Two gambling companies lost their claims alleging that they didn’t get a sporting chance to do business in The Netherlands. Ladbrokes and Betfair both challenged the Dutch monopoly on gambling. They lost in the Court of Justice of the European Union, which held that Member States can prohibit the operation of games of chance on the Internet in joined Cases C-203/08 and C-258/08, Sporting Exchange v Minister van Justitie, and Ladbrokes Betting & Gaming, Ladbrokes International v Stichting de Nationale Sporttotalisator.
The regulatory regime in the Netherlands permits issuing an exclusive license to only one provider of gambling services. This license is held by De Lotto, a non-profit foundation whose object is to collect funds by means of organizing games of chance and distributing those funds to institutions that work in the public interest.
De Lotto brought proceedings, in Case C-258/08, against Ladbrokes, in the Dutch national court, seeking to bar Ladbrokes from offering games of chance to Netherlands residents on their website. In Case C-203/08, Sporting Exchange, Betfair, a company which provides a platform for betting on sports events and horse races, claimed that the Netherlands authorities should recognize the gambling license that it held in the United Kingdom. It also asserted that the Netherlands was obligated to respect the principle of transparency by holding competitive tendering procedures when granting licenses.
The Netherlands’ national courts were unwilling to take a gamble on interpreting EU law and asked the Court of Justice about the compatibility of the Netherlands legislation with EU law.
The Court of Justice acknowledged that this legislation restricts the freedom to provide services. However, it found the legislation justified by the goal of consumer protection (protecting the public from gambling addiction and from squandering money), the prevention of fraud, and the need to preserve public order. Furthermore, the Internet gaming industry has not been harmonized in the EU, so the fact that an operator has a license in another Member State is not sufficient assurance that national consumers will receive the protection that nation wants to provide. Finally, the omission of a call for tenders for receiving a license is not disproportionate in light of the legislative objectives.
Who would have put money on the fact that a monopoly would prevail over transparency and free market forces? That’s what makes horse racing.