The Court of Justice of the European Union (CJEU) has ruled that the tightening of Valencia’s gambling framework is compatible with EU law, though also cautioning against heavy-handed local regulations.
A number of gaming venue operators in the Spanish region had challenged the local government’s stricter requirements. The CJEU has now provided a closer examination over whether local gambling rules unjustly limit EU operators’ freedom to establish or expand in Spain.
The treaty of Article 49 of the Treaty on the Functioning of the European Union (TFEU) seeks to ensure a level playing field for EU citizens and domestic residents looking to establish and grow a business within an EU country.
The treaty prohibits “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.”
The challenge from Valencia operators pursued the claim that there were disproportionate national rules that hinder foreign operators and the ability to progress.
The latest set of rules also implemented a 500-metre distance between gaming venues and a suspension of the issuing of new licences. Local regulators were hoping to prevent market saturation and proliferation of gambling venues.
The European Court backed the Valencia regulators’ decisions. However, it did emphasise that these restrictions must be justified and legitimised by the backing of domestic courts.
Meanwhile, the blocking of new licences was also cited as a legitimate step taken by the regulator to ensure the market in its current form isn’t oversaturated.
Although there is no appeal from a CJEU preliminary ruling, Spanish courts will now have the final say on the fate of the regulation.
From Spain to Malta
This is a decision that will inflame the attention of other European countries that are embattled in court cases which challenge whether domestic regulations infringe on EU laws.
In Malta, pressure over Bill 55 has shown no signs of slowing this year as EU courts have been challenged to increase scrutiny of the impact of the bill and its protection of Maltese companies.
Criticism of the bill mirrors that of the criticism towards the bill in Valencia, in the sense that it simply doesn’t align with EU law. As battle lines have been drawn, questions have also been raised over the transparency of the bill, which has been magnified as a result of numerous cases involving challenges to the rule.
The German regulator, the GGL, has been a staunch opponent of the bill. In March, the regulator put its case forward to the European Commission in a bid to push them to re-examine the law and its effectiveness alongside domestic and EU frameworks.
“We are of the opinion that this law should not be compatible with European requirements for the recognition of decisions (Regulation (EU) 1215/2002),” The GGL stated at the time.“However, the final assessment of this question is not the responsibility of the GGL. We have informed the federal states of our assessment and are otherwise in contact with the relevant authorities.”
The bill was recently brought back under the microscope as Maltese courts ruled in two separate cases that Austrian courts do not have the power to dictate whether gaming operators in Malta compensate Austrian players.
This is in spite of Austrian courts backing the players, with the country’s legal framework around gambling considering any overseas operator illegal.
In response, Maltese courts and the two operators have cited the free market and EU Laws enabling free movements of services as illegitimising the original Austrian decision.
Maltese regulators may well be energised by the decision of EU courts in Valencia, as the MGA looks to affirm its claims that Bill 55 does not exist solely to eradicate any impact from foreign judgements, but is instead to protect its licence holders and align with EU frameworks.
