Gambling Restrictions upon Arts. 43 and 49 EC Treaty in NETHERLANDS

Justification

National measure
- Compatibility with EC law, in particular with the principle of proportionality

Public order, money laundering, crime

Article 1, subsection a, Act on Games of Chance of 10.12.1964 (O.J. 1964, 483), provides in a licensing scheme for games of chance, subject to a series of strict conditions. Only Dutch authorities are qualified to issue gaming licenses; whether or not the provider disposes of a foreign gaming licence or complies with foreign gaming regulations is irrelevant.
The Dutch licensing scheme results in a monopoly or an oligopoly for the commercially most important games of chance (national lotteries, betting and casino gaming; cf. articles 9; 14b; 16; 27b; 27h Act on Games of Chance of 10.12.1964), licensing (de facto) only Dutch registered artificial persons. Moreover, national gaming licenses are issued on a (semi) permanent basis.
- According to the Dutch courts, the restrictive Dutch gaming regulations validly infringe the free circulation of services and comply with article 49 EC Treaty and the case law of the ECJ, because of imperative requirements of public interest, including the protection of minors and the struggle against gambling fraud and illegal gaming (decisions in which the court refers to article 49 EC Treaty and the ECJ case law include: Dutch Supreme Court 18.02.2005 (N° C03/306HR) Ladbrokes/Lotto; Arnhem Court of Appeal 21.11.2004; (N° AR 7476, 2004/287 KG, 2004/288 KG and 2004/ 289 KG) Interwetten Cyprus and others / Nationale Sporttotalisator and others; Arnhem District Court 2.06.2004 (N° 98631/ HA ZA 03-606) Stichting De Nationale Sporttotalisator/Ladbrokes; ‘s- Hertogenbosch District Court 1.06.2004 (N° 10.9742/ KG ZA 04-281) Incoll/Fortis; ‘s-Hertogenbosch Court of Appeal 2.3.2004 (N° 20.003207)). Few court decisions however, explicitly question whether or not these infringements are proportionate by applying the proportionality-test as set out in the ECJ case law.
  To date, only the Administrative Court of Breda found in a decision of 2 December 2005 (N° 03/1868 WET) that although the contested decision of the Netherlands authorities concerning the issuance of a gaming licence is based on the consideration that the legal monopoly on casinos might be justified by the objectives on which it is said to be based by the Netherlands authorities, it failed to specify whether the Dutch regulation is “coherent and systematic”. The court held that Member States enjoy a wide margin of discretion as to how to regulate gaming markets, restrictions need however to be coherent and consistent and the restrictions need to be justified by overriding principles of general interest (fraud prevention, player protection). It furthermore follows that a factual assessment of the circumstances should be made. The court made some critical observations as to the intensive marketing campaigns of Holland Casino and states that no clear prove was given as to the coherence and the suitability of the Netherlands casino licensing scheme. Therefore, the contested decision cannot be upheld and instructed the Netherlands authorities to issue a new decision. In this new decision the defendants should answer the question whether the government actions on the regulations are coherent and systematic, and evidence of such coherence and systematic structure should be provided. In the event that the coherence and systematic structure cannot be demonstrated, the court holds the view that the justification of the restriction of Article 49 of the EC Treaty contained in Article 27h.1 of the Act on Games of Chance is absent and that said provision should remain inapplicable because it is in violation of Article 49 of the EC Treaty.
  The ‘s-Hertogenbosch Court of Appeal held in a decision of 2.3.2004 (N° 20.003207) that the Act on Games of Chance validly infringe article 49 EC Treaty, does not qualify as discriminative towards foreign providers and serve as a proportionate means in protecting the public interests. The Act on Games of Chance was not considered by the ‘s- Hertogenbosch Court to be more restrictive then necessary to achieve the legislator’s goals.
  The Dutch Supreme Court and the Arnhem Court of Appeal held in response to the lower court of Arnhem that had questioned in its interlocutory judgment of 2 June 2004, the compliance of the Dutch gaming policy with the requirements of European law, that on-line providers who offer on-line games of chance, in which Dutch residents can participate, must comply with the Dutch gaming regulations. It is not considered to be disproportionate to ban Dutch residents (or participants who dispose of a Dutch IP-address, whether or not they are resident in The Netherlands) from participating in on-line games of chance offered by unlicensed foreign providers; Dutch Supreme Court 18.02.2005 (n° C03/306HR) Ladbrokes/Lotto and Arnhem Court of Appeal 2.09.2003 (n° 2003/216) Ladbrokes/Lotto.
A draft law proposal – Amendment of the Act on games of chance, containing temporary provisions on games of chance via the Internet (T.K. 2005-2006, 30362, nr. 2) – authorises a trial of games of chance via the Internet. The draft law proposal will issue a temporary and exclusive online gaming licence to Holland Casino, the current casino gaming licensee. The net-proceeds of the on-line gaming are for the benefit of the Netherlands State Treasury. Moreover, a compulsory off-line registration system, which will be elaborated on the licence conditions, will mean that people cannot participate directly in games of chance organised by the provider via the Internet from abroad. The starting point for authorising on-line games of chance is that the licence holder should aim its provision of games of chance at the Netherlands.
- The Explanatory Memorandum of the draft proposal (T.K. 2005-2006, 30362, nr. 3, p. 2) states that “The objectives of the policy on games of chance – combating gambling addiction, protecting consumers and combating crime – call for an appropriate response by the government. For this reason I (the Netherlands Minister) intend to permit, in addition to legal provision in the physical world, a limited provision of games of chance via the Internet. This will provide a legal and reliable alternative to non-regulated gaming sites”. Moreover, the Explanatory Memorandum argues that “The objectives of Dutch policy on games of chance in general, and those of Internet trial in particular, thus fit into the framework outlined by the European Court of Justice, within which each Member State may impose restrictions on the provision of games.” The Explanatory Memorandum states that the proposed on-line gaming regulation will not be discriminatory, and that the restrictions on the free provision of services are imposed in a coherent and consistent manner (T.K. 2005-2006, 30362, nr. 3, p. 12)
  Since machine gambling is offered by multiple providers in the Netherlands, it is more easily accessible for juvenile players and enhances the risks for illegal gambling and gambling addiction. The triple licensing scheme subject to a series of conditions which was inserted in the Act on Games of Chance in 2000, intends to counter the risks of fraud and illegal machine gaming and to protect (in particular) the interests of minors.
Operating slot machines is subject to a triple licensing scheme, whereby only slot machines of approved types can be operated in The Netherlands (articles 30b; 30d; 30h; 30m trough s Act on Games of Chance). Moreover, the number of machines that can be set up is limited according to the type of location (cf. “low” versus “high”-barrier locations); article 30c Act on Games of Chance.
Gaming licenses to operate slot machines inside casinos can only be issued to the current licensee of the casino games (article 30z Act on Games of Chance).
Numerus clausus of number of casinos that can be licensed in the Netherlands.