Dutch Court Verdict Gives Hope To Private Operators

Drawing heavily on the ECJ’s recent Placanica decision, Holland’s highest court has raised severe doubts over the compatibility with European law of the country’s system for licensing domestic lottery operators. According to one observer, the precedent also bodes well for operators hoping to secure access to the Dutch betting market.

On July 18, the Dutch Council of State delivered its judgment on a case brought against the Ministry of Justice by an operator whose application for a Dutch lottery licence had been denied by the Ministry. The operator in question, Schindler, applied for a licence to act as an intermediary for foreign lottery companies within Holland, as well as a licence to offer its own lottery games within the country. The Council of State’s decision last week means that the Ministry of Justice will now have to review Schindler’s application in accordance with the Council’s recommendations.

There are currently three licensed lotteries in Holland and licences are renewable on a five-year basis. As Justin Franssen, partner at Amsterdam-based law firm Van Mens and Wisselink, explains, in reality these licences are “semi-permanent” as they are continually renewed and are not opened to a tendering process once they expire. The Ministry of Justice, in rejecting Schindler’s application, stated that there was no particular need for a fourth licensee as lottery demand in Holland was already being satisfied by the three operators and issuing a licence to Schindler would cause the Dutch government to “loosen its grip” on the market.

The Court found that the absence of any tendering procedure to renew licences “…cannot, in light of principles of necessity and proportionality established by the ECJ […], be justified by merely referring to the objective of keeping a grip on the market.” According to the Court, granting Schindler access to a licensing process would not cause the government to ‘lose its grip’ as all operators would still be obliged to comply with any regulations set by the government under the terms of that process.

Although Dutch courts have traditionally upheld the Dutch system to be in line with European law, the latest Council of State decision suggests that the ECJ’s Placanica verdict in March has led to something of a re-evaluation.

“The Dutch government says that it has large discretion within European law to determine national policy on gaming. The Council of State has now said that on the basis of Placanica this is not true,” says Franssen.

“In its decision, the Council of State is critical of the Dutch policy on the basis of Placanica and Gambelli and argues that if there is to be a limited amount of licences available there has to be a more transparent mechanism to determine how those licences are issued or renewed.”

According to Franssen, such a transparent process should grant foreign, or at least EU-based, operators access to any lottery licence bidding process. The precedent set by the Council of State’s decision could however have an impact upon the sports betting and horse racing markets where long-standing licences are renewed on a similar basis to the lottery market. “This decision could mean that all [lottery, horse racing and betting] licences will become subject to tender. If we stretch the Council of State’s decision to these other licences it means that no operator in Holland, aside from Holland Casinos and the state lottery, is safe,” says Franssen.

For Franssen, the verdict is especially significant given the fact that betting operators, Ladbrokes and Betfair in particular, have challenged the government’s decisions to exclude them from the Dutch market on similar grounds to Schindler. “After all the judgments against foreign operators [3] recently, I would say that this new decision is in a way groundbreaking,” he says. “The Dutch government has taken the view that it has the right to exclude operators from a licensing process – in accordance with this decision it cannot do that anymore.”

Gamblingcompliance.com understands that the Council of State will rule on the Betfair case on August 30.

—

The author of this article is James Kilsby. This article was published on 25/07/2007 on GamblingCompliance.com (http://www.gamblingcompliance.com)

© Gambling Compliance Ltd 2006

Source URL: http://www.gamblingcompliance.com/node/7239

Links:

[1] http://www.gamblingcompliance.com/

[2] http://www.gamblingcompliance.com/author/30

[3] http://www.gamblingcompliance.com/node/6787