Belgian online gambling at a critical moment further to European Commission Action

By Tatjana Klaeser

The story so far…

Under the Belgian Gaming Act (BGA), to be granted a license for the operation of games of chance online, the applicant must already hold an equivalent land-based license, the online license being considered a “supplementary license” to authorised casinos, gaming arcades and betting shops (offline requirement). Furthermore, the number of land-based licenses is limited by Royal Decree on the basis of a numerus clausus principle and no more offline licenses are available at the moment.

As a result, foreign operators could not access the Belgian online market unless they were able to partner with Belgian land-based operators.

Arguments of non-complicance with competition law and fundamental European law principles, such as the freedom of establishment and services provision have been upheld but did not rattle the Belgian watchdog’s cage, , until now…

The EC’s opinion

Before the Belgian Gaming Act was passed, the European Commission (EC) had issued a detailed opinion pointing to several concerns in relation to the draft legislation among which the offline requirement, the limitation of licenses (numerus clausus) and the tools used to detect unlawful gambling operations, etc.

The EC’s opinion was not taken into account by Belgium, who argued that their approach is compliant with EU Law as the criticised measures solely aim at protecting its population by restraining the offer to companies which have established goodwill in the country.

The EGBA’s and RGA’s complaint of 23 June 2010

A complaint against Belgium on the above mentioned grounds was filed with the EC by world leading gambling operators’ associations – RGA and EGBA – on 23 June 2010.

The claimants also argued that the Belgian legislation is designed to protect the domestic market from legitimate competition by putting in place unacceptable barriers (offline and server location requirements) to new entrants seeking to offer online gambling.

The complaint is still pending to date. In light of its opinion on the draft BGA, it may be that the EC decides to launch a formal EU infringement procedure against Belgium.

 

 

The Supreme Court’s ruling of 14 July 2011

Requests for annulment of the provisions of the BGA were then introduced by Telebet, the RGA and Betfair before the Belgian Constitutional Court on the basis of the violation of the constitutional principles of equality and non- and of fundamental EU law principles. The claimants further required the judge to raise a preliminary question with the Court of Justice of the European Union.

In a much criticised decision, the Constitutional Court rejected all claims stating that the restrictions to the abovementioned principles were legitimate, necessary and legally justified.

Blacklisting

Despite the shaky legal grounds of the BGA, the Belgian Gaming Commission (BGC) went a step further and introduced the black list. The black list currently names 50 operators, deemed to operate illegally on the Belgian market. ISPs and financial services providers which signed a protocol with the BGC are expected to block access and financial flows to and from the blacklisted web sites.

The legal grounds alleged by the Gaming Commission for the publication of the black list (Article 48, §2, 5°) clearly state that measures undertaken to ensure player protection (such as issuance of a black list) shall be set by Royal Decree. No such Royal Decree was adopted so that the publication of the black list is illegal.

Furthermore, web site blocking and freezing of financial transfers constitute sanctions which can only be imposed in accordance with specific legal provisions and further to a Court’s decision.  These principles derive, among others, from the European Convention for the Protection of Human Rights and Fundamental Freedoms. The BGA does neither contain provisions allowing the BGC to proceed to such sanctions, nor does it foresee any judicial remedy to these sanctions.

A ray of light: the Bwin and Bet-at-home cases

The Gibraltar based operator who had been black listed by the BGC and saw its website

www.bwin.com blocked by ISPs, filed a preliminary injunction against the Belgian State

and the BGC in an interim procedure. On the basis of prima facie rights and without consideration as to the merits of the case, the judge dismissed Bwin’s claim. An appeal is currently pending.

Bet-at-Home is following in Bwin’s footsteps and has initiated legal proceedings before the same Court against the BGC’s decision to include it the blacklist in early May 2012. Its approach differs from that of Bwin as Bet-at-Home argues the lack of legal basis of the BGC’s blacklisting and blocking practice on the grounds of the E-Commerce Directive 2000/31 and fundamental rights which foresee specific requirements to be complied with before requesting blocking measures from internet intermediaries.

These cases and the arrest of Bwin’s Chairman, Norbert Teufelberger, for questioning after his concluding speech at the a roundtable on responsible gambling in Brussels, have contributed to draw attention to Belgium’s controverted online legislation. The RGA has urged the EC to take immediate action against restrictive markets, like Belgium’s, to stop “irreparable and unjustifiable” damage being done, according to Gambling Compliance (http://www.gamblingcompliance.com/node/50382/hl/).

 

Gambling Compliance alsoreported Wahid Chammas’ (fund manager at Janus Capital, which holds almost 10 percent of Bwin stock) comments that “Europe is not a banana republic, and Belgium is wrong to think it can do what it wants against the spirit of the EU, and hurt private markets, without any repercussions,” and that “Belgium’s regulator thinks they have the right to accuse these gaming companies of being illegal, but the ones who are really breaking the law are Belgium when they act in protectionist fashion.”

The EC’s statement in its Action plan and measures undertaken

The EC’s Action plan on online gambling of 23 October 2012 highlighted that compliance of national regulatory frameworks with EU law was one of the five priority areas to be addressed. It further called for a clarification on the procedures for notifying and acting on unauthorised content hosted in the EU by online intermediaries.

On the same day as the release of the Action plan, commission officials reopened investigations into nine infringement cases and 20 complaints. The EC has given 20 member States, including Belgium, until the end of this year to justify that their gambling regulation does not breach EU law.

 

Another indication that the EC is taking this matter seriously is found in commission official Stengg’s declaration at the World Regulatory Briefing on 28 November 2012 that if member States have violated EU rules and refuse to adapt their legislation, then the EC will take them to court. Although Stengg indicated that the most likely outcome is that governments will negotiate further regulatory changes with the commission, the BGC’s representative, Peter Naessens, continued to uphold the legality of the BGA on the grounds of player protection at the World Regulatory Briefing. Reacting to the EC’s request for information, the BGC declared that « in the absence of European regulation, the Belgian model is a good system which allows operators to organize their activity so to be profitable, but they must comply with the restrictions that protect citizens and society. We believe that the [European]Commission  should support the democratic decisions of the member States instead of only listening to operators who want to impose their private interests over the general interest” (free translation from a quote to GamingLaw).

 

Should Belgium refuse to ensure compliance of its online gambling regulation with the principles set forth by the European Treaties, the EC has already stated that it reserves all rights to open a formal infringement procedure against the State.

 

Even if action at EU level will take longer than what operators hope for, Bwin’s and Bet-at-home’s judicial initiatives may very well have a butterly effect on controversial gambling regualtion in general. Belgian online gambling legislation is at a critical moment further to the backing up of operators’ arguments through the EC. Now more than ever is the time for blacklisted operators, lobbyists, press partners and related services providers to take action against a legislation safeguarding the interests of the local market in the name of public interest. It remains to be seen whether further contentious

steps undertaken in Belgium may finally blow the wind of change.