European Court of Justice critiques Hungary's gambling legislation.
What steps can an EU member nation take against online casinos that don't hold a local license? However, fines may be excessive - according to the European Court of Justice's decision in a Hungary case. Additionally, granting licenses shouldn't put foreign firms at a disadvantage.
The ECJ announced a decision at the end of February concerning a 2016 conflict in Hungary. The Hungarian tax office had slapped a nearly €11,000 fine on the British company Sporting Odds Ltd. The reason? Sporting Odds offered sports betting in Hungary through its website, hu.sportingbeteuro.com, without possessing the necessary license. The company challenged this decision by referencing its existing UK license and the EU's freedom to conduct business across borders, leading to the dispute reaching the Budapest administrative court.
Hungary's "two-part" gambling law dictates a state monopoly with regard to lotteries and sports betting. Online casino games, on the contrary, can be provided by companies as long as they have a license for a Hungarian casino.
Judges in Hungary sought clarification from their colleagues in Luxembourg, questioning how the nation's legal scenario aligns with European fundamental freedoms. This pertain to how Article 56 of the European Union's Treaty on the Functioning of the EU (TFEU) should be interpreted. In principle, this provision forbids the restriction of services between EU citizens. This would initially allow Sporting Odds Ltd. to conduct business in Hungary.
The ECJ Opinion
Initially, the court pointed out that there are substantial variances among EU nations regarding morals, religious regulations, and cultural customs as they relate to gambling. Thus, this falls under the authority of the nations and not the EU. The Hungarian approach of monopolizing parts of the market and liberalizing others is acceptably legal. Thus, the country is under no obligation to grant licenses to online casino operators in the sports betting sector.
Despite these concessions, the court deemed that the Hungarian sports betting monopoly restricted the freedom of European entities to provide services. Mild measures should be taken to rectify this breach of fundamental rights. However, the fine against Sporting Odds is excessive.
Equal Opportunities across Borders
The court ruled that a local casino license should not be a prerequisite for offering sports betting on the internet. This would constitute discriminatory practices, particularly towards foreign online providers who do not engage in terrestrial gambling and therefore lack the possibility of obtaining a license.
While it's uncertain whether Hungary will reform the law in response, the decision is legally binding. Accordingly, it's likely that the fine against Sporting Odds will be removed.
Implications Beyond Hungary
The 9-page court ruling isn't exclusively significant to the case at hand. The judges repeatedly referred to past ECJ rulings on European gambling and updated the regulations. Subsequent disputes will likely relate to this precedent. Although member states enjoy considerable autonomy in this field, their choices are not absolute. Monopolies are only justified if they fulfill vital national responsibilities such as curbing addiction and safeguarding consumers, and cannot entail stringent penalties against European competitors. Likewise, the judges reject any favoritism towards domestic industries.
This ruling indirectly justifies Germany's inaction regarding online casinos, as they are not currently eligible for licensing. However, the state's hands-off approach could incur the displeasure of the EU if it oversteps the limits of encroaching on the freedom to provide services.
The text above may be downloaded as Paraphrased ECJ-Hungary Gambling Decision.
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Source: www.onlinecasinosdeutschland.com
