CELEX: 62004CJ0338
Language: en
Date: 2007-03-06
Title: Judgment of the Court (Grand Chamber) of 6 March 2007.#Criminal proceedings against Massimiliano Placanica (C-338/04), Christian Palazzese (C-359/04) and Angelo Sorricchio (C-360/04).#References for a preliminary ruling: Tribunale di Larino (C-338/04) and Tribunale di Teramo (C-359/04 and C-360/04) - Italy.#Freedom of establishment - Freedom to provide services - Interpretation of Articles 43 EC and 49 EC - Games of chance - Collection of bets on sporting events - Licensing requirement - Exclusion of certain operators by reason of their type of corporate form - Requirement of police authorisation - Criminal penalties.#Joined cases C-338/04, C-359/04 and C-360/04.

Joined Cases C-338/04, C-359/04 and C-360/04
      Criminal proceedings
      against
      Massimiliano Placanica and Others
      (References for a preliminary ruling from the 
      Tribunale di Larino and the Tribunale di Teramo)
      (Freedom of establishment – Freedom to provide services – Interpretation of Articles 43 EC and 49 EC – Games of chance – Collection of bets on sporting events – Licensing requirement – Exclusion of certain operators by reason of their type of corporate form – Requirement of police authorisation – Criminal penalties)
      Opinion of Advocate General Ruiz-Jarabo Colomer delivered on 16 May 2006 
      Judgment of the Court (Grand Chamber), 6 March 2007 
      Summary of the Judgment
      1.     Freedom of movement for persons – Freedom of establishment – Freedom to provide services – Restrictions 
      (Arts 43 EC and 49 EC)
      2.     Freedom of movement for persons – Freedom of establishment – Freedom to provide services – Restrictions 
      (Arts 43 EC and 49 EC)
      3.     Freedom of movement for persons – Freedom of establishment – Freedom to provide services – Restrictions 
      (Arts 43 EC and 49 EC)
      1.     National legislation which prohibits the pursuit of the activities of collecting, taking, booking and forwarding offers of
         bets, in particular bets on sporting events, without a licence or a police authorisation issued by the Member State concerned,
         constitutes a restriction on the freedom of establishment and the freedom to provide services, provided for in Articles 43
         EC and 49 EC respectively.
      
      The objective of combating criminality by making the operators active in the sector subject to control and channelling the
         activities of betting and gaming into the systems thus controlled is capable of justifying those obstacles, a licensing system
         being capable, in that regard, of constituting an efficient mechanism.
      
      However, it is for the national courts to determine whether, in limiting the number of operators active in the betting and
         gaming sector, that national legislation genuinely contributes to that objective. By the same token, it will be for the national
         courts to ascertain whether those restrictions are suitable for achieving the objective pursued, do not go beyond what is
         necessary in order to achieve those objectives, and are applied without discrimination.
      
      (see paras 49, 52, 57-58, operative part 1-2)
      2.     Articles 43 EC and 49 EC must be interpreted as precluding national legislation which excludes from the betting and gaming
         sector operators in the form of companies whose shares are quoted on the regulated markets. Independently of the question
         whether the exclusion of companies quoted on the regulated markets applies, in fact, in the same way to operators established
         in the Member State concerned and to those from other Member States, that blanket exclusion goes beyond what is necessary
         in order to achieve the objective of preventing operators active in the betting and gaming sector from being involved in criminal
         or fraudulent activities.
      
      (see paras 62, 64, operative part 3)
      3.     Articles 43 EC and 49 EC must be interpreted as precluding national legislation which imposes a criminal penalty on persons
         for pursuing the organised activity of collecting bets without a licence or a police authorisation as required under the national
         legislation, where those persons were unable to obtain licences or authorisations because that Member State, in breach of
         Community law, refused to grant licences or authorisations to them.
      
      Although in principle criminal legislation is a matter for which the Member States are responsible, Community law sets certain
         limits to their power, and such legislation may not restrict the fundamental freedoms guaranteed by Community law. Furthermore,
         a Member State may not apply a criminal penalty for failure to complete an administrative formality where such completion
         has been refused or rendered impossible by the Member State concerned in breach of Community law.
      
      (see paras 68-69, 71, operative part 4)
JUDGMENT OF THE COURT (Grand Chamber)
      6 March 2007 (*)
      
      (Freedom of establishment – Freedom to provide services – Interpretation of Articles 43 EC and 49 EC – Games of chance – Collection of bets on sporting events – Licensing requirement – Exclusion of certain operators by reason of their type of corporate form – Requirement of police authorisation – Criminal penalties)
      In Joined Cases C‑338/04, C‑359/04 and C‑360/04,
      REFERENCES for a preliminary ruling under Article 234 EC, by the Tribunale di Larino (Italy) (Case C‑338/04) and the Tribunale
         di Teramo (Italy) (Cases C‑359/04 and C‑360/04), by decisions of 8 July 2004 and 31 July 2004, received at the Court on 6
         August 2004 and 18 August 2004 respectively, in the criminal proceedings before those courts against
      
      Massimiliano Placanica (Case C‑338/04),
      
      Christian Palazzese (Case C‑359/04),
      
      Angelo Sorricchio (Case C‑360/04),
      
      THE COURT (Grand Chamber),
      composed of V. Skouris, President, P. Jann, C.W.A. Timmermans, A. Rosas and K. Lenaerts (Presidents of Chambers), J.N. Cunha
         Rodrigues, R. Silva de Lapuerta, K. Schiemann (Rapporteur), G. Arestis, A. Borg Barthet and M. Ilešič, Judges,
      
      Advocate General: D. Ruiz‑Jarabo Colomer,
      Registrar: L. Hewlett, Principal Administrator,
      having regard to the written procedure and further to the hearing on 7 March 2006,
      after considering the observations submitted on behalf of:
      –       Mr Placanica and Mr Palazzese, by D. Agnello, avvocatessa,
      –       Mr Sorricchio, by R.A. Jacchia, A. Terranova, I. Picciano and F. Ferraro, avvocati,
      –       the Italian Government, by I.M. Braguglia, acting as Agent, assisted by A. Cingolo and F. Sclafani, Avvocati dello Stato (Cases
         C‑338/04, C‑359/04 and C‑360/04),
      
      –       the Belgian Government, initially by D. Haven and subsequently by M. Wimmer, acting as Agents, assisted by P. Vlaemminck and
         S. Verhulst, advocaten (Case C‑338/04),
      
      –       the German Government, by C.‑D. Quassowski and C. Schulze‑Bahr, acting as Agents (Case C‑338/04),
      –       the Spanish Government, by F. Díez Moreno, acting as Agent (Cases C‑338/04, C‑359/04 and C‑360/04),
      –       the French Government, by G. de Bergues and C. Bergeot‑Nunes, acting as Agents (Case C‑338/04),
      –       the Austrian Government, by H. Dossi, acting as Agent (Cases C‑338/04, C‑359/04 and C‑360/04),
      –       the Portuguese Government, by L.I. Fernandes and A.P. Barros, acting as Agents (Cases C‑338/04, C‑359/04 and C‑360/04), assisted
         by J.L. da Cruz Vilaça, advogado (Case C‑338/04),
      
      –       the Finnish Government, by T. Pynnä, acting as Agent (Case C‑338/04),
      –       la Commission of the European Communities, by E. Traversa, acting as Agent (Cases C‑338/04, C‑359/04 and C‑360/04),
      after hearing the Opinion of the Advocate General at the sitting on 16 May 2006,
      gives the following
      Judgment
      1       The references for a preliminary ruling concern the interpretation of Articles 43 EC and 49 EC.
      2       The references have been made in the course of criminal proceedings against Mr Placanica, Mr Palazzese and Mr Sorricchio for
         failure to comply with the Italian legislation governing the collection of bets. The legal and factual context of these references
         is similar to the situations that gave rise to the judgments in Case C‑67/98 Zenatti [1999] ECR I‑7289 and Case C‑243/01 Gambelli and Others [2003] ECR I‑13031.
      
       Legal context
      3       Italian legislation essentially provides that participation in the organising of games of chance, including the collection
         of bets, is subject to possession of a licence and a police authorisation. Any infringement of that legislation carries criminal
         penalties of up to three years’ imprisonment.
      
       Licences
      4       Until 2002 the awarding of licences for the organising of bets on sporting events was managed by the Italian National Olympic
         Committee (Comitato olimpico nazionale italiano (CONI)) and the National Union for the Improvement of Horse Breeds (Unione
         nazionale per l’incremento delle razze equine (UNIRE)), which had the authority to organise bets relating to sporting events
         organised or conducted under their supervision. That resulted from Legislative Decree No 496 of 14 April 1948 (GURI No 118
         of 14 April 1948), read in conjunction with Article 3(229) of Law No 549 of 28 December 1995 (GURI No 302 of 29 December 1995,
         Ordinary Supplement) and Article 3(78) of Law No 662 of 23 December 1996 (GURI No 303 of 28 December 1996, Ordinary Supplement).
      
      5       Specific rules for the award of licences were laid down, in the case of CONI, by Decree No 174 of the Ministry of Economic
         Affairs and Finance of 2 June 1998 (GURI No 129 of 5 June 1998; ‘Decree No 174/98’) and, in the case of UNIRE, by Decree No 169
         of the President of the Republic of 8 April 1998 (GURI No 125 of 1 June 1998; ‘Decree No 169/98’).
      
      6       Decree No 174/98 provided that the award of licences by CONI was to be made by means of calls for tender. When awarding the
         licences, CONI had, in particular, to make sure that the share ownership of the licence holders was transparent and that the
         outlets for collecting and taking bets were rationally distributed across the national territory.
      
      7       In order to ensure transparency of share ownership, Article 2(6) of Decree No 174/98 provided that where the licence holder
         took the form of a company, shares carrying voting rights had to be issued in the name of natural persons, general partnerships
         or limited partnerships, and could not be transferred by simple endorsement.
      
      8       Similar provision was made with regard to the award of licences by UNIRE.
      9       In 2002, following a number of legislative initiatives, the competences of CONI and UNIRE with respect to bets on sporting
         events were transferred to the independent authority for the administration of State monopolies, acting under the supervision
         of the Ministry of Economic Affairs and Finance.
      
      10     Pursuant to an amendment introduced at that time by Article 22(11) of Law No 289 of 27 December 2002 (GURI No 305 of 31 December
         2002, Ordinary Supplement; ‘the 2003 Finance Law’) all companies – without any limitation as to their form – may now take
         part in tender procedures for the award of licences.
      
       Police authorisation
      11     Police authorisation may be granted only to those who hold a licence or authorisation granted by a Ministry or other body
         to which the law reserves the right to organise or manage betting. Those conditions are laid down in Article 88 of Royal Decree
         No 773, approving a single text of the laws on public security (Regio Decreto No 773, Testo unico delle leggi di pubblica
         sicurezza), of 18 June 1931 (GURI No 146 of 26 June 1931), as amended by Article 37(4) of Law No 388 of 23 December 2000 (GURI
         No 302 of 29 December 2000, Ordinary Supplement; ‘the Royal Decree’).
      
      12     Furthermore, by virtue of Article 11 of the Royal Decree, read in conjunction with Article 14 thereof, a police authorisation
         may not be issued to a person who has had certain penalties imposed on him or who has been convicted of certain offences,
         in particular offences reflecting a lack of probity or good conduct, and infringements of the betting and gaming legislation.
      
      13     Once authorisation has been granted, the holder must, pursuant to Article 16 of the Royal Decree, permit law enforcement officials
         access at any time to the premises where the authorised activity is pursued.
      
       Criminal penalties
      14     Article 4 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 Article 37(5) of Law No 388 (‘Law No 401/89’) provides as follows in respect
         of criminal penalties for malpractice in the organising of games of chance:
      
      ‘1.      Any person who unlawfully participates in the organising 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, or 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 organising of betting
         on other contests between people or animals, or 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, albeit 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, albeit 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. 
      
      …
      4a.      The 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 purposes of accepting or collecting,
         or, in any case, of assisting the acceptance or in any way whatsoever the collection, including by telephone or by data transfer,
         of bets of any kind accepted by any person in Italy or abroad.
      
      …’
       Case-law of the Corte suprema di cassazione
      15     In its judgment No 111/04 of 26 April 2004 in Gesualdi, the Corte suprema di cassazione (Supreme Court of Cassation) (Italy) was called upon to determine whether the Italian betting
         and gaming legislation is compatible with Articles 43 EC and 49 EC. On completion of its analysis, that court reached the
         conclusion that the Italian legislation does not conflict with Articles 43 EC and 49 EC.
      
      16     In Gesualdi, the Corte suprema di cassazione noted that, for several years, the Italian legislature had been pursuing a policy of expansion
         in the betting and gaming sector with the manifest aim of increasing tax revenue, and that the Italian legislation could not
         be justified by reference to the aim of protecting consumers or of limiting their propensity to gamble or of limiting the
         availability of games of chance. Rather, the Corte suprema di cassazione identified as the true purpose of the Italian legislation
         a desire to channel betting and gaming activities into systems that are controllable, with the objective of preventing their
         exploitation for criminal purposes. That is why the Italian legislation provided for the control and supervision of the persons
         who operate betting and tipster contests, as well as the premises in which they do so. In the view of the Corte suprema di
         cassazione, that objective is sufficient in itself to justify the restrictions on the freedom of establishment and the freedom
         to provide services.
      
      17     As regards the conditions designed to ensure the transparency of the share ownership of licence holders – the principal effect
         of which is to exclude from tender procedures for licences companies whose individual shareholders are not always identifiable
         at any given moment – the Corte suprema di cassazione found in Gesualdi that the Italian legislation did not discriminate against foreign companies at all, even indirectly, since it had the effect
         of excluding not only the foreign companies whose shareholders cannot be precisely identified, but also all the Italian companies
         whose shareholders cannot be precisely identified.
      
       The main proceedings and the questions referred for a preliminary ruling
       The award of licences
      18     According to the documents before the Court, CONI – acting in accordance with the Italian legislation – launched a call for
         tenders on 11 December 1998 for the award of 1 000 licences for sports betting operations, that being the number of licences
         considered on the basis of a specific assessment to be sufficient for the whole of the national territory. At the same time,
         a call for tenders in respect of 671 new licences for the taking of bets on competitive horse events was organised by the
         Ministry of Economic Affairs and Finance in agreement with the Ministry of Agricultural and Forestry Policy, and 329 existing
         licences were automatically renewed.
      
      19     The application of the provisions concerning the transparency of share ownership that were in force at the time of those calls
         for tender had primarily the effect of excluding the participation of operators in the form of companies whose shares were
         quoted on the regulated markets, since in their case the precise identification of individual shareholders was not possible
         on an ongoing basis. Following those calls for tender, a number of licences – valid for six years and renewable for a further
         six years – were awarded in 1999.
      
       Stanley International Betting Ltd
      20     Stanley International Betting Ltd (‘Stanley’) is a company incorporated under English law and a member of the group Stanley
         Leisure plc (‘Stanley Leisure’), a company incorporated under English law and quoted on the London (United Kingdom) stock
         exchange. Both companies have their head office in Liverpool (United Kingdom). Stanley Leisure operates in the betting and
         gaming sector and is the fourth biggest bookmaker and the largest casino operator in the United Kingdom.
      
      21     Stanley is one of Stanley Leisure’s operational conduits outside the United Kingdom. It is duly authorised to operate as a
         bookmaker in the United Kingdom by virtue of a licence issued by the City of Liverpool. It is subject to controls by the British
         authorities in the interests of public order and safety; to internal controls over the lawfulness of its activities; to controls
         carried out by a private audit company; and to controls carried out by the Inland Revenue and the United Kingdom customs authorities.
      
      22     In the hope of obtaining licences for at least 100 betting outlets in Italy, Stanley investigated the possibility of taking
         part in the tendering procedures, but realised that it could not meet the conditions concerning the transparency of share
         ownership because it formed part of a group quoted on the regulated markets. Accordingly, it did not participate in the tendering
         procedure and holds no licence for betting operations.
      
       Data transmission centres
      23     Stanley operates in Italy through more than 200 agencies, commonly called ‘data transmission centres’ (DTCs). The DTCs supply
         their services in premises open to the public in which a data transmission link is placed at the disposal of bettors so that
         they can access the server of Stanley’s host computer in the United Kingdom. In that way, bettors are able – electronically
         – to forward sports bets proposals to Stanley (chosen from lists of events, and the odds on them, supplied by Stanley), to
         receive notice that their proposals have been accepted, to pay their stakes and, where appropriate, to receive their winnings.
      
      24     The DTCs are run by independent operators who have contractual links to Stanley. Mr Placanica, Mr Palazzese and Mr Sorricchio,
         the defendants in the main proceedings, are all DTC operators linked to Stanley.
      
      25     According to the case-file forwarded by the Tribunale (District Court) di Teramo (Italy), Mr Palazzese and Mr Sorricchio applied,
         before commencing their activities, to Atri Police Headquarters for police authorisation in accordance with Article 88 of
         the Royal Decree. Those applications met with no response.
      
       The reference for a preliminary ruling from the Tribunale di Larino (Case C‑338/04)
      26     Accusing Mr Placanica of the offence set out in Article 4(4a) of Law No 401/89 in that, as a DTC operator for Stanley, Mr
         Placanica had pursued the organised activity of collecting bets without the required police authorisation, the Public Prosecutor
         brought criminal proceedings against him before the Tribunale di Larino (Italy).
      
      27     That court expresses misgivings as to the soundness of the conclusion reached by the Corte suprema di cassazione in Gesualdi, with regard to the compatibility of Article 4(4a) of Law No 401/89 with Community law. The Tribunale di Larino is uncertain
         whether the public order objectives invoked by the Corte suprema di cassazione justify the restrictions at issue.
      
      28     Accordingly, the Tribunale di Larino decided to stay proceedings and to refer the following question to the Court for a preliminary
         ruling:
      
      ‘Does the Court of Justice consider Article 4(4a) of Law No 401/89 to be compatible with the principles enshrined in Article
         43 [EC] et seq. and 49 [EC] concerning the freedom of establishment and the freedom to provide cross-border services, having
         regard to the difference between the interpretation emerging from the decisions of the Court … (in particular the judgment
         in Gambelli and Others) and the decision of the Corte Suprema di Cassazione, Sezione Uniti, in Case No 23271/04? In particular, the Court is requested
         to rule on the applicability in Italy of the rules on penalties referred to in the indictment and relied upon against [Mr] Placanica.’
      
       The references for a preliminary ruling from the Tribunale di Teramo (Cases C‑359/04 and C‑360/04)
      29     The Atri police authorities charged Mr Palazzese and Mr Sorricchio with pursuing, without a licence or a police authorisation,
         an organised activity with a view to facilitating the collection of bets, and placed their premises and equipment under preventive
         seizure on the basis of Article 4(4a) of Law No 401/89. Upon confirmation of the seizure measures by the Public Prosecutor,
         Mr Palazzese and Mr Sorricchio each brought an action challenging those measures before the Tribunale di Teramo.
      
      30     In the view of that court, the restrictions imposed on companies quoted on the regulated markets, which prevented them in
         1999 from taking part in the last tender procedure for the award of licences for the operation of betting activities, are
         incompatible with the principles of Community law because they discriminate against operators who are not Italian. In consequence
         – like the Tribunale di Larino – the Tribunale di Teramo has doubts as to whether the judgment in Gesualdi is sound.
      
      31     In those circumstances, the Tribunale di Teramo decided to stay proceedings and to refer the following question to the Court
         for a preliminary ruling:
      
      ‘The District Court [of Teramo] needs to know, in particular, whether [the first paragraph of Article 43 EC and the first
         paragraph of Article 49 EC] may be interpreted as allowing the Member States to derogate temporarily (for 6 to 12 years) from
         the freedom of establishment and the freedom to provide services within the European Union, and to legislate as follows, without
         undermining those Community principles:
      
      –       allocating to certain persons licences for the pursuit of certain activities involving provision of services, valid for 6
         or 12 years, on the basis of a body of rules which excluded from the tender procedure certain kinds of (non-Italian) competitors;
      
      –       amending that system, after subsequently noting that it was not compatible with the principles enshrined in Articles 43 [EC]
         and 49 [EC], so as to allow in future the participation of those persons who had been excluded;
      
      –       not revoking the licences granted on the basis of the earlier system which, as stated, infringed the principles of freedom
         of establishment and of free movement of services or setting up a new tender procedure pursuant to the new rules which now
         comply with the abovementioned principles;
      
      –       continuing, on the other hand, to bring criminal proceedings against anyone carrying on business via a link with operators
         who, [despite] being entitled to pursue such an activity in the Member State of origin, were nevertheless unable to seek an
         operating licence precisely because of the restrictions contained in the earlier licensing rules, later repealed?’
      
      32     By order of the President of the Court of 14 October 2004, Cases C‑359/04 and C‑360/04 were joined for the purposes of the
         written and oral procedures and of the judgment. By a second order of the President of the Court of 27 January 2006, Case
         C‑338/04 was joined with Joined Cases C‑359/04 and C‑360/04 for the purposes of the oral procedure and of the judgment.
      
       Admissibility of the questions referred for a preliminary ruling
      33     In Case C‑338/04, all the Governments which lodged observations – with the exception of the Belgian Government – call in question
         the admissibility of the question referred. With regard to Cases C‑359/04 and C‑360/04, the Italian and Spanish Governments
         question the admissibility of the question referred. With regard to Case C‑338/04, the Portuguese and Finnish Governments
         submit that the reference from the Tribunale di Larino does not contain sufficient information to enable a reply to be given
         whereas, according to the Italian, German, Spanish and French Governments, the question referred concerns the interpretation
         of national law, not Community law, and in consequence calls for the Court to rule on the compatibility with Community law
         of rules of national law. The Italian and Spanish Governments express the same reservation as regards the admissibility of
         the question referred in Cases C‑359/04 and C‑360/04.
      
      34     Concerning the information that must be provided to the Court in the context of a reference for a preliminary ruling, it should
         be noted that that information does not serve only to enable the Court to provide answers which will be of use to the national
         court; it must also enable the Governments of the Member States, and other interested parties, to submit observations in accordance
         with Article 23 of the Statute of the Court of Justice. For those purposes, according to settled case-law, it is firstly necessary
         that the national court should define the factual and legislative context of the questions it is asking or, at the very least,
         explain the factual circumstances on which those questions are based. Secondly, the referring court must set out the precise
         reasons why it was unsure as to the interpretation of Community law and why it considered it necessary to refer questions
         to the Court for a preliminary ruling. In consequence, it is essential that the referring court provide at the very least
         some explanation of the reasons for the choice of the Community provisions which it requires to be interpreted and of the
         link it establishes between those provisions and the national legislation applicable to the dispute in the main proceedings
         (see to that effect, inter alia, Joined Cases C‑320/90 to C‑322/90 Telemarsicabruzzo and Others [1993] ECR I‑393, paragraph 6; Joined Cases C‑453/03, C‑11/04, C‑12/04 and C‑194/04 ABNA and Others [2005] ECR I‑10423, paragraphs 45 to 47; and Case C‑506/04 Wilson [2006] ECR I‑0000, paragraphs 38 and 39).
      
      35     The reference from the Tribunale di Larino (Case C‑338/04) meets those requirements. In so far as the national legal context,
         and the arguments relied upon by the parties are in essence identical to those in Gambelli and Others, a reference to that judgment was sufficient to enable the Court, as well as the Governments of Member States and the other
         interested parties, to identify the subject-matter of the dispute.
      
      36     Admittedly, as regards the division of responsibilities under the cooperative arrangements established by Article 234 EC,
         the interpretation of provisions of national law is a matter for the national courts, not for the Court of Justice, and the
         Court has no jurisdiction, in proceedings brought on the basis of that article, to rule on the compatibility of national rules
         with Community law. On the other hand, the Court does have jurisdiction to provide the national court with all the guidance
         as to the interpretation of Community law necessary to enable that court to rule on the compatibility of those national rules
         with Community law (see, in particular, Case C‑55/94 Gebhard [1995] ECR I‑4165, paragraph 19, and Wilson, paragraphs 34 and 35).
      
      37     In that regard, the Advocate General pointed out, quite correctly, at point 70 of his Opinion that, on a literal reading of
         the question referred for a preliminary ruling by the Tribunale di Larino (Case C‑338/04), the Court is being asked to rule
         on the compatibility with Community law of a provision of national law. Nevertheless, although the Court cannot answer that
         question in the terms in which it is framed, there is nothing to prevent it from giving an answer of use to the national court
         by providing the latter with the guidance as to the interpretation of Community law necessary to enable that court to rule
         on the compatibility of those national rules with Community law.
      
      38     As for the question referred for a preliminary ruling by the Tribunale di Teramo (Cases C‑359/04 and C‑360/04), this identifies
         with precision the effects of a number of national legislative developments and asks the Court whether those effects are compatible
         with the EC Treaty. It follows that, by that question, the Court is not being called upon to rule on the interpretation of
         national law or on the compatibility of national law with Community law.
      
      39     The questions referred must therefore be declared admissible.
       The questions referred for a preliminary ruling
      40     It is clear from the case-files forwarded to the Court that an operator wishing to pursue, in Italy, an activity in the betting
         and gaming sector must comply with national legislation characterised by the following elements:
      
      –       the obligation to obtain a licence;
      –       a method of awarding those licences, by means of a tender procedure excluding certain types of operator and, in particular,
         companies whose individual shareholders are not always identifiable at any given moment;
      
      –       the obligation to obtain a police authorisation; and
      –       criminal penalties for failure to comply with the legislation at issue.
      41     By the questions referred, which it is appropriate to consider together, the national courts essentially ask whether Articles
         43 EC and 49 EC preclude national legislation on betting and gaming, such as that at issue in the main proceedings, in so
         far as it contains such elements.
      
      42     The Court has already ruled that, in so far as the national legislation at issue in the main proceedings prohibits – on pain
         of criminal penalties – the pursuit of activities in the betting and gaming sector without a licence or police authorisation
         issued by the State, it constitutes a restriction on the freedom of establishment and the freedom to provide services (see
         Gambelli and Others, paragraph 59 and the operative part).
      
      43     In the first place, the restrictions imposed on intermediaries such as the defendants in the main proceedings constitute obstacles
         to the freedom of establishment of companies established in another Member State, such as Stanley, which pursue the activity
         of collecting bets in other Member States through an organisation of agencies such as the DTCs operated by the defendants
         in the main proceedings (see Gambelli and Others, paragraph 46).
      
      44     Secondly, the prohibition imposed on intermediaries such as the defendants in the main proceedings, under which they are forbidden
         to facilitate the provision of betting services in relation to sporting events organised by a supplier, such as Stanley, established
         in a Member State other than that in which the intermediaries pursue their activity, constitutes a restriction on the right
         of that supplier freely to provide services, even if the intermediaries are established in the same Member State as the recipients
         of the services (see Gambelli and Others, paragraph 58).
      
      45     In those circumstances, it is necessary to consider whether the restrictions at issue in the main proceedings may be recognised
         as exceptional measures, as expressly provided for in Articles 45 EC and 46 EC, or justified, in accordance with the case-law
         of the Court, for reasons of overriding general interest (see Gambelli and Others, paragraph 60).
      
      46     On that point, a certain number of reasons of overriding general interest have been recognised by the case-law, such as the
         objectives of consumer protection and the prevention of both fraud and incitement to squander on gaming, as well as the general
         need to preserve public order (see, to that effect, Case C‑275/92 Schindler [1994] ECR I‑1039, paragraphs 57 to 60; Case C‑124/97 Läärä and Others [1999] ECR I‑6067, paragraphs 32 and 33; Zenatti, paragraphs 30 and 31; and Gambelli and Others, paragraph 67).
      
      47     In that context, moral, religious or cultural factors, as well as the morally and financially harmful consequences for the
         individual and for society associated with betting and gaming, may serve to justify a margin of discretion for the national
         authorities, sufficient to enable them to determine what is required in order to ensure consumer protection and the preservation
         of public order (Gambelli and Others, paragraph 63).
      
      48     However, although the Member States are free to set the objectives of their policy on betting and gaming and, where appropriate,
         to define in detail the level of protection sought, the restrictive measures that they impose must nevertheless satisfy the
         conditions laid down in the case-law of the Court as regards their proportionality.
      
      49     The restrictive measures imposed by the national legislation should therefore be examined in turn in order to determine in
         each case in particular whether the measure is suitable for achieving the objective or objectives invoked by the Member State
         concerned and whether it does not go beyond what is necessary in order to achieve those objectives. In any case, those restrictions
         must be applied without discrimination (see to that effect Gebhard, paragraph 37, as well as Gambelli and Others, paragraphs 64 and 65, and Case C‑42/02 Lindman [2003] ECR I‑13519, paragraph 25).
      
       The licensing requirement
      50     Before an operator can be active in the betting and gaming sector in Italy, it must obtain a licence. Under the licensing
         system in use, the number of operators is limited. So far as concerns the taking of bets, the number of licences for the management
         of sports bets on competitive events not involving horses is limited to 1 000, as is the number of licences for the acceptance
         of bets on competitive horse events.
      
      51     It should be made clear from the outset that the fact that that number of licences for each of those two categories was, according
         to the documents before the Court, considered on the basis of a specific assessment to be ‘sufficient’ for the whole of the
         national territory could not of itself justify the obstacles to the freedom of establishment and the freedom to provide services
         brought about by that limitation.
      
      52     As regards the objectives capable of justifying those obstacles, a distinction must be drawn in this context between, on the
         one hand, the objective of reducing gambling opportunities and, on the other hand – in so far as games of chance are permitted
         – the objective of combating criminality by making the operators active in the sector subject to control and channelling the
         activities of betting and gaming into the systems thus controlled.
      
      53     With regard to the first type of objective, it is clear from the case-law that although restrictions on the number of operators
         are in principle capable of being justified, those restrictions must in any event reflect a concern to bring about a genuine
         diminution of gambling opportunities and to limit activities in that sector in a consistent and systematic manner (see, to
         that effect, Zenatti, paragraphs 35 and 36, and Gambelli and Others, paragraphs 62 and 67).
      
      54     It is, however, common ground in the present case, according to the case-law of the Corte suprema di cassazione, that the
         Italian legislature is pursuing a policy of expanding activity in the betting and gaming sector, with the aim of increasing
         tax revenue, and that no justification for the Italian legislation is to be found in the objectives of limiting the propensity
         of consumers to gamble or of curtailing the availability of gambling.
      
      55     Indeed it is the second type of objective, namely that of preventing the use of betting and gaming activities for criminal
         or fraudulent purposes by channelling them into controllable systems, that is identified, both by the Corte suprema di cassazione
         and by the Italian Government in its observations before the Court, as the true goal of the Italian legislation at issue in
         the main proceedings. Viewed from that perspective, it is possible 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 betting and gaming –
         and, as such, activities which are prohibited – to activities which are authorised and regulated. As the Belgian and French
         Governments, in particular, have pointed out, in order to achieve that objective, authorised operators must represent a reliable,
         but at the same time attractive, alternative to a prohibited activity. This may as such necessitate the offer of an extensive
         range of games, advertising on a certain scale and the use of new distribution techniques.
      
      56     The Italian Government also referred to a number of factual elements, including, notably, an investigation into the betting
         and gaming sector, carried out by the Sixth Permanent Committee (Finance and the Treasury) of the Italian Senate. That investigation
         led to the conclusion that the activities of clandestine betting and gaming, prohibited as such, are a considerable problem
         in Italy, which it may be possible to solve through the expansion of authorised and regulated activities. Thus, according
         to that investigation, half the total turnover figure for the betting and gaming sector in Italy is generated by illegal activities.
         It was also thought that, by extending the betting and gaming activities permitted by law, it might be possible to recover
         from those illegal activities a proportion of that turnover figure at least equivalent in value to the amount generated by
         the activities permitted by law.
      
      57     A licensing system may, in those circumstances, constitute an efficient mechanism enabling operators active in the betting
         and gaming sector to be controlled with a view to preventing the exploitation of those activities for criminal or fraudulent
         purposes. However, as regards the limitation of the total number of such licences, the Court does not have sufficient facts
         before it to be able to assess that limitation, as such, in the light of the requirements flowing from Community law.
      
      58     It will be for the referring courts to determine whether, in limiting the number of operators active in the betting and gaming
         sector, the national legislation genuinely contributes to the objective invoked by the Italian Government, namely, that of
         preventing the exploitation of activities in that sector for criminal or fraudulent purposes. By the same token, it will be
         for the referring courts to ascertain whether those restrictions satisfy the conditions laid down by the case-law of the Court
         as regards their proportionality.
      
       The tender procedures
      59     The Tribunale di Teramo (Cases C‑359/04 and C‑360/04) expressly refers to the exclusion of companies whose individual shareholders
         are not always identifiable at any given moment, and thus of all companies quoted on the regulated markets, from tender procedures
         for the award of licences. The Commission of the European Communities has pointed out that the effect of that restriction
         is to exclude from those tender procedures the leading Community operators in the betting and gaming sector – operators in
         the form of companies whose shares are quoted on the regulated markets.
      
      60     By way of a preliminary point, it should be noted that the question of the lawfulness of the conditions imposed in the context
         of the 1999 tender procedures is far from having been made redundant by the legislative amendments introduced in 2002 and
         allowing from then on all companies – with no limitation as to their form – to participate in tender procedures for the award
         of licences. Indeed, as the Tribunale di Teramo pointed out, since the licences awarded in 1999 were valid for six years and
         renewable for an additional period of six years, and meanwhile no new tender procedure has been planned, the exclusion from
         the betting and gaming sector of companies quoted on the regulated markets, and of intermediaries such as the defendants in
         the main proceedings who might act on behalf on such companies, is liable to produce effects until the year 2011.
      
      61     The Court has already ruled that, even if the exclusion from tender procedures is applied without distinction to all companies
         quoted on the regulated markets which could be interested in those licences – regardless of whether they are established in
         Italy or in another Member State – in so far as the lack of foreign operators among the licensees is attributable to the fact
         that the Italian rules governing invitations to tender make it impossible in practice for 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
         (see Gambelli and Others, paragraph 48).
      
      62     Independently of the question whether the exclusion of companies quoted on the regulated markets applies, in fact, in the
         same way to operators established in Italy and to those from other Member States, that blanket exclusion goes beyond what
         is necessary in order to achieve the objective of preventing operators active in the betting and gaming sector from being
         involved in criminal or fraudulent activities. Indeed, as the Advocate General pointed out in point 125 of his Opinion, there
         are other ways of monitoring the accounts and activities of operators in the betting and gaming sector which impinge to a
         lesser extent on the freedom of establishment and the freedom to provide services, one such possibility being the gathering
         of information on their representatives or their main shareholders. Support for that observation is to be found in the fact
         that the Italian legislature believed it possible to repeal the exclusion completely by the 2003 Finance Law without, however,
         adopting other restrictive measures in its place.
      
      63     As regards the consequences flowing from the unlawful nature of the exclusion of a certain number of operators from tender
         procedures for the award of existing licences, it is for the national legal order to lay down detailed procedural rules to
         ensure the protection of the rights which those operators derive by direct effect of Community law, provided, however, that
         those detailed rules are not less favourable than those governing similar domestic situations (principle of equivalence) and
         that they do not make it excessively difficult or impossible in practice to exercise the rights conferred by Community law
         (principle of effectiveness) (see Case C‑453/99 Courage and Crehan [2001] ECR I‑6297, paragraph 29, and Joined Cases C‑392/04 and C‑422/04 i‑21 Germany and Arcor [2006] ECR I‑0000, paragraph 57). In that connection, appropriate courses of action could be the revocation and redistribution
         of the old licences or the award by public tender of an adequate number of new licences. In any case, it should nevertheless
         be noted that, in the absence of a procedure for the award of licences which is open to operators who have been unlawfully
         barred from any possibility of obtaining a licence under the last tender procedure, the lack of a licence cannot be a ground
         for the application of sanctions to such operators.
      
      64     Articles 43 EC and 49 EC must therefore be interpreted as precluding national legislation such as that at issue in the main
         proceedings, which excludes – and, moreover, continues to exclude – from the betting and gaming sector operators in the form
         of companies whose shares are quoted on the regulated markets.
      
       The police authorisation requirement
      65     The requirement that operators active in the betting and gaming sector, as well as their premises, be subject to ex ante controls
         as well as to ongoing supervision clearly contributes to the objective of preventing the involvement of those operators in
         criminal or fraudulent activities and appears to be a measure that is entirely commensurate with that objective.
      
      66     However, it is clear from the documents before the Court that the defendants in the main proceedings were ready to obtain
         police authorisations and to submit to such controls and to such supervision. Nevertheless, since a police authorisation is
         issued only to licence holders, it would have been impossible for the defendants in the main proceedings to obtain it. On
         that point, it is also clear from the case-files that, before commencing their activities, Mr Palazzese and Mr Sorricchio
         had applied for police authorisation in accordance with Article 88 of the Royal Decree, but that their applications met with
         no response. 
      
      67     As the Advocate General pointed out at point 123 of his Opinion, the procedure for granting police authorisations is, in consequence,
         vitiated by the defects identified above, which taint the award of the licences. Accordingly, the lack of a police authorisation
         cannot, in any case, be a valid ground for complaint in respect of persons such as the defendants in the main proceedings,
         who were unable to obtain authorisations because the grant of an authorisation presupposed the award of a licence – a licence
         which, contrary to Community law, those persons were unable to obtain.
      
       The criminal penalties
      68     Although in principle criminal legislation is a matter for which the Member States are responsible, the Court has consistently
         held that Community law sets certain limits to their power, and such legislation may not restrict the fundamental freedoms
         guaranteed by Community law (see Case C‑348/96 Calfa [1999] ECR I‑11, paragraph 17).
      
      69     The case-law has also made it quite clear that a Member State may not apply a criminal penalty for failure to complete an
         administrative formality where such completion has been refused or rendered impossible by the Member State concerned, in infringement
         of Community law (see, to that effect, Case 5/83 Rienks [1983] ECR 4233, paragraphs 10 and 11).
      
      70     It appears that persons such as the defendants in the main proceedings, in their capacity as DTC operators linked to a company
         organising bets which is quoted on the regulated markets and which is established in another Member State, had no way of being
         able to obtain the licences or police authorisation required under Italian legislation because, contrary to Community law,
         Italy makes the grant of police authorisations subject to possession of a licence and, at the time of the last tender procedure
         in the case which is the subject of the main proceedings, had refused to award licences to companies quoted on the regulated
         markets. In consequence, Italy cannot apply criminal penalties to persons such as the defendants in the main proceedings for
         pursuing the organised activity of collecting bets without a licence or a police authorisation.
      
      71     Articles 43 EC and 49 EC must therefore be interpreted as precluding national legislation, such as that at issue in the main
         proceedings, which imposes a criminal penalty on persons such as the defendants in the main proceedings for pursuing the organised
         activity of collecting bets without a licence or a police authorisation as required under the national legislation where those
         persons were unable to obtain licences or authorisations because that Member State, in breach of Community law, refused to
         grant licences or authorisations to such persons.
      
      72     In the light of the foregoing, it is appropriate to state in answer to the questions referred for a preliminary ruling that:
      1.      National legislation which prohibits the pursuit of the activities of collecting, taking, booking and forwarding offers of
         bets, in particular bets on sporting events, without a licence or a police authorisation issued by the Member State concerned,
         constitutes a restriction on the freedom of establishment and the freedom to provide services provided for in Articles 43
         EC and 49 EC respectively.
      
      2.      It is for the national courts to determine whether, in so far as national legislation limits the number of operators active
         in the betting and gaming sector, it genuinely contributes to the objective of preventing the exploitation of activities in
         that sector for criminal or fraudulent purposes.
      
      3.      Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings,
         which excludes – and, moreover, continues to exclude – from the betting and gaming sector operators in the form of companies
         whose shares are quoted on the regulated markets.
      
      4.      Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings,
         which imposes a criminal penalty on persons such as the defendants in the main proceedings for pursuing the organised activity
         of collecting bets without a licence or a police authorisation as required under the national legislation, where those persons
         were unable to obtain licences or authorisations because that Member State, in breach of Community law, refused to grant licences
         or authorisations to such persons.
      
       Costs
      73     Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national courts,
         the decision on costs is a matter for those courts. Costs incurred in submitting observations to the Court, other than the
         costs of those parties, are not recoverable.
      
      On those grounds, the Court (Grand Chamber) hereby rules:
      1.      National legislation which prohibits the pursuit of the activities of collecting, taking, booking and forwarding offers of
            bets, in particular bets on sporting events, without a licence or a police authorisation issued by the Member State concerned,
            constitutes a restriction on the freedom of establishment and the freedom to provide services, provided for in Articles 43
            EC and 49 EC respectively.
      2.      It is for the national courts to determine whether, in so far as national legislation limits the number of operators active
            in the betting and gaming sector, it genuinely contributes to the objective of preventing the exploitation of activities in
            that sector for criminal or fraudulent purposes.
      3.      Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings,
            which excludes – and, moreover, continues to exclude – from the betting and gaming sector operators in the form of companies
            whose shares are quoted on the regulated markets.
      4.      Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings,
            which imposes a criminal penalty on persons such as the defendants in the main proceedings for pursuing the organised activity
            of collecting bets without a licence or a police authorisation as required under the national legislation, where those persons
            were unable to obtain licences or authorisations because that Member State, in breach of Community law, refused to grant licences
            or authorisations to such persons.
      [Signatures]
      * Language of the case: Italian.