Uncle Sven Knows Best: The EJC, Swedish Gambling Restrictions, and Outmoded Proportionality Analysis

Abstract: The free movement of services is a fundamental tenet of the European Union's Common Market. Gambling services' free movement, however, has long been obstructed by municipal gambling restrictions. One such restriction in place in Sweden authorized the prosecution of two newspaper editors for publishing advertisements of foreign-based online gambling operators. In the course of the editors' appeal from their conviction, the Swedish courts referred questions to the European Court of Justice regarding the compliance of Sweden's domestic restriction with European treaty provisions enshrining the free movement of services. The Court of Justice provided little guidance, however, when it addressed the dispositive question of proportionality; that is, whether Sweden's law went beyond the point needed to affect Sweden's legitimate underlying policy objectives. The court, in its deferent and cursory proportionality analysis, employed a standard ill-equipped to account for the effects national gambling restrictions have on the Common Market in the online age.IntroductionOn July 8, 2010, the European Court of Justice (ECJ) handed down a preliminary ruling on questions referred to it by Sweden's Court of Appeals (Svea hovratt) in Criminal Proceedings Against Sjoberg & Another.1 Both disputes stemmed from criminal charges brought against two newspaper editors who had published advertisements for foreign gambling enterprises.2 The ECJ had been asked to decide whether Sweden's ban on the promotion of foreign gambling violated Article 49 of the Treaty Establishing the European Community (Article 49) ,3Article 49 prohibits European Union (EU) Member States from restricting the free movement of services across national borders within the EU.4 In its judgment, the ECJ reasoned that Article 49 did not pre- clude Sweden's ban on gambling promotion, because the ban reflects Sweden's legitimate objective of excluding profit-making interests from its domestic gambling sector, and is proportional to achieving that ob- jective.5This holding, however, was premised upon precedent derived in part from the notion that a gambling operator has to physically en- croach upon the territory of a Member State in order to promote itself there.6 Yet, online gambling is a large and growing part of the EU's market.7 In its Sjoberg judgment, the ECJ missed an opportunity to in- troduce a new standard for evaluating the proportionality of Member States' restrictions on the free movement of services.8 Such a standard is necessary to uphold Article 49's effect on the gambling industry by confining relevant domestic restrictions to their Member States.9Part I of this Comment provides the factual and procedural back- ground of the Sjoberg case. Part II presents the ECJ's relevant Sjoberg holdings, its gambling precedents, and brief overviews of the European gambling market and EU Member States' comparative gambling laws, framing the proportionality issue in Sjoberg within the larger scheme of EU movement-of-services doctrine. Part III explains why Sjoberg pre- sented an opportunity for the ECJ to introduce a new standard for as- sessing the proportionality of restrictions on cross-border gambling ser- vices, and why the court should have seized the opportunity.I. BackgroundIn 2003 and 2004, two Swedish newspapers, Expressen and Afton- bladet, published advertisements for gambling organized outside of Sweden.10 Four separate for-profit gambling operators-all lawfully or- ganized in other EU Member States-purchased the ads.11 At the time of publication, Otto Sjoberg and Anders Gerdin were the editors-in- chief and publishers of Expressen and Aftonbladet, respectively.12Swedish authorities prosecuted Sjoberg and Gerdin for violating section 54 of the Lotterilag, the Swedish lotteries act that governs all domestic gambling activities.13 Section 54 prescribes criminal sanctions for individuals who promote domestic participation in commercial gambling activities that have been organized abroad. …