Europe's top court ruled today that countries can run state monopolies for online sports betting, citing a heightened risk of criminal activity.
"The prohibition imposed on operators ... of offering games of chance via the Internet may be regarded as justified by the objective of combating fraud and crime," the Luxembourg-based European Court of Justice said in a statement.
The case, which could have implications on international internet gaming sites based in Malta, was referred to the court after a sponsorship deal between Gibraltar-based Bwin and the Portuguese football federation breached national laws and resulted in fines of around €75,000 ($110,000) each.
While judges agreed that Portuguese law ran counter to the European principle of freedom of services in the single EU market, they said that "may be justified by over-riding reasons relating to the public interest."
The court said betting carried a high risk of fraud and that online betting, given the lack of direct contact, carried an even higher risk of criminal activity.
It added that betting companies that sponsored sports competitions, along with some of the participants, "may be in a position to influence the outcome" of events "and thus increase its profits."
Portuguese punters wanting to place online bets legally on football or other lotteries are only allowed to do so via a state-controlled organisation, despite a proliferation of operators across the EU market.
As a result of today's judgment, bookmakers will remain frustrated at the failure to implement a single market for online betting across the 27 European countries.
Similarly, gamblers used to placing online bets on Champions League football or horse-racing in one EU member state but who move to another will continue to face restrictions on their normal providers.
Greece, Germany and Norway also run state betting monopolies, while France, Spain and Sweden are currently working on reforms, according to analyst and lobby group Gambling Compliance.
Industry's reaction
The Remote Gambling Association in a statement expressed disappointment at the European Court of Justice's failure to find that Portugal had violated the freedoms of the internal market by creating an exclusive internet gambling monopoly.
"The Portuguese monopoly eliminates competition and limits consumer choice. Although the ECJ recognized that the monopoly was a restriction on the freedom of services, it ruled that the restriction may be justified in certain situations," the association said.
"We regret that in its preliminary ruling the ECJ did not take a further step toward the fair treatment of gambling services in the internal market, but remain hopeful that the Portuguese courts will ultimately render a fair verdict. The narrow scope of this ruling reduces its significance in the overall legal context as it is not a departure from previous rulings,"Clive Hawkswood, Chief Executive of the association said
"Thus, nothing in it should stop the European Commission from pursuing ongoing infringement proceedings against the clearly unlawful gambling regulations in multiple jurisdictions nor should Member States construe this ruling as permission to enact protectionist regulations that are still unlawful under the ECJ's controlling jurisprudence. As for the subjective views expressed by the ECJ about online gambling and the reliability of licensing in different Member States, all I can say is that they bear little or no relation to the reality of the situation."