The Court of Justice of the EU (CJEU) today ruled that member states were prohibited from taking enforcement action against EU licensed online gaming operators who were unlawfully excluded from national licensing processes.

The Court confirmed the obligation on member states to organise transparent licensing processes and rejected EU countries’ discretion to impose enforcement measures.

Hungary violated the fundamental freedom to provide services, by failing to organise a licensing tender.

“This ruling comes at a crucial time for countries like the Netherlands, where national legislation is being enforced that was found to be incompatible with the Treaties,” the European Gaming and Betting Association commented.

The Budapest-Capital Administrative and Labour Court had asked the CJEU whether Hungary violated the freedom to provide for imposing administrative fines and temporary ISP blocking measures against an EU licensed and regulated operator, Unibet International, while it failed to publish a call for tenders and did not enable the operator to submit an application for the purposes of obtaining a Hungarian license.

The court found that Hungary violated the fundamental freedom to provide services guaranteed under Art. 56 of the EU Treaty, by failing to organise a licensing tender “published according to objective, transparent, non-discriminatory and proportionate criteria” – thereby prohibiting a cross-border operator licensed in the EU to lawfully provide its services in Hungary.

Paragraph 42 states that member states are required to open service concessions to competition and to review the impartiality of the award procedures.

“When the national regime is in violation of EU law, a member state is precluded from sanctioning an operator holding a licence in the EU. Such jurisprudence is more relevant than ever with member states such as Poland and the Netherlands introducing very restrictive and incompatible regulatory frameworks and imposing subsequent enforcement measures which clearly contradict the fundamental principles of EU law,” the association said.

Maarten Haijer, secretary general of EGBA, commented: “The Court reiterated that member states must guarantee that national regulation on online gambling services meets objective, transparent, non-discriminatory and proportionate criteria. Only a properly regulated and transparent online gambling market can ensure that the consumer is channelled to the regulated offer.”

“The Court’s ruling is a clear message to other gaming authorities, including the Dutch Gaming Authority, that they must not enforce regulation that does not comply with basic EU law. We expect these member states to reconsider and lift these enforcement measures as they are acting in violation of EU law. Their actions do not serve the interest of consumers, they fail to channel the consumers to reliable providers, instead they merely prop up failed regulation.”

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