Europe's top court ruled that the EU's founding free trade principle could be bypassed on public policy grounds by laws prohibiting private companies from promoting gambling in Sweden. The law must apply equally to foreign and Swedish companies, though, the Court said.
Newspaper publishers Otto Sjöberg and Anders Gerdin were found by the Swedish courts to have infringed a gambling control law by publishing adverts for gambling operators based outside of the country.
The Swedish courts asked the ECJ if Sweden could ban foreign gambling companies and unlicensed Swedish companies from operating there or whether that would break EU laws on cross border trade.
"The effect of [the Swedish law] is to restrict Swedish consumers’ participation in such gambling," said the ECJ ruling. "The purpose of that provision is to ensure that those consumers take part in gambling only in the context of the system licensed at national level, thereby in particular ensuring that private profit-making interests are excluded from that sector."
Sweden allows gambling activity, but only that which is licensed by the state and has as its main purpose socially beneficial activities.
"That provision consequently constitutes a restriction on the freedom of Swedish residents to receive, on the internet, services offered in other Member States. It also imposes, so far as providers of gambling services established in Member States other than the Kingdom of Sweden are concerned, a restriction on their freedom to provide services in the Kingdom of Sweden," said the ECJ.
But it said that the EC Treaty, the founding document of the European Union, "allows restrictions justified on grounds of public policy, public security or public health".
"In addition, a certain number of overriding reasons in the general interest have been recognised by case-law, such as the objectives of consumer protection and the prevention of both fraud and incitement to squander money on gambling, as well as the general need to preserve public order," it said.
"In that context, it must be observed that the legislation on gambling is one of the areas in which there are significant moral, religious and cultural differences between the Member States. In the absence of Community harmonisation in the field, it is for each Member State to determine in those areas, in accordance with its own scale of values, what is required to protect the interests in question," said the ruling.
The Court said that Sweden was entitled to have its anti-gambling laws and, in the case of the two newspaper publishers, the courts were entitled to find their behaviour illegal.
"The gaming operators which caused the advertisements on account of which the criminal proceedings were initiated to be published are private undertakings run for profit, which could never, as the Swedish Government confirmed at the hearing, have obtained licences for the operation of gambling under Swedish legislation," it said. "The prohibition on the promotion of the services of such operators to consumers resident in Sweden therefore reflects the objective of the exclusion of private profit-making interests from the gambling sector and may moreover be regarded as necessary in order to meet such an objective."
The courts' punishment of the publishers had to be consistent, though, and they could not be more or less harshly punished for promoting foreign operations than they would be for promoting unlicensed domestic companies' gambling services, the Court said.
The promotion of foreign and domestic companies would break different Swedish laws. This would only be permissible if the punishments meted out under those two laws were the same, it said.
"It is for the referring court to examine whether the two infringements at issue, although covered by different enactments, are nevertheless subject to equivalent treatment under the applicable national legislation. That court must in particular ascertain whether, on the facts, those infringements are prosecuted by the competent authorities with the same diligence and lead to the imposition of equivalent penalties by the competent courts," the ECJ said.
"If the two infringements at issue receive equivalent treatment, the national legislation cannot be regarded as discriminatory, regardless of the fact that the provisions on which the proceedings are based and which lay down the applicable penalties are contained in different enactments."
"On the other hand, if the persons carrying out the promotion of gambling organised in Sweden without a licence incur penalties which are less strict than those imposed on the persons who advertise gambling organised in other Member States, then it must be stated that those arrangements are discriminatory and that [the gambling law is] unenforceable against the persons being prosecuted in the main actions," said the ECJ.
