Case A-001/14, Malta – illegal sports betting

Is the Council of Europe’s Draft Convention against the Manipulation of Sports Competitions compatible with EU law?

Facts
On 11 July 2014, the Maltese Government issued a press release announcing that it was asking the CJEU for an Advisory Opinion on the Council of Europe’s Draft Convention against the Manipulation of Sports Competitions.

Although its press release is written in Maltese, Google’s translation suggests that the Republic of Malta is concerned that specific provisions of the Convention exceed the Convention’s aims and purpose.

Of particular concern to Malta is the definition of ‘illegal betting’. Malta believes that this should be defined according to the law where the betting company is licensed, and not, as the Convention proposes, according to the consumer’s jurisdiction.

During the negotiations, Malta entered specific reserves on this and other points in the Convention. However, the European Commission has not changed its stance.

Consequently, the State of Malta has decided to ask the CJEU for an advisory opinion pursuant to Article 281(11) TFEU on whether the proposed Convention would be incompatible with EU law.

Malta takes the view that the draft Convention would be incompatible with EU internal market because it is unnecessary, unjustified, and disproportionate. In any event, the gaming industry is not harmonised by EU law.

Question Referred
According to the Curia website, the Republic of Malta has asked:

1. Is the Council of Europe Draft Convention against the Manipulation of Sports Competitions, insofar as it regulates sports betting and defines “illegal sports betting” in Article 3(5)(a) as “all sports betting activity whose type or operator is not allowed under the applicable law of the jurisdiction where the consumer is located”, in conjunction with Articles 9 and 11 thereof which target “illegal sports betting” so defined, compatible with the Treaties, particularly Articles 18, 49 and 56 TFEU?

Comment
Three months before Malta made its request to the CJEU, the CJEU had handed down its judgment in Case C-390/12, Pfleger ECLI:EU:C:2014:281. In that case, the Third Chamber discussed gaming, national licences, Article 56 TFEU and the EU Charter. See further, Case C-390/12, Pfleger – on-line fruit machines, proportionality and the EU freedom to provide services in Austria.

The Republic of Malta’s request for legal advice also coincides with another reference that arrived at the CJEU at around the same time. It too involves the issue of the cross-border gaming and national gambling licences. The reference originates from a German court and is docketed as Case C-336/14, Ince. The dispute involves a Ms Ince, who runs a ‘sportbar’ in Germany. In the bar was a gaming machine. Ms Ince did not possess a German gambling licence. However, she operated the machine on behalf of a company in Austria, which did possess an Austrian licence. Consequently, Ms Ince was prosecuted under German law.

According to the Curia website, the German court has asked the CJEU:

I. On the first charge (January 2012) and the second charge in so far as it relates to the period up to the end of June 2012:

1(a) Must Article 56 TFEU be interpreted as meaning that criminal prosecution authorities are prohibited from penalising the intermediation of bets on sporting competitions carried on without German authorisation on behalf of betting organisers licensed in other Member States, where such intermediation is subject to the condition that the betting organiser too must hold a German authorisation, but the legal position under statute that is contrary to EU law (‘monopoly on sports betting’) prohibits the national authorities from issuing an authorisation to non-State-owned betting organisers?

1(b) Is the answer to question 1(a) altered by the fact that, in one of the 15 German Länder which jointly established and jointly implement the State monopoly on sports betting, the State authorities maintain, in prohibition or criminal proceedings, that the statutory prohibition on the issue of an authorisation to private suppliers is not applied in the event of an application for an authorisation to operate as an organiser or intermediary in that federal Land?

1(c) Must the principles of EU law, in particular the freedom to provide services, and the judgment of the Court of Justice in Case C-186/11 be interpreted as precluding a permanent prohibition or an imposition of penalties (described as ‘precautionary’) on the cross-border intermediation of bets on sporting competitions, where this is justified on the ground that it ‘was not obvious, that is to say recognisable without further examination’ to the prohibiting authority at the time of its decision that the intermediation activity fulfils all the substantive conditions of authorisation (apart from the reservation of such activities to a State monopoly)?

2 Must Directive 98/34/EC […] be interpreted as precluding the imposition of penalties for the intermediation of bets on sporting competitions via a gaming machine, without a German authorisation, on behalf of a betting organiser licensed in another EU Member State, where the interventions by the State are based on a law, not notified to the European Commission, which was adopted by an individual Land and has as its content the expired Staatsvertrag zum Glücksspielwesen (State Treaty on Gaming) (‘the GlüStV’)?

II. The second charge in so far as it relates to the period from July 2012

3 Must Article 56 TFEU, the requirement of transparency, the principle of equality and the EU-law prohibition of preferential treatment be interpreted as precluding the imposition of penalties for the intermediation of bets on sporting competitions, without a German authorisation, on behalf of a betting organiser licensed in another EU Member State in a situation characterised by the Glücksspieländerungsstaatsvertrag (State Treaty amending the provisions on games of chance) (‘the GlüÄndStV’), applicable for a period of nine years and containing an ‘experimental clause for bets on sporting competitions’, which, for a period of seven years, provides for the theoretical possibility of awarding also to non-State-owned betting organisers a maximum of 20 licences, legally effective in all German Länder, as a necessary condition of authorisation to operate as an intermediary, where:

(a) the licensing procedure and disputes raised in that connection are managed by the licensing authority in conjunction with the law firm which has regularly advised most of the Länder and their lottery undertakings on matters relating to the monopoly on sports betting that is contrary to EU law and represented them before the national courts in proceedings against private betting suppliers, and was entrusted with the task of representing the State authorities in the preliminary ruling proceedings in Markus Stoß [and Others, ,,,, and, EU:C:2010:504], Carmen Media [Group,, EU:C:2010:505] and Winner Wetten [, EU:C:2010:503];

(b) the call for tenders for licences published in the Official Journal of the European Union on 8 August 2012 gave no details of the minimum requirements applicable to the proposals to be submitted, the content of the other declarations and evidence required or the selection of the maximum of 20 licensees, such details not having been communicated until after the expiry of the deadline for submission of tenders, in a so-called ‘information memorandum’ and numerous other documents, and only to tenderers who had qualified for the ‘second stage’ of the licensing procedure;

(c) eight months after the start of the procedure, the licensing authority, contrary to the call for tenders, invites only 14 tenderers to present their social responsibility and safety policies in person, because these have fulfilled all of the minimum conditions for a licence, but, 15 months after the start of the procedure, announces that not one of the tenderers has provided ‘verifiable’ evidence that it fulfilled the minimum conditions;

(d) the State-controlled tenderer ‘Ods’ (Ods Deutschland Sportwetten GmbH), consisting of a consortium of State-owned lottery companies, is one of the 14 tenderers invited to present their proposals to the licensing authority but, because of its organisational links to organisers of sporting events, is probably not eligible for a licence because the law (Paragraph 21(3) of the GlüÄndStV) requires a strict separation of active sport and the bodies organising it from the organisation and intermediation of bets on sporting competitions;

(e) one of the requirements for a licence is to demonstrate ‘the lawful origin of the resources necessary to organise the intended offer of sports betting facilities’;

(f) the licensing authority and the gaming board that decides on the award of licences, consisting of representatives from the Länder, do not avail themselves of the possibility of awarding licences to private betting organisers, whereas State-owned lottery undertakings are permitted to organise bets on sporting competitions, lotteries and other games of chance without a licence, and to operate and advertise them via their nationwide network of commercial betting outlets, for up to a year after the award of any licences?

Furthermore, cross-border gambling and national licences also feature in another reference which the CJEU will hear on 22 October 2014. The dispute is docketed as Case C-463/13, Stanley International Betting Ltd and Stanleybet Malta Ltd. The case originates from Italy.

According to the Curia website, the Italian Council of State has asked:

1. Are Article 49 et seq. TFEU and Article 56 et seq. TFEU and the principles laid down by the Court of Justice of the European Union in [Joined Cases C-72/10 and C-77/10 Costa and Cifone [2012] ECR I-0000] to be interpreted as precluding a call for tenders for the award of licences with a period of validity shorter than that of licences awarded in the past, where that tendering procedure has been launched in order to remedy the consequences of the unlawful exclusion of a certain number of operators from earlier tendering procedures?

2. Are Article 49 et seq. TFEU and Article 56 et seq. TFEU and the principles laid down by the Court of Justice of the European Union in Costa and Cifone to be interpreted as precluding the possibility that sufficient justification for the shorter period of validity of licences offered for tender, as compared with licences awarded in the past, can be found in the requirement for the licensing system to be reorganised through the alignment of licence expiry dates?

Update – 30 November 2015
According to the Official Journal (2015 C398/22), this request has been removed from the register.