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Ban on foreign casino operators breaks EU law, says Advocate General


Countries which ban foreign firms from operating casinos are breaking EU law, a legal advisor to Europe's top court has said. The ban discriminates against companies from other countries without any sound basis, the advisor said.

Ján Mazák is an Advocate General at the EU's top court, the Court of Justice. Advocates General publish opinions on cases which judges can follow or ignore. They are followed in around 80% of cases.

Mazák has said that an Austrian law which forbids companies that do not have Austria as their base from running casinos is an unjustified restraint on their freedom to trade across EU borders, which is one of the founding principles of the EU.

"The Austrian legislation which reserves the operation of games of chance in gaming establishments exclusively to limited companies which have their seat in Austrian territory is incompatible with freedom of establishment," said a Court of Justice-produced summary of his opinion, which is not available in English.

"The requirement that companies must establish their seat in Austria involves a restriction on freedom of establishment which introduces direct discrimination inasmuch as it prohibits companies with their seat in another Member State from being holders of a licence to operate a casino," said the summary.

The case involved a German man, Ernst Engelmann, who operated two casinos in Austria without a licence either from Austria or any other country. Austrian law creates a state monopoly for games of chance and allows the state to licence companies to conduct such gambling activity.

An Austrian court found Engelmann guilty of operating unauthorised games of chance for financial gain.

When that case was appealed the appeals court asked the Court of Justice whether Austrian law was compatible with EU law. Mazák has said that it is not.

Mazák said that such restrictions on trade could be justified "on grounds of public policy, public security or public health, inasmuch as recourse to one of those justifications presupposes the existence of a genuine and sufficiently serious threat affecting a fundamental interest of society".

This was not such a case though, he said.

"If the requirement that companies establish their seat in Austria did not exist, the Austrian authorities would not be faced with a genuine and sufficiently serious threat affecting a fundamental interest of society by reason of being unable to supervise effectively the activities of a gaming undertaking whose seat was situated in another Member State," said the summary. "In fact, any undertaking established in a Member State can be supervised and penalties imposed on it, regardless of the place of residence of its managers."

Mazák also said that Austrian rules which said that only Austrian citizens can apply for gaming licences is discriminatory and cannot be justified on public policy grounds.

The advocate general also examined whether or not the policy of restricting casinos was inconsistent with policies allowing the advertising of licensed lotteries. It found that it was not necessarily so, and that it was up to Austrian courts to decide if the Austrian state's policy of trying to discourage casinos was legally acceptable.

A different advocate general to the Court of Justice last week ruled that countries could ban the promotion of foreign-based online gambling sites. Yves Bot, ruling in a Swedish case, said that Sweden's policy ran counter to the principles of free cross border trade but that this was justified by the public policy reasoning behind it, which was to fight fraud and criminality.

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