Entering the virtual world of betting from the comfort of one’s home has made online gambling extremely attractive, with a resultant surge in its popularity across the globe. In tandem, gaming policies have been adopted to promote a healthy and safe gaming market in which the public interest is the main focus. In the EU, member states have created their own domestic legislation after the EU Parliament had rejected calls for community-wide regulation of online gambling.
One such domestic legislation came under scrutiny in two parallel cases dealing with two newspaper editors Otto Sjöberg, former editor in chief at Swedish tabloid newspaper Expressen, and Ander Gerdin, former editor in chief and publisher of rival Swedish tabloid Aftonbladet, who were prosecuted in 2005 after their newspapers carried advertisements for unlicenced gambling companies based outside Sweden.
The Swedish law banned the promotion of unlicenced gambling inside Sweden and, also, of legally organised gambling in other EU member states. It further restricted the organisation of gambling for profit, with the only groups allowed to run betting in the country being those using the earnings for socially beneficial objectives.
A referral was made by the Stockholm Court of Appeal to the European Court of Justice in the context of criminal proceedings taken against the editors, who challenged the fines they were ordered to pay for publishing adverts in their sports pages promoting online gambling. They argued Swedish law unfairly penalised the promotion of gambling in foreign-based companies more harshly than it did similar offences inside Sweden. Sweden counteracted by claiming that its law was necessary in order to protect the general public interest.
Confirming previous case-law, the ECJ in its recent judgment considered primarily that gambling is a service under the Treaty and as such, the EU Treaty prohibits any restrictions on the freedom to provide services when they are liable to prohibit or impede the activities of a service provider established in another member state where it lawfully provides similar services. Taken at face value, the Swedish law fell squarely within the EU Treaty prohibition.
Yet, in its judgment, the ECJ upheld Sweden’s ban on the advertising of online gambling services provided by companies not licensed in Sweden.
The ECJ therefore considered it permissible for Sweden to ban any promotional advertising of unlicensed gambling activities, accepting Sweden’s arguments that such a ban was necessary for it to have a tight control of the gambling sector.
The court tended to accept that considerations of a cultural, moral or religious nature can justify restrictions on the freedom of gambling operators to provide services, in particular in so far as it might be considered unacceptable to allow private profit to be drawn from the exploitation of a social evil.
The ECJ finally considered necessary and justified Sweden’s restriction on advertisement of gambling activities organised in other member states by private operators to ensure that consumers take part in gambling only in the context of the national licensing system.
The ECJ was also asked to consider whether it was lawful for Sweden to apply stricter penalties for the promotion of gambling operated outside Sweden than for unlicensed gambling operated within Sweden. The ECJ, in this context, ruled that sanctions for the promotion of foreign gambling sites and sanctions for promotion of domestic unlicensed sites must apply without discrimination.
This judgment follows hard on the heels of two further decisions delivered by the ECJ in June against UK betting companies Ladbrokes International and Betfair, which upheld Dutch restrictions on internet gambling.
Dr Grech is an associate with Guido de Marco & Associates and heads its European law division.
josette.grech@onvol.net