Criminal proceedings against Jochen Dickinger and Franz Ömer.
Date: 2011-09-15
31. As the Advocate General observes in points 45 to 50 of his Opinion, it is settled case-law of the Court that European Union law sets certain limits to the powers of Member States in criminal matters, since criminal legislation may not restrict the fundamental freedoms guaranteed by European Union law (see, to that effect, Case 186/87 Cowan  [1989] ECR 195, paragraph 19, and Case C‑348/96 Calfa  [1999] ECR I‑11, paragraph 17).
35. According to the Court’s case-law, for there to be establishment within the meaning of the Treaty, a commercial relationship entered into by an operator established in a Member State with operators or intermediaries established in the host Member State must make it possible for the operator to participate, on a stable and continuous basis, in the economic life of the host Member State, and must thus be such as to enable customers to take advantage of the services offered through a permanent presence in the host Member State, which may be done by means merely of an office managed by a person who is independent but authorised to act on a permanent basis for the operator, as would be the case with an agency (see, to that effect, Joined Cases C‑316/07, C‑358/07 to C‑360/07, C‑409/07 and C‑410/07 Stoß and Others  [2010] ECR I‑0000, paragraphs 59 and 60).
37. It follows, moreover, from the Court’s case-law that Article 49 EC applies to an operator of games of chance established in one Member State who offers his services in another Member State, even if he makes use for that purpose of intermediaries established in the same Member State as the recipients of those services (Case C‑243/01 Gambelli and Others  [2003] ECR I‑13031, paragraph 58). That article applies a fortiori  where the operator of games of chance makes use not of intermediaries but of a mere provider of computer support services in the host Member State.
41. It is common ground that legislation of a Member State such as that at issue in the main proceedings under which exclusive rights to organise and promote games of chance are conferred on a single operator, and whereby all other operators, including operators established in another Member State, are prohibited from offering over the internet services falling within the scope of that regime in the territory of the first Member State, constitutes a restriction on the freedom to provide services guaranteed by Article 49 EC (see, to that effect, Case C‑203/08 Sporting Exchange  [2010] ECR I‑0000, paragraphs 22 and 24 and the case-law cited).
42. However, such a restriction of the freedom to provide services may be allowed as a derogation expressly provided for in Articles 45 EC and 46 EC, applicable in this area by virtue of Article 55 EC, or justified in accordance with the case-law of the Court by overriding reasons in the public interest (Case C‑42/07 Liga Portuguesa de Futebol Profissional and Bwin International  [2009] ECR I‑7633, paragraphs 55 and 56, and Case C‑212/08 Zeturf  [2011] ECR I‑0000, paragraph 37).
43. It should be emphasised at the outset, in the context of the case at issue in the main proceedings, that, where a monopoly system has been established in a Member State for games of chance and that system is incompatible with Article 49 EC, an infringement by an economic operator cannot be penalised by criminal penalties (Joined Cases C‑338/04, C‑359/04 and C‑360/04 Placanica and Others  [2007] ECR I‑1891, paragraphs 63 and 69).
The conditions for establishing a monopoly of games of chance
44. As regards the justifications which may be accepted, the Court has observed that the objectives pursued by national legislation adopted in the area of betting and gaming, considered as a whole, usually concern the protection of the recipients of the services in question and of consumers more generally, and the protection of society. It has also found that such objectives are among the overriding reasons in the public interest which are capable of justifying obstacles to the freedom to provide services ( Stoß and Others , paragraph 74 and the case-law cited).
45. The Court has, moreover, repeatedly held that 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 be capable of justifying a sufficient margin of discretion for the national authorities for them to determine, in accordance with their own scale of values, what is required in order to ensure consumer protection and the protection of society ( Stoß and Others , paragraph 76 and the case-law cited).
46. The mere fact that a Member State has opted for a system of protection which differs from that adopted by another Member State cannot affect the assessment of the need for and proportionality of the relevant provisions. Those provisions must be assessed solely by reference to the objectives pursued by the competent authorities of the Member State concerned and the level of protection which they seek to ensure ( Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 58).
47. The Member States are therefore in principle free to set the objectives of their policy on games of chance and, where appropriate, to define in detail the level of protection sought (see, to that effect, Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 59).
48. A Member State seeking to ensure a particularly high level of protection may consequently, as the Court has acknowledged in its case-law, be entitled to take the view that it is only by granting exclusive rights to a single entity which is subject to strict control by the public authorities that it can tackle the risks connected with the gambling sector and pursue the objective of preventing incitement to squander money on gambling and combating addiction to gambling with sufficient effectiveness (see, to that effect, Stoß and Others , paragraphs 81 and 83, and Zeturf , paragraph 41).
49. The public authorities of a Member State may legitimately consider that the fact that, in their capacity as overseers of the entity holding the monopoly, they will have additional means of influencing its conduct outside the statutory regulating and monitoring mechanisms is likely to secure for them a better command over the supply of games of chance and better guarantees that their policy will be implemented effectively than in the case where those activities are carried on by private operators in a situation of competition, even if the latter are subject to a system of authorisation and a regime of supervision and penalties ( Stoß and Others , paragraph 82).
50. The fact remains, however, that the restrictions imposed by the Member States must satisfy the conditions laid down in the Court’s case-law as regards their proportionality, a matter which it is for the national courts to determine ( Liga Portuguesa de Futebol Profissional and Bwin International , paragraphs 59 and 60, and Stoß and Others , paragraphs 77 and 78).
51. It must be noted that the question of which objectives are in fact pursued by the national legislation is, in the context of a case referred to the Court under Article 267 TFEU, within the jurisdiction of the referring court.
54. It is for the referring court to ascertain that the national authorities really did intend at the material time to ensure a particularly high level of protection with regard to the objectives relied on, and whether, having regard to the level of protection sought, the establishment of a monopoly could actually be considered necessary ( Zeturf , paragraph 47). In this connection, it is the Member State wishing to rely on an objective capable of justifying the restriction of the freedom to provide services which must supply the court called on to rule on that question with all the evidence of such a kind as to enable the court to be satisfied that the measure does indeed comply with the requirements deriving from the principle of proportionality ( Stoß and Others , paragraph 71).
55. The objective of maximising public revenue alone cannot permit such a restriction of the freedom to provide services.
56. It should be recalled in this connection, in particular, that national legislation is appropriate for ensuring attainment of the objective relied on only if it genuinely reflects a concern to attain it in a consistent and systematic manner. It is therefore for the referring court to satisfy itself, having regard inter alia to the actual rules for applying the restrictive legislation concerned, that the legislation genuinely meets the concern to reduce opportunities for gambling and to limit activities in that area in a consistent and systematic manner (see, to that effect, Stoß and Others , paragraphs 88, 97 and 98).
57. The referring court will therefore have to ascertain, in the light inter alia of the development of the market for games of chance in Austria, whether the State controls to which the monopoly holder’s activities are subject are suitable for ensuring that the holder will in fact be able to pursue, in a consistent and systematic manner, the objectives relied on by means of a supply that is quantitatively measured and qualitatively planned by reference to those objectives (see, to that effect, Case C‑258/08 Ladbrokes Betting & Gaming and Ladbrokes International  [2010] ECR I‑0000, paragraph 37, and Stoß and Others , paragraph 83).
61. It must be observed here that an increase in the commercial activity of an operator who has been granted exclusive rights in the field of games of chance and a substantial increase in the income received from those games require particular attention in the examination of whether the legislation at issue is consistent and systematic, and hence whether it is appropriate for pursuing the objectives recognised by the Court’s case-law. According to that case-law, the financing of activities in the public interest by means of income from games of chance must not be the real aim of a restrictive policy in that sector, but can only be regarded as an incidental beneficial consequence (see, inter alia, Case C‑275/92 Schindler  [1994] ECR I‑1039, paragraphs 57 and 60; Case C‑124/97 Läärä and Others  [1999] ECR I‑6067, paragraphs 32 and 37; Case C‑67/98 Zenatti  [1999] ECR I‑7289, paragraphs 35 and 36; and Gambelli and Others , paragraphs 61 and 62).
62. A Member State is not therefore entitled to rely on reasons of public policy relating to the need to reduce opportunities for gambling in so far as the public authorities of that State incite and encourage consumers to participate in games of chance so that the public purse can benefit (see, to that effect, Gambelli and Others , paragraph 69).
63. The Court has also held, however, that a policy of controlled expansion of gambling activities may be consistent with the objective of channelling them into controlled circuits by drawing gamblers away from clandestine, prohibited betting and gaming to activities which are authorised and regulated. Such a policy may be consistent both with the objective of preventing the use of gambling activities for criminal or fraudulent purposes and with that of preventing incitement to squander money on gambling and of combating addiction to gambling, by directing consumers towards the offer emanating from the holder of the public monopoly, that offer being deemed to be free from criminal elements and designed to safeguard consumers more effectively against squandering of money and addiction to gambling ( Stoß and Others , paragraphs 101 and 102).
64. In order to achieve that objective of channelling into controlled circuits, the authorised operators must provide a reliable, but at the same time attractive, alternative to non-regulated activities, which may as such necessitate the offer of an extensive range of games, advertising on a certain scale, and the use of new distribution techniques ( Placanica and Others , paragraph 55, and Stoß and Others , paragraph 101).
65. It is for the referring court to assess, in the light of the circumstances of the dispute pending before it, whether the commercial policy of the holder of the monopoly may be regarded, both with regard to the scale of advertising undertaken and with regard to the creation of new games, as forming part of a policy of controlled expansion in the sector of games of chance, aiming in fact to channel the propensity to gamble into controlled activities (see Ladbrokes Betting & Gaming and Ladbrokes International , paragraph 37, and Zeturf , paragraph 69).
66. In the context of that assessment, it is for the referring court to ascertain in particular whether, first, criminal and fraudulent activities linked to gambling and, second, addiction to gambling could have been a problem in Austria at the material time and whether the expansion of authorised and regulated activities could have solved that problem (see, to that effect, Ladbrokes Betting & Gaming and Ladbrokes International , paragraph 29).
67. Since the objective of protecting consumers from addiction to gambling is in principle difficult to reconcile with a policy of expanding games of chance characterised inter alia by the creation of new games and by the advertising of those games, such a policy cannot be regarded as being consistent unless the scale of unlawful activity is significant and the measures adopted are aimed at channelling consumers’ propensity to gamble into activities that are lawful ( Ladbrokes Betting & Gaming and Ladbrokes International , paragraph 30).
68. In any event, any advertising by the holder of a public monopoly must remain measured and strictly limited to what is necessary in order thus to channel consumers towards controlled gaming networks. Such advertising cannot, on the other hand, aim to encourage consumers’ natural propensity to gamble by stimulating their active participation in it, such as by trivialising gambling or giving it a positive image because revenues derived from it are used for activities in the public interest, or by increasing the attractiveness of gambling by means of enticing advertising messages holding out the prospect of major winnings ( Stoß and Others , paragraph 103).
71. It should be recalled to begin with, as the Advocate General notes in point 97 of his Opinion, that, as a monopoly is an unusually restrictive measure, it must aim to ensure a particularly high level of consumer protection and must be accompanied by a legislative framework suitable for ensuring that the holder of the monopoly will in fact be able to pursue, in a consistent and systematic manner, the objectives thus determined by means of a supply that is quantitatively measured and qualitatively planned by reference to those objectives and subject to strict control by the public authorities ( Stoß and Others , paragraph 83, and Zeturf , paragraph 58).
76. As the Court held in Engelmann , paragraph 30, the requirement of a particular legal form for operators of games of chance may, by virtue of the obligations binding certain kinds of company with respect in particular to their internal organisation, the keeping of their accounts, the scrutiny to which they may be subject and their relations with third parties, be justified by the objective of preventing money laundering and fraud, relied on by the Austrian Government in the present case.
77. Similarly, the requirement for a share capital of a certain amount may prove to be of use in order to ensure a certain financial capacity on the part of the operator and to guarantee that he is in a position to meet the obligations he may contract towards winning gamblers. It must be recalled, however, that observance of the principle of proportionality requires that the restriction imposed does not go beyond what is necessary for achieving the aim pursued. It will be for the referring court to ascertain, having regard to other possible ways of ensuring that the claims of winning gamblers will be honoured by the operator, whether the requirement at issue is proportionate.
– Location of the registered office of the holder of the monopoly
82. With respect more specifically to the objective of monitoring and supervising the holder of the monopoly and the Austrian Government’s argument that it is necessary to ensure effective supervision of economic operators, inter alia by the presence of State commissioners, it is settled case-law that the concept of public policy, first, presumes that there is a genuine and sufficiently serious threat to a fundamental interest of society and, second, must, as a justification for a derogation from a fundamental principle of the Treaty, be narrowly construed (see, to that effect, Joined Cases 115/81 and 116/81 Adoui and Cornuaille  [1982] ECR 1665, paragraph 8; Calfa , paragraphs 21 and 23; Case C‑268/99 Jany and Others  [2001] ECR I‑8615, paragraph 59; and Case C‑161/07 Commission  v Austria  [2008] ECR I‑10671, paragraph 35 and the case-law cited).
96. It must be recalled in this respect that no duty of mutual recognition of authorisations issued by the various Member States can exist in the current state of European Union law ( Stoß and Others , paragraph 112). In the absence of harmonisation at European Union level of legislation in the sector of games of chance, and in view of the substantial differences between the objectives pursued and the levels of protection sought by the legislation of the various Member States, the mere fact that an operator lawfully offers services in one Member State, in which it is established and is in principle already subject to statutory conditions and controls on the part of the competent authorities of that State, cannot be regarded as a sufficient assurance that national consumers will be protected against the risks of fraud and crime, in view of the difficulties liable to be encountered in such a context by the authorities of the Member State of establishment in assessing the professional qualities and integrity of operators ( Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 69).
98. The various Member States do not necessarily have the same technical means available for controlling online games of chance, and do not necessarily make the same choices in this respect. While the Maltese Government has itself asserted that the Republic of Malta was the first Member State to develop a system of regulation specifically aimed at controlling and monitoring games of chance on the internet, the fact that a particular level of protection of consumers against fraud by an operator may be achieved in a particular Member State by applying sophisticated control and monitoring techniques does not permit of the conclusion that the same level of protection can be achieved in other Member States which do not have those technical means available or have made different choices. A Member State may legitimately wish, moreover, to monitor an economic activity which is carried on in its territory, and that would be impossible if it had to rely on checks done by the authorities of another Member State using regulatory systems which it itself does not grasp.
99. Consequently, the case-law relied on by Mr Dickinger and Mr Ömer and the Maltese Government which states that it is not compatible with Article 49 EC to make a provider subject to restrictions for safeguarding the public interest in so far as that interest is already safeguarded in the Member State where he is established does not apply, in the present state of development of European Union law, in a field such as that of games of chance, which is not harmonised at European Union level, and in which the Member States have a wide discretion in relation to the objectives they wish to pursue and the level of protection they seek.