirm that it is aware of the Italian legislation referred to and that it has received a number of complaints from gambling operators. Among other things, these complaints cite in particular the non-notification of the Italian legislation as required under Directive 98/34/EC# which imposes an obligation on Member States to notify to the Commission and each other, of all draft regulations concerning information society services before they are adopted in national law. The matter is the subject of an ongoing investigation by the Commission."
The local remote gaming industry is currently facing some tough times as many EU member states try to enact laws intended to protect their own industries and exclude outside competition.
The European Court of Justice has repeatedly stated that any restriction which seeks to protect general interest objectives, such as the protection of consumers, must be consistent and systematic in how they seek to limit betting activities.