CELEX: 62001CJ0243
Language: en
Date: 2003-11-06
Title: Judgment of the Court of 6 November 2003.#Criminal proceedings against Piergiorgio Gambelli and Others.#Reference for a preliminary ruling: Tribunale di Ascoli Piceno - Italy.#Right of establishment - Freedom to provide services - Collection of bets on sporting events in one Member State and transmission by internet to another Member State - Prohibition enforced by criminal penalties - Legislation in a Member State which reserves the right to collect bets to certain bodies.#Case C-243/01.

Case C-243/01 Criminal proceedingsagainstPiergiorgio Gambelli and Others(Reference for a preliminary ruling from the Tribunale di Ascoli Piceno (Italy))
         
            «(Right of establishment – Freedom to provide services – Collection of bets on sporting events in one Member State and transmission by internet to another Member State – Prohibition enforced by criminal penalties – Legislation in a Member State which reserves the right to collect bets to certain bodies)»
            
               
                  Opinion of Advocate General Alber delivered on 13 March 2003 
                     
                
               
            
                   
               
               
            
               
                  Judgment of the Court, 6 November 2003  
                     
                
               
            
                   
               
               
            
            Summary of the Judgment
         
         
                  
                  Freedom of establishment – Freedom to provide services – Restrictions – National legislation prohibiting, on pain of criminal penalty, the collection of bets without a licence or authorisation – Not permissible – Justification in the public interest – Compliance with the principles of proportionality and non-discrimination – Investigation by the national courts(Arts 43 EC and 49 EC) National legislation which prohibits on pain of criminal penalties the pursuit of the activities of collecting, taking, booking
         and forwarding offers of bets, in particular on sporting events, without a licence or authorisation from the Member State
         concerned constitutes a restriction on freedom of establishment and the freedom to provide services provided for in Articles
         43 EC and 49 EC respectively, which, to be justified, must be based on imperative requirements in the general interest, be
         suitable for achieving the objective which they pursue and not go beyond what is necessary in order to attain it and be applied
         without discrimination.In that connection, it is for the national court to determine whether such legislation, taking account of the detailed rules
         for its application, actually serves the aims which might justify it, and whether the restrictions it imposes are disproportionate
         in the light of those objectives.In particular, in so far as the authorities of a Member State incite and encourage consumers to participate in lotteries,
         games of chance and betting to the financial benefit of the public purse, the authorities of that State cannot invoke public
         order concerns relating to the need to reduce opportunities for betting in order to justify measures such as those at issue
         in the main proceedings. Furthermore, where a criminal penalty was imposed on any person who from his home in a Member State
         connects by internet to a bookmaker established in another Member State the national court must consider whether this constitutes
         a disproportionate penalty.see paras 65, 69, 72, 76, operative part
      

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT6 November 2003  (1)
         
         
            
         
               ((Right of establishment – Freedom to provide services – Collection of bets on sporting events in one Member State and transmission by internet to another Member State – Prohibition enforced by criminal penalties – Legislation in a Member State which reserves the right to collect bets to certain bodies))
               
            In Case C-243/01, 
             REFERENCE to the Court under Article 234 EC by the Tribunale di Ascoli Piceno (Italy) for a preliminary ruling in the criminal
            proceedings before that court against 
            
            
            
             Piergiorgio Gambelli and Others, 
            
            
            
            
            
            
            
             on the interpretation of Articles 43 EC and 49 EC,
            
            THE COURT,,
            
             composed of: V. Skouris, President, P. Jann, C.W.A. Timmermans and J.N. Cunha Rodrigues (Presidents of Chambers), D.A.O. Edward (Rapporteur), R. Schintgen, F. Macken, N. Colneric and S. von Bahr, Judges, 
            
             Advocate General: S. Alber, Registrar: H.A. Rühl, Principal Administrator, 
            
            
            after considering the written observations submitted on behalf of:
               
               
               ─
                Mr Gambelli and Others, by D. Agnello, avvocato,
               
               
               ─
                Mr Garrisi, by R.A. Jacchia, A. Terranova and I. Picciano, avvocati, 
               
               
               ─
                the Italian Government, by I.M. Braguglia, acting as Agent, assisted by    D. Del Gaizo, avvocato dello Stato, 
               
               
               ─
                the Belgian Government, by F. van de Craen, acting as Agent, assisted by P. Vlaemminck, avocat, 
               
               
               ─
                the Greek Government, by M. Apessos and D. Tsagkaraki, acting as Agent, 
               
               
               ─
                the Spanish Government, by L. Fraguas Gadea, acting as Agent, 
               
               
               ─
                the Luxembourg Government, by N. Mackel, acting as Agent, 
               
               
               ─
                the Portuguese Government, by L. Fernandes and A. Barros, acting as Agents,  
               
               
               ─
                the Finnish Government, by E. Bygglin, acting as Agent,  
               
               
               ─
                the Swedish Government, by B. Hernqvist, acting as Agent,  
               
               
               ─
                the Commission of the European Communities, by A. Aresu and M. Patakia, acting as Agents, 
               
               
            
            
            having regard to the Report for the Hearing,
            
            after hearing the oral observations of Mr Gambelli and others, represented by D. Agnello; of Mr Garrisi, represented by R.A.
               Jacchia and A. Terranova; of the Italian Government, represented by A. Cingolo, avvocato dello Stato; of the Belgian Government,
               represented by P. Vlaemminck; of the Greek Government, represented by M. Apessos; of the Spanish Government, represented by
               L. Fraguas Gadea; of the French Government, represented by P. Boussaroque, acting as Agent; of the Portuguese Government,
               represented by A. Barros; of the Finnish Government, represented by E. Bygglin; and of the Commission, represented by A. Aresu
               and M. Patakia, at the hearing on 22 October 2003,
            
            
            after hearing the Opinion of the Advocate General at the sitting on 13 March 2003, 
         gives the following
         
         
         Judgment
         1
            
          By order of 30 March 2001, received at the Court on 22 June 2001, the Tribunale di Ascoli Peceno referred to the Court for
         a preliminary ruling under Article 234 EC a question on the interpretation of Articles 43 and 49 EC. 
         
         
         2
            
          The question was raised in criminal proceedings brought against Mr Gambelli and 137 other defendants (hereinafter  
         Gambelli and others), who are accused of having unlawfully organised clandestine bets and of being the proprietors of centres carrying on the
         activity of collecting and transmitting betting data, which constitutes an offence of fraud against the State. 
         
            
               Legal background
             Community legislation
         
         
         3
            
          Article 43 EC provides as follows:- Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member
         State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the
         setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member
         State.Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and
         manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 48, under the
         conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the
         provisions of the Chapter relating to capital.
         
         
         4
            
          The first paragraph of Article 48 EC provides that  
         companies or firms formed in accordance with the law of a Member State and having their registered office, central administration
         or principal place of business within the Community shall ... be treated in the same way as natural persons who are nationals
         of Member States. 
         
         
         5
            
          Article 46(1) EC provides that  
         the provisions of this Chapter and measures taken in pursuance thereof shall not prejudice the applicability of provisions
         laid down by law, regulation or administrative action providing for special treatment for foreign nationals on grounds of
         public policy, public security or public health. 
         
         
         6
            
          The first paragraph of Article 49 EC provides that  
         within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall
         be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of
         the person for whom the services are intended. 
          National legislation
         
         
         7
            
          Under Article 88 of the Regio Decreto No 773, Testo Unico delle Leggi di Pubblica Sicurezza (Royal Decree No 773 approving
         a single text of the laws on public security), of 18 June 1931 (GURI No 146 of 26 June 1931, hereinafter  
         the Royal Decree), no licence is to be granted for the taking of bets, with the exception of bets on races, regatta, ball games or similar
         contests where the taking of the bets is essential for the proper conduct of the competitive event. 
         
         
         8
            
          Under Legge Finanziaria No 388 (Finance Law No 388) of 23 December 2000 (ordinary supplement to the GURI of 29 December 2000,
         hereinafter  
         Law No 388/00), authorisation to organise betting is granted exclusively to licence holders or to those entitled to do so by a ministry
         or other entity to which the law reserves the right to organise or carry on betting. Bets can relate to the outcome of sporting
         events taking place under the supervision of the Comitato olimpico nazionale italiano (Italian National Olympic Committee,
         hereinafter  
         the CONI), or its subsidiary organisations, or to the results of horse races organised through the Unione nazionale per l'incremento
         delle razze equine (National Union for the Betterment of Horse Breeds, hereinafter  
         the UNIRE). 
         
         
         9
            
          Articles 4, 4a and 4b of Law No 401 of 13 December 1989 on gaming, clandestine betting and ensuring the proper conduct of
         sporting contests (GURI No 294 of 18 December 1989 as amended by Law No 388/00, (hereinafter Law No 401/89), Article 37(5)
         of which inserted Articles 4a and 4b into Law No 410/89, provide as follows: Unlawful participation in the organisation of games or betsArticle 4
         
         1.
          Any person who unlawfully participates in the organisation of lotteries, betting or pools reserved by law to the State or
         to entities operating under licence from the State shall be liable to a term of imprisonment of 6 months to 3 years. Any person
         who organises betting or pools in respect of sporting events run by CONI, by organisations under the authority of CONI or
         by UNIRE shall be liable to the same penalty. Any person who unlawfully participates in the public organisation of betting
         on other contests between people or animals, as well as on games of skill, shall be liable to a term of imprisonment of 3
         months to 1 year and a minimum fine of ITL 1 000 000.
         
         
         2.
          Any person who advertises competitions, games or betting organised in the manner described in paragraph 1 without being an
         accomplice to an offence defined therein shall be liable to a term of imprisonment of up to 3 months and a fine of between
         ITL 100 000 and ITL 1 000 000.
         
         
         3.
          Any person who participates in competitions, games or betting organised in the manner described in paragraph 1 without being
         an accomplice to an offence defined therein shall be liable to a term of imprisonment of up to 3 months or a fine of between
         ITL 100 000 and ITL 1 000 000.
         ...Article 4aThe penalties laid down in this article shall be applicable to any person who without the concession, authorisation or licence
         required by Article 88 of [the Royal Decree] carries out activities in Italy for the purpose of accepting or collecting, or,
         in any case, assisting in the acceptance or collection in any way whatsoever, including by telephone or by data transfer,
         of bets of any kind placed by any person in Italy or abroad.Article 4b... the penalties provided for by this article shall be applicable to any person who carries out the collection or registration
         of lottery tickets, pools or bets by telephone or data transfer without being authorised to use those means to effect such
         collection or registration.
         The main proceedings and the question referred for a preliminary ruling
         
         10
            
          The order for reference states that the Public Prosecutor and the investigating judge at the Tribunale di Fermo (Italy) established
         the existence of a widespread and complex organisation of Italian agencies linked by the internet to the English bookmaker
         Stanley International Betting Ltd (
         Stanley), established in Liverpool (United Kingdom), and to which Gambelli and others, the defendants in the main proceedings, belong.
         They are accused of having collaborated in Italy with a bookmaker abroad in the activity of collecting bets which is normally
         reserved by law to the State, thus infringing Law No 401/89. 
         
         
         11
            
          Such activity, which is considered to be incompatible with the monopoly on sporting bets enjoyed by the CONI and which constitutes
         an offence under Article 4 of Law No 401/89, is performed as follows: the bettor notifies the person in charge of the Italian
         agency of the events on which he wishes to bet and how much he intends to bet; the agency sends the application for acceptance
         to the bookmaker by internet, indicating the national football games in question and the bet; the bookmaker confirms acceptance
         of the bet in real time by internet; the confirmation is transmitted by the Italian agency to the bettor and the bettor pays
         the sum due to the agency, which sum is then transferred to the bookmaker into a foreign account specially designated for
         this purpose. 
         
         
         12
            
          Stanley is an English capital company registered in the United Kingdom which carries on business as a bookmaker under a licence
         granted pursuant to the Betting, Gaming and Lotteries Act by the City of Liverpool. It is authorised to carry on its activity
         in the United Kingdom and abroad. It organises and manages bets under a UK licence, identifying the events, setting the stakes
         and assuming the economic risk. Stanley pays the winnings and the various duties payable in the United Kingdom, as well as
         taxes on salaries and so on. It is subject to rigorous controls in relation to the legality of its activities, which are carried
         out by a private audit company and by the Inland Revenue and Customs and Excise. 
         
         
         13
            
          Stanley offers an extensive range of fixed sports bets on national, European and world sporting events. Individuals may participate
         from their own home, using various methods such as the internet, fax or telephone, in the betting organised and marketed by
         it. 
         
         
         14
            
          Stanley's presence as an undertaking in Italy is consolidated by commercial agreements with Italian operators or intermediaries
         relating to the creation of data transmission centres. Those centres make electronic means of communication available to users,
         collect and register the intentions to bet and forward them to Stanley. 
         
         
         15
            
          The defendants in the main proceedings are registered at the Camera di Commercio (Chamber of Commerce) as proprietors of undertakings
         which run data transfer centres and have received due authorisation from the Ministero delle Poste e delle Comunicazioni (Minister
         for Post and Communications) to transmit data. 
         
         
         16
            
          The judge in charge of the preliminary investigations at the Tribunale di Fermo made an order for provisional sequestration
         and the defendants were also subjected to personal checks and to searches of their agencies, homes and vehicles. Mr Garrisi,
         who is on the Board of Stanley, was taken into police custody. 
         
         
         17
            
          The defendants in the main proceedings brought an action for review before the Tribunale di Ascoli Piceno against the orders
         for sequestration relating to the data transmission centres of which they are the proprietors. 
         
         
         18
            
          The Tribunale di Ascoli Piceno makes reference to the case-law of the Court, in particular its judgment in Case C-67/98  
          Zenatti  [1999] ECR I-7289. However, it considers that the questions raised in the case before it do not quite correspond to the facts
         already considered by the Court in  
          Zenatti . Recent amendments to Law No 401/89 demand re-examination of the issue by the Court of Justice. 
         
         
         19
            
          The Tribunale di Ascoli Piceno refers in this context to the parliamentary working papers relating to Law No 388/00 which
         show that the restrictions inserted by that law into Law No 401/89 were dictated chiefly by the need to protect sports  
         Totoricevitori, a category of private sector undertakings. The court states that it cannot find in those restrictions any public policy
         concern able to justify a limitation of the rights guaranteed by Community or constitutional rules. 
         
         
         20
            
          The court emphasises that the apparent legality of collecting and forwarding bets on foreign sporting events, on the initial
         wording of Article 4 of Law No 401/89, had led to the creation and development of a network of operators who have invested
         capital and created infrastructures in the gaming and betting sector. Those operators suddenly find the legitimacy of their
         position called in question following amendments to the rules in Law No 388/00 prohibiting on pain of criminal penalties the
         carrying on of activities by any person anywhere involving the collection, acceptance, registration and transmission of offers
         to bet, in particular on sporting events, without a licence or permit from the State. 
         
         
         21
            
          The national court questions whether the principle of proportionality is being observed, having regard first to the severity
         of the prohibition, breach of which attracts criminal penalties which may make it impossible in practice for lawfully constituted
         undertakings or Community operators to carry on economic activities in the betting and gaming sector in Italy, and secondly
         to the importance of the national public interest protected and for which the Community freedoms are sacrificed. 
         
         
         22
            
          The Tribunale di Ascoli Piceno also considers that it cannot ignore the extent of the apparent discrepancy between national
         legislation severely restricting the acceptance of bets on sporting events by foreign Community undertakings on the one hand,
         and the considerable expansion of betting and gaming which the Italian State is pursuing at national level for the purpose
         of collecting taxation revenues, on the other. 
         
         
         23
            
          The court observes that the proceedings before it raise, first, questions of national law relating to the compatibility of
         the statutory amendments to Article 4 of Law No 401/89 with the Italian constitution, which protects private economic initiative
         for activities which are not subject to taxes levied by the State, and secondly questions relating to the incompatibility
         of the rule laid down in that article with the freedom of establishment and the freedom to provide cross-border services.
         The questions of national law raised have been referred by the Tribunale di Ascoli Piceno to the Corte costituzionale (the
         Italian Constitutional Court). 
         
         
         24
            
          In those circumstances, the Tribunale di Ascoli Piceno has decided to stay proceedings and to refer the following question
         to the Court of Justice for a preliminary ruling: Is there incompatibility (with the repercussions that that has in Italian law) between Articles 43 et seq. and Article 49
         et seq. of the EC Treaty regarding freedom of establishment and freedom to provide cross-border services, on the one hand,
         and on the other domestic legislation such as the provisions contained in Article 4(1) et seq., Article 4a and Article 4b
         of Italian Law No 401/89 (as most recently amended by Article 37(5) of Law No 388/00 of 23 December 2000) which prohibits
         on pain of criminal penalties the pursuit by any person anywhere of the activities of collecting, taking, booking and forwarding
         offers of bets, in particular bets on sporting events, unless the requirements concerning concessions and authorisations prescribed
         by domestic law have been complied with?
         The question Observations submitted to the Court
         
         
         25
            
          Gambelli and others consider that by prohibiting Italian citizens from linking up with foreign companies in order to place
         bets and thus to receive the services offered by those companies by internet, by prohibiting Italian intermediaries from offering
         the bets managed by Stanley, by preventing Stanley from establishing itself in Italy with the assistance of those intermediaries
         and thus offering its services in Italy from another Member State and, in sum, by creating and maintaining a monopoly in the
         betting and gaming sector, the legislation at issue in the main proceedings amounts to a restriction on both freedom of establishment
         and freedom to provide services. No justification for the restriction is to be found in the case-law of the Court of Justice
         stemming from Case C-275/92  
          Schindler  [1994] ECR I-1039, Case C-124/97  
          Läärä and Others  [1999] ECR I-6067 and  
          Zenatti , cited above, because the Court has not had occasion to consider the amendments made to that legislation by Law No 388/00
         and it has not examined the issue from the point of view of freedom of establishment. 
         
         
         26
            
          The defendants in the main proceedings emphasise in that regard that the Italian State is not pursuing a consistent policy
         whose aim is to restrict, or indeed abolish, gaming activities within the meaning of the judgments in  
          Läärä , paragraph 37, and  
          Zenatti , paragraph 36. The concerns cited by the national authorities relating to the protection of bettors against the risk of fraud,
         the preservation of public order and reducing both opportunities for gaming in order to avoid the damaging consequences of
         betting at both individual and social level and the incitement to spend inherent therein are groundless because Italy is increasing
         the range of betting and gaming available, and even inciting people to engage in such activities by facilitating collection
         in order to increase tax revenue. The fact that the organising of bets is regulated by financial laws shows that the true
         motivation of the national authorities is economic. 
         
         
         27
            
          The purpose of the Italian legislation is also to protect licensees under the national monopoly by making that monopoly impenetrable
         for operators from other Member States, since the invitations to tender contain criteria relating to ownership structures
         which cannot be met by a capital company quoted on the stock exchange but only by natural persons, and since they require
         applicants to own premises and to have been a licence holder over a substantial period. 
         
         
         28
            
          The defendants in the main proceedings argue that it is difficult to accept that a company like Stanley, which operates entirely
         legally and is duly regulated in the United Kingdom, should be treated by the Italian legislation in the same way as an operator
         who organises clandestine gaming, when all the public-interest concerns are protected by the United Kingdom legislation and
         the Italian intermediaries in a contractual relationship with Stanley as secondary or subsidiary establishments are registered
         as official suppliers of services and with the Ministry of Post and Telecommunications with which they operate, and which
         subjects them to regular checks and inspections. 
         
         
         29
            
          That situation, which falls within the scope of freedom of establishment, contravenes the principle of mutual recognition
         in sectors which have not yet been harmonised. It is also contrary to the principle of proportionality,  
          a fortiori  because criminal penalties ought to constitute a last resort for a Member State in cases where other measures and instruments
         are not able to provide adequate protection of the interests concerned. Under the Italian legislation, bettors in Italy are
         not only deprived of the possibility of using bookmakers established in another Member State, even through the intermediary
         of operators established in Italy, but are also subject to criminal penalties. 
         
         
         30
            
          The Italian, Belgian, Greek, Spanish, French, Luxembourg, Portuguese, Finnish and Swedish Governments, as well as the Commission,
         cite the case-law of the Court of Justice, in particular the judgments in  
          Schindler ,  
          Läärä  and  
          Zenatti . 
         
         
         31
            
          The Italian Government relies on the judgment in  
          Zenatti  to show that Law No 401/89 is compatible with the Community legislation in the sphere of freedom to provide services, and
         even in that of freedom of establishment. Both the matter considered by the Court in that case, namely administrative authorisation
         to pursue the activity of collecting and managing bets in Italy, and the question raised in the main proceedings, namely the
         existence of a criminal penalty prohibiting that activity where it is carried on by operators who are not part of the State
         monopoly on betting, pursue the same aim, which is to prohibit such activities and to reduce gaming opportunities in practice,
         other than in situations which are expressly provided for by law. 
         
         
         32
            
          The Belgian Government observes that a single market for gaming will only incite consumers to squander more and will have
         significant damaging effects for society. The level of protection introduced by Law No 401/89 and the restrictive authorisation
         scheme serve to ensure the attainment of objectives which are in the general interest, namely limiting and strictly controlling
         the supply of gaming and betting, is proportionate to those objectives and involves no discrimination on grounds of nationality.
         
         
         
         33
            
          The Greek Government considers that the organisation of games of chance and bets on sporting events must remain within the
         control of the State and be operated by means of a monopoly. If it is engaged in by private entities, that will have direct
         consequences such as disturbance of the social order and incitement to commit offences, as well as exploitation of bettors
         and consumers in general. 
         
         
         34
            
          The Spanish Government submits that both the grant of special or exclusive rights under a strict authorisation or licensing
         regime and the prohibition on opening foreign branches to process bets in other Member States are compatible with the policy
         of limiting supply, provided that those measures are adopted with a view to reducing opportunities for gaming and stimulation
         of supply. 
         
         
         35
            
          The French Government maintains that the fact that in the main proceedings the collection of bets is effected at a distance
         by electronic means and the sporting events to which the bets relate take place exclusively in Italy ─ which was not the case
         in  
          Zenatti   ─ does not affect the Court's case-law under which national laws which limit the pursuit of activities relating to gaming
         or lotteries and cash machines are compatible with the principle of the freedom to provide services where they pursue an objective
         that is in the general interest, such as the prevention of fraud or the protection of bettors against themselves. Member States
         are therefore justified in regulating the activities of operators in the area of betting in non-discriminatory ways, since
         the degree and scope of the restrictions are within the discretion enjoyed by the national authorities. It is thus for the
         courts of the Member States to determine whether the national authorities have acted proportionately in their choice of means,
         having regard to the principle of freedom to provide services. 
         
         
         36
            
          As regards freedom of establishment, the French Government considers that the restrictions on the activities of the independent
         Italian companies in a contractual relationship with Stanley do not undermine Stanley's right to establish itself freely in
         Italy. 
         
         
         37
            
          The Luxembourg Government considers that the Italian legislation constitutes an obstacle to the pursuit of the activity of
         organising bets in Italy because it prohibits Stanley from carrying on its activities in Italy either directly, under the
         freedom to provide cross-border services, or indirectly through the intermediary of Italian agencies linked by internet. It
         also constitutes a restriction on the freedom of establishment. However, those obstacles are justified in so far as they pursue
         objectives which are in the general interest, such as the need to channel and control the desire to engage in gaming, and
         are appropriate and proportionate for the attainment of those objectives inasmuch as they do not discriminate on grounds of
         nationality, because both Italian entities and those established abroad have to obtain the same permit from the Minister for
         Finance to be allowed to engage in the organisation, taking and collecting of bets in Italy. 
         
         
         38
            
          The Portuguese Government notes that the main proceedings have serious implications as regards the maintenance not only in
         Italy but in all the Member States of a system for running lotteries by public monopoly and as regards the need to preserve
         a significant source of revenue for the States, which replaces the compulsory levying of taxes and serves to finance social,
         cultural and sporting policies. In the activity of gaming, the market economy and free competition operate a redistribution
         of sums levied in the context of that activity which is contrary to the social order, because they are likely to move from
         countries where overall involvement is low to countries where it is higher and the amount of winnings more attractive. Bettors
         in the small Member States would therefore be financing the social, cultural and sporting budgets of the large Member States
         and the reduction in revenue from gaming would force governments in the smaller Member States to finance public initiatives
         of a social nature and other State social, sporting and cultural activities by other means, which would mean an increase in
         taxes in those Member States and a reduction in taxes in the big States. Furthermore, dividing up the State betting, gaming
         and lotteries market between three or four large operators in the European Union would produce structural changes in distribution
         networks for gaming lawfully carried on by those States, destroying an enormous number of jobs and distorting unemployment
         levels in the various Member States. 
         
         
         39
            
          The Finnish Government cites in particular the judgment in  
          Läärä , in which the Court acknowledged that the need for and proportionality of provisions adopted by a Member State are to be
         assessed solely in the light of the objectives pursued by the national authorities in that State and the level of protection
         they seek to provide, so that it is for the national court to determine whether, in the light of the specific detailed rules
         for its application, national legislation enables the aims relied on to justify it to be attained and whether the restrictions
         are proportionate to those aims, having regard to the fact that the legislation must be applied to all operators alike, whether
         they are from Italy or another Member State. 
         
         
         40
            
          The Swedish Government observes that the fact that restrictions on the free movement of services are introduced for tax purposes
         is not sufficient to support the conclusion that those restrictions are contrary to Community law, provided that they are
         proportionate and do not involve discrimination as between operators, a matter for the national court to determine. The amendments
         to the Italian legislation made by Law No 388/00 enable an entity which has been refused authorisation to collect bets in
         Italy to circumvent the legislation by carrying on its activity from another Member State and prohibit foreign entities which
         organise bets in their own country from pursuing their activities in Italy. As the Court held at paragraph 36 of the judgment
         in  
          Läärä  and at paragraph 34 of the judgment in  
          Zenatti , the mere fact that a Member State has opted for a protection scheme which is not the same as that adopted in another Member
         State cannot influence the assessment of the need for and proportionality of the provisions adopted in that area. 
         
         
         41
            
          The Commission of the European Communities takes the view that the legislative amendments effected by Law No 388/00 merely
         make explicit what was already contained in Law No 401/89 and do not introduce a genuinely new category of offences. The public-order
         grounds for limiting the damaging effects of betting activities relating to football matches which are relied on to justify
         the fact that the national legislation reserves the right to collect those bets to certain organisations are the same regardless
         of the Member State in which those activities take place. The fact that the sporting events to which the bets related in the
         case of  
          Zenatti  took place abroad whereas in the main proceedings here the football matches take place in Italy is irrelevant. The Commission
         adds that Directive No 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of
         information society services, in particular electronic commerce, in the Internal Market (
         Directive on electronic commerce) (OJ 2000 L 178, p. 1) does not apply to bets, so that the outcome should be no different to that in  
          Zenatti . 
         
         
         42
            
          The Commission considers that the issue is not to be examined from the point of view of freedom of establishment because the
         agencies run by the defendants in the main proceedings are independent and act as collection centres for bets and as intermediaries
         in relations between their Italian customers and Stanley, and are not in any way subordinate to the latter. However, even
         if the right of establishment were to apply, the restrictions in the Italian legislation are justified on the same grounds
         of social policy as those accepted by the Court in  
          Schindler ,  
          Läärä  and  
          Zenatti  with regard to the restriction on the freedom to provide services. 
         
         
         43
            
          At the hearing the Commission informed the Court that it had initiated the procedure against the Italian Republic for failure
         to fulfil obligations in regard to the liberalisation of the horse-race betting sector managed by the UNIRE. As regards the
         lottery sector, which is liberalised, the Commission referred to the judgment in Case C-272/91  
          Commission  v  
          Italy  [1994] ECR I-1409, in which the Court held that by restricting participation in an invitation to tender for the concession
         of a lottery computerisation system to bodies, companies, consortia and groupings the majority of whose capital, considered
         individually or in aggregate, was held by the public sector, the Italian Republic had failed to fulfil its obligations inter
         alia under the EC Treaty. 
          The Court's reply
         
         
         44
            
          The first point to consider is whether legislation such as that at issue in the main proceedings (Law No 401/89) constitutes
         a restriction on the freedom of establishment. 
         
         
         45
            
          It must be remembered that restrictions on freedom of establishment for nationals of a Member State in the territory of another
         Member State, including restrictions on the setting-up of agencies, branches or subsidiaries, are prohibited by Article 43
         EC. 
         
         
         46
            
          Where a company established in a Member State (such as Stanley) pursues the activity of collecting bets through the intermediary
         of an organisation of agencies established in another Member State (such as the defendants in the main proceedings), any restrictions
         on the activities of those agencies constitute obstacles to the freedom of establishment. 
         
         
         47
            
          Furthermore, in reply to the questions put to it by the Court at the hearing, the Italian Government acknowledged that the
         Italian legislation on invitations to tender for betting activities in Italy contains restrictions. According to that Government,
         the fact that no entity has been licensed for such activities apart from the monopoly-holder is explained by the fact that
         the way in which the Italian legislation is conceived means that the licence can only be awarded to certain persons. 
         
         
         48
            
          In so far as the lack of foreign operators among licensees in the betting sector on sporting events in Italy is attributable
         to the fact that the Italian rules governing invitations to tender make it impossible in practice for capital companies quoted
         on the regulated markets of other Member States to obtain licences, those rules constitute prima facie a restriction on the
         freedom of establishment, even if that restriction is applicable to all capital companies which might be interested in such
         licences alike, regardless of whether they are established in Italy or in another Member State. 
         
         
         49
            
          It is therefore possible that the conditions imposed by the legislation for submitting invitations to tender for the award
         of these licences also constitute an obstacle to the freedom of establishment. 
         
         
         50
            
          The second point to consider is whether the Italian legislation in that respect constitutes a restriction on the freedom to
         provide services. 
         
         
         51
            
          Article 49 EC prohibits restrictions on freedom to provide services within the Community for nationals of Member States who
         are established in a Member State other than that of the person for whom the services are intended. Article 50 EC defines
          
         services as services which are normally provided for remuneration, in so far as they are not governed by the provisions relating to
         freedom of movement of goods, capital and persons. 
         
         
         52
            
          The Court has already held that the importation of lottery advertisements and tickets into a Member State with a view to the
         participation by residents of that State in a lottery operated in another Member State relates to a  
         service (
          Schindler , paragraph 37). By analogy, the activity of enabling nationals of one Member State to engage in betting activities organised
         in another Member State, even if they concern sporting events taking place in the first Member State, relates to a  
         service within the meaning of Article 50 EC. 
         
         
         53
            
          The Court has also held that, on a proper construction, Article 49 EC covers services which the provider offers by telephone
         to potential recipients established in other Member States and provides without moving from the Member State in which he is
         established (Case C-384/93  
          Alpine Investments  [1995] ECR I-1141, paragraph 22). 
         
         
         54
            
          Transposing that interpretation to the issue in the main proceedings, it follows that Article 49 EC relates to the services
         which a provider such as Stanley established in a Member State, in this case the United Kingdom, offers via the internet ─
         and so without moving ─ to recipients in another Member State, in this case Italy, with the result that any restriction of
         those activities constitutes a restriction on the freedom of such a provider to provide services. 
         
         
         55
            
          In addition, the freedom to provide services involves not only the freedom of the provider to offer and supply services to
         recipients in a Member State other than that in which the supplier is located but also the freedom to receive or to benefit
         as recipient from the services offered by a supplier established in another Member State without being hampered by restrictions
         (see, to that effect, Joined Cases 286/82 and 26/83  
          Luisi and Carbone  [1984] ECR 377, paragraph 16, and Case C-294/97  
          Eurowings Luftverkehr  [1999] ECR I-7447, paragraphs 33 and 34). 
         
         
         56
            
          In reply to the questions put by the Court at the hearing, the Italian Government confirmed that an individual in Italy who
         from his home connects by internet to a bookmaker established in another Member State using his credit card to pay is committing
         an offence under Article 4 of Law No 401/89. 
         
         
         57
            
          Such a prohibition, enforced by criminal penalties, on participating in betting games organised in Member States other than
         in the country where the bettor is established constitutes a restriction on the freedom to provide services. 
         
         
         58
            
          The same applies to a prohibition, also enforced by criminal penalties, for intermediaries such as the defendants in the main
         proceedings on facilitating the provision of betting services on sporting events organised by a supplier such as Stanley,
         established in a Member State other than that in which the intermediaries pursue their activity, since the prohibition constitutes
         a restriction on the right of the bookmaker freely to provide services, even if the intermediaries are established in the
         same Member State as the recipients of the services. 
         
         
         59
            
          It must therefore be held that national rules such as the Italian legislation on betting, in particular Article 4 of Law No
         401/89, constitute a restriction on the freedom of establishment and on the freedom to provide services. 
         
         
         60
            
          In those circumstances it is necessary to consider whether such restrictions are acceptable as exceptional measures expressly
         provided for in Articles 45 and 46 EC, or justified, in accordance with the case-law of the Court, for reasons of overriding
         general interest.  
         
         
         61
            
          With regard to the arguments raised in particular by the Greek and Portuguese Governments to justify restrictions on games
         of chance and betting, suffice it to note that it is settled case-law that the diminution or reduction of tax revenue is not
         one of the grounds listed in Article 46 EC and does not constitute a matter of overriding general interest which may be relied
         on to justify a restriction on the freedom of establishment or the freedom to provide services (see, to that effect, Case
         C-264/96  
          ICI  [1998] ECR I-4695, paragraph 28, and Case C-136/00  
          Danner   [2002] ECR I-8147, paragraph 56). 
         
         
         62
            
          As stated in paragraph 36 of the judgment in  
          Zenatti , the restrictions must in any event reflect a concern to bring about a genuine diminution of gambling opportunities, and
         the financing of social activities through a levy on the proceeds of authorised games must constitute only an incidental beneficial
         consequence and not the real justification for the restrictive policy adopted. 
         
         
         63
            
          On the other hand, as the governments which submitted observations and the Commission pointed out, the Court stated in  
          Schindler ,  
          Läärä  and  
          Zenatti  that moral, religious and cultural factors, and the morally and financially harmful consequences for the individual and society
         associated with gaming and betting, could serve to justify the existence on the part of the national authorities of a margin
         of appreciation sufficient to enable them to determine what consumer protection and the preservation of public order require.
          
         
         
         64
            
          In any event, in order to be justified the restrictions on freedom of establishment and on freedom to provide services must
         satisfy the conditions laid down in the case-law of the Court (see, inter alia, Case C-19/92  
          Kraus  [1993] ECR I-1663, paragraph 32, and Case C-55/94  
          Gebhard  [1995] ECR I-4165, paragraph 37). 
         
         
         65
            
          According to those decisions, the restrictions must be justified by imperative requirements in the general interest, be suitable
         for achieving the objective which they pursue and not go beyond what is necessary in order to attain it. They must in any
         event be applied without discrimination. 
         
         
         66
            
          It is for the national court to decide whether in the main proceedings the restriction on the freedom of establishment and
         on the freedom to provide services instituted by Law No 401/89 satisfy those conditions. To that end, it will be for that
         court to take account of the issues set out in the following paragraphs. 
         
         
         67
            
          First of all, whilst in  
          Schindler ,  
          Läärä  and  
          Zenatti  the Court accepted that restrictions on gaming activities may be justified by imperative requirements in the general interest,
         such as consumer protection and the prevention of both fraud and incitement to squander on gaming, restrictions based on such
         grounds and on the need to preserve public order must also be suitable for achieving those objectives, inasmuch as they must
         serve to limit betting activities in a consistent and systematic manner. 
         
         
         68
            
          In that regard the national court, referring to the preparatory papers on Law No 388/00, has pointed out that the Italian
         State is pursuing a policy of substantially expanding betting and gaming at national level with a view to obtaining funds,
         while also protecting CONI licensees. 
         
         
         69
            
          In so far as the authorities of a Member State incite and encourage consumers to participate in lotteries, games of chance
         and betting to the financial benefit of the public purse, the authorities of that State cannot invoke public order concerns
         relating to the need to reduce opportunities for betting in order to justify measures such as those at issue in the main proceedings.
         
         
         
         70
            
          Next, the restrictions imposed by the Italian rules in the field of invitations to tender must be applicable without distinction:
         they must apply in the same way and under the same conditions to operators established in Italy and to those from other Member
         States alike. 
         
         
         71
            
          It is for the national court to consider whether the manner in which the conditions for submitting invitations to tender for
         licences to organise bets on sporting events are laid down enables them in practice to be met more easily by Italian operators
         than by foreign operators. If so, those conditions do not satisfy the requirement of non-discrimination. 
         
         
         72
            
          Finally, the restrictions imposed by the Italian legislation must not go beyond what is necessary to attain the end in view.
         In that context the national court must consider whether the criminal penalty imposed on any person who from his home connects
         by internet to a bookmaker established in another Member State is not  disproportionate in the light of the Court's case-law
         (see Case C-193/94  
          Skanavi and Chryssanthakopoulos  [1996] ECR I-929, paragraphs 34 to 39, and Case C-459/99  
          MRAX  [2002] ECR I-6591, paragraphs 89 to 91), especially where involvement in betting is encouraged in the context of games organised
         by licensed national bodies. 
         
         
         73
            
          The national court will also need to determine whether the imposition of restrictions, accompanied by criminal penalties of
         up to a year's imprisonment, on intermediaries who facilitate the provision of services by a bookmaker in a Member State other
         than that in which those services are offered by making an internet connection to that bookmaker available to bettors at their
         premises is a restriction that goes beyond what is necessary to combat fraud, especially where the supplier of the service
         is subject in his Member State of establishment to a regulation entailing controls and penalties, where the intermediaries
         are lawfully constituted, and where, before the statutory amendments effected by Law No 388/00, those intermediaries considered
         that they were permitted to transmit bets on foreign sporting events. 
         
         
         74
            
          As to the proportionality of the Italian legislation in regard to the freedom of establishment, even if the objective of the
         authorities of a Member State is to avoid the risk of gaming licensees being involved in criminal or fraudulent activities,
         to prevent capital companies quoted on regulated markets of other Member States from obtaining licences to organise sporting
         bets, especially where there are other means of checking the accounts and activities of such companies, may be considered
         to be a measure which goes beyond what is necessary to check fraud.  
         
         
         75
            
          It is for the national court to determine whether the national legislation, taking account of the detailed rules for its application,
         actually serves the aims which might justify it, and whether the restrictions it imposes are disproportionate in the light
         of those aims. 
         
         
         76
            
          In the light of all those considerations the reply to the question referred must be that national legislation which prohibits
         on pain of criminal penalties the pursuit of the activities of collecting, taking, booking and forwarding offers of bets,
         in particular bets on sporting events, without a licence or authorisation from the Member State concerned constitutes a restriction
         on the freedom of establishment and the freedom to provide services provided for in Articles 43 and 49 EC respectively. It
         is for the national court to determine whether such legislation, taking account of the detailed rules for its application,
         actually serves the aims which might justify it, and whether the restrictions it imposes are disproportionate in the light
         of those aims. 
         
         Costs
         77
            
          The costs incurred by the Italian, Belgian, Greek, Spanish, French, Luxembourg, Portuguese, Finnish and Swedish Governments
         and the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for
         the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter
         for that court. 
         
         On those grounds, 
         
         
         
            
            THE COURT,
         
         
          in answer to the question referred to it by the Tribunale di Ascoli Piceno by an order of 30 March 2001, hereby rules: 
         
                  Skouris
               
               
                  Jann 
               
               
                  Timmermans 
               
            
                  Cunha Rodgrigues
               
               
                  Edward 
               
               
                  Schintgen 
               
            
                  Macken
               
               
                  Colneric 
               
               
                  von Bahr 
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
            
            
            
            
            
            
            
         
         
          Delivered in open court in Luxembourg on 6 November 2003. 
         
         
         
         
                  R. Grass 
               
               
                  V. Skouris  
               
            
         
         
         
                  Registrar
               
               
                  President
               
            
      
      
          1 –
            
             Language of the case: Italian.