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EU court upholds Dutch gambling restrictions

By Sarah Miley

[JURIST] The EU Court of Justice (ECJ) [official website] issued two judgments on Thursday against UK betting companies Ladbrokes International and Betfair [judgments], upholding Dutch restrictions on Internet gambling. The Netherlands Supreme Court [official website] sought guidance from the ECJ to determine whether the Dutch licensing system was compatible with EU law on service provisions and games of chance [Article 49-EC text, PDF]. The gambling companies were both attempting to break the monopoly held by domestic "game of chance" agencies in the Netherlands. De Lotto, a non-profit foundation that controls domestic gambling profits, filed suit against Ladbrokes claiming that the company was not licensed to operate in the Netherlands. Betfair filed a claim with the Supreme Court after Dutch authorities refused to grant the UK company license, which had been issued to two domestic agencies. In similar judgments, the ECJ ruled in both cases that national regulations on games of chance are compatible with EU law when they are enacted to mitigate addiction and combat fraud. In the Ladbrokes decision, the ECJ stated:

National legislation, such as that at issue in the main proceedings, which seeks to curb addiction to games of chance and to combat fraud, and which in fact contributes to the achievement of those objectives, can be regarded as limiting betting activities in a consistent and systematic manner even where the holder(s) of an exclusive licence are entitled to make what they are offering on the market attractive by introducing new games and by means of advertising. It is for the national court to determine whether unlawful gaming activities constitute a problem in the Member State concerned which might be solved by the expansion of authorised and regulated activities, and whether that expansion is on such a scale as to make it impossible to reconcile with the objective of curbing such addiction.

The Dutch judiciary must now determine if its regulations are designed to meet these objectives or if they were simply implemented to boost funding. The Netherlands has set up a monopoly for the national lottery and other games of chance, which is held by the non-profit De Lotto. It uses the funds it collects to promote sports, health, and culture in the country.

The US has also taken recently taken steps to tighten restrictions on Internet gambling. Earlier this week, official federal enforcement of the Unlawful Internet Gambling Enforcement Act (UIGEA) [HR 4411 materials] began. The UIGEA, which bans banks and financial institutions from intentionally accepting payments from credit cards, checks, or electronic fund transfers related to unlawful Internet bets was scheduled to take effect on December 1, 2009, but enforcement was delayed [JURIST report] in November until June 1. The delay allowed US banks and financial institutions six months to get in compliance with the new rules designed to curb Internet gambling. The act was signed into law [JURIST report] by then-president George W. Bush in October 2006 amid controversy over the effects of the bill on US bettors and foreign companies. The US House of Representatives passed the UIGEA [JURIST report] in July 2006 and included exemptions for Internet gambling on horse racing and state lotteries.

Full post as published by JURIST - The Paper Chase on June 03, 2010 (boomark / email).