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The commercial strategy of the exclusive right holder in EU gambling insudtry

Online gambling in EU

The CJEU has accepted in steady case-law111 that Member States may justify limitations on the number of operators allowed to offer games of chance by invoking the objective of “preventing the use of betting and gaming activities for criminal or fraudulent purposes by channelling them into controlled systems”. The Court has also admitted that “a policy of controlled expansion in the betting and gaming sector may be entirely consistent with the objective of drawing players away from clandestine bettering and gaming – and, as such, activities which are prohibited – to activities which are authorised and regulated”. It is for the Member States to demonstrate that such channelling measures including, if relevant, the development of new games may reasonably be assumed to serve their purpose. (Ladbrokes, par. 54.)

To be consistent with the objective of fighting crime and reducing opportunities for gambling, national legislation establishing a monopoly of games of chance which allows the holder of the monopoly to follow an expansionist policy must be based on a finding that the crime and fraud linked to gaming and addiction to gambling are a problem in the Member State concerned which could be remedied by expanding authorised regulated activities. (See, to that effect, the judgments of the CJEU in Ladbrokes Betting & Gaming and Ladbrokes International, par. 29, and in Case Dickinger and Ömer par. 66.)

According to the Court, “[s]ince the objective of protecting consumers from gambling addiction is, in principle, difficult to reconcile with a policy of expanding games of chance characterised, inter alia, by the creation of new games and by the advertising of such games, such a policy cannot be regarded as being consistent unless the scale of unlawful activity is significant and the measures adopted are aimed at channelling consumers’ propensity to gamble into activities that are lawful.” (Ladbrokes Betting & Gaming and Ladbrokes International, par. 30; Dickinger and Ömer, par. 67.) That fact that demand for games of chance has already increased noticeably particularly at a clandestine level, must be taken into consideration. (Ladbrokes Betting & Gaming and Ladbrokes International, par. 31.)

The Court underlines the need for national authorities to bring all the necessary evidence in this regard.(See for instance Case Zeturf, par.70, on the black market for betting on horseracing.) In Placanica, the Court accepted factual evidence of the Italian Government (investigations carried out by the Italian Senate) which led to the conclusion that the activities of clandestine betting and gaming, prohibited as such, were a considerable problem in Italy as it appeared that half the total turnover figure of the betting and gaming sector in Italy was generated by illegal activities. (Case Placanica, par. 56-57.)

In order to achieve the objective of drawing players away from clandestine betting and gaming, authorised operators must represent a reliable, but at the same time attractive, alternative to a prohibited activity. As such, this may require “the offer of an extensive range of games, advertising on a certain scale and the use of new distribution techniques”. (Case Dickinger and Ömer, par. 63-64; Ladbrokes Betting & Gaming and Ladbrokes International, par. 25; Case Placanica, par. 55.)

An increase in the commercial activity of an operator who has been granted exclusive rights in the field of games of chance and a substantial increase in the income received from those games require particular attention when examining of whether the legislation at issue is consistent and systematic, and hence whether it is appropriate for pursuing the objectives recognised by the case-law. (Case Dickinger and Ömer, par. 61.)

The courts recognised (Stoß and Others, par. 100; Case Gaming machines, par 43-45, Ladbrokes, par. 52-54, 59-62, Carmen Media Group, par. 67, Zeturf, paragraph 65.) the following concrete features of such expansionist policy:

  • the public monopoly extends to lottery games and the holder is engaged in intensive advertising campaigns for lottery games, emphasising the need to finance social, cultural or sporting activities to which the profits are allocated, thereby making it appear that maximisation of the profits destined for such activities is becoming an end in itself of the restrictive measures concerned;
  • the development and marketing of addictive games by the monopoly holder;
  • the public authorities are developing or tolerating policies of expanding supply of casino games and automated games, despite the fact that they present a higher risk of addiction than bets on sporting competitions;
  • the public authorities tolerate the offering of new possibilities of casino games on the Internet;
  • the relaxation, by the public authorities, of the conditions in which automated games may be exploited in establishments other than casinos, such as gaming arcades, restaurants, cafes and places of accommodation;
  • restrictions on how often per week or per day games are on offer, restrictions on the number of outlets which offer games of chance and on sales and marketing activities of the outlets, as well as restrictions on advertising and development of new games (from the owner of an exclusive licence);
  • the extent and effect of marketing and development of the games of chance, inter alia, how much the owner of an exclusive licence spends in that regard as well as the form or content of the marketing and the susceptibility of the targeted groups;
  • the fact whether the advertising of the gambling and betting services is rather more informative than evocative in nature;
  • the fact that the number of casinos has risen from 66 to 81 in 6 years;
  • the fact that the exclusive right holder makes use of sustained and growing advertising for its products, including on the internet, is increasing the number of outlets for betting and for the products offered to bettors, and uses a commercial strategy seeking to draw in new audiences for the betting offered.

More specifically in the context of the objective to draw players from illegal gambling to controlled channels, the CJEU has considered a number of features related to advertising, relevant for the assessment of the commercial policy of the holder of the monopoly:

  • any advertising by the holder of a public monopoly must remain measured and strictly limited to what is necessary in order thus to channel consumers towards controlled gaming networks. Such advertising cannot aim to encourage consumers’ natural propensity to gamble by stimulating their active participation in it. Examples are trivialising gambling or giving it a positive image because revenues derived from it are used for activities in the public interest, or increasing the attractiveness of gambling by means of enticing advertising messages holding out the prospect of major winnings. (Stoß and Others, par. 103; Dickinger and Ömer, par. 68.)
  • in particular, a distinction should be drawn between strategies of the holder of a monopoly which are intended solely to inform potential customers of the existence of products and serve to ensure regular access to games of chance by channelling gamblers into controlled circuits, and those which invite and encourage active participation in such games. A distinction must therefore be drawn between a restrained commercial policy seeking only to capture or retain the existing market for the organisation with the monopoly, and an expansionist commercial policy whose aim is to expand the overall market for gaming activities. (Dickinger and Ömer, par. 69. Advocate-General Mazák concluded in the Stanleybet International & Sportingbet case that it is apparent from the observations referred to the Court that the expansionist commercial policy pursued by the monopolist OPAP and the exclusive right granted to it are “manifestly inconsistent” with the purported objective of reducing the betting and gaming opportunities in that Member State, see par. 51 of his Opinion)

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