Turfed out
It is not enough for member states to simply say their actions are 'justified' - the ECJ will scrutinise their reasoning, says Paul Stanley NO
It might have surprised those who, in the aftermath of the Second World War, set out to create the European Community that their lofty ideals would be frequently invoked by those seeking to establish as freedom to gamble. But the ECJ has a fairly regular diet of gambling cases, especially since the internet offers such an ideal means of gambling. In case C-212/08 Zeturf (Eighth Chamber, 30 June 2011) the court has once more taken up the issues.
The case concerned the French monopoly on off-course betting, which permits off-course betting on horse races to be carried out only by a monopoly provider, PMU, which is controlled by the state and contributes a substantial subsidy (around 12 per cent of the sums bet) to the state. This was challenged by a Maltese-based provider of internet gambling services.
The basic features of this sort of case are now reasonably routine. Restrictions on the provision of gambling services require justification. Typically the state invokes a variety of public interest reasons for regulating gambling: preventing fraud by bookmakers; preventing the public from 'wasting' their money on gambling and dealing with gambling addiction; preventing gambling attracting criminal elements and being used for money laundering and so forth. In general, the ECJ has been rather indulgent towards member states in this field, and has recognised that fairly stringent measures (including even national monopolies) may be justifiable.
In most cases where the public interest is invoked to justify a restriction on the freedom to provide services '“ or other similar freedoms '“ assessment of the justifications is essentially an abstract exercise. The court does not normally question the member state's good faith; if a state says 'we are doing this to reduce crime', it is normally accepted without question that this is the reason for the measure '“ and the question is whether (objectively speaking) that measure is sufficiently necessary to meet the requirements of proportionality.
Alternative motives
But in Zeturf the complainant was not willing to accept this. It pointed to a number of features which, in effect, called into question whether the French government really had the high-minded objectives it claimed '“ or whether the real aim of the measures was revenue raising. Since France sought to justify a particularly intrusive form of regulation (the reservation of a national monopoly), the ECJ thought it necessary to consider whether the real reason for that monopoly was a desire to pursue a 'particularly high level of protection' '“ or whether other forces were at work.
As a factual question, those matters were left to be examined by the national court; but it is fair to say that the questions raised by the ECJ indicated, at least, an appreciation that Zeturf's scepticism might be justified.
Thus the ECJ pointed out that it was not legitimate to adopt a monopoly just because it was administratively simpler than (tough) regulation of third parties. Nor could the fact that the proceeds of the monopoly went to worthy causes be a justification. What had to be shown was that only a monopoly could achieve the 'high level of protection' required.
The ECJ stressed that, even if the legislation was legislation which could have been adopted by a member state which was concerned to ensure a 'high level of protection', it remained to be proved that this was actually the reason for it. Among the things the ECJ invited the national court to consider was whether (as Zeturf alleged) the monopoly provider was itself used for money laundering, which had not been prevented. It would also be important to decide whether PMU's advertising and marketing suggested that the real objective was not rigid control. It would be one thing to invest just sufficiently in advertising to make sure the product remained sufficiently attractive to would-be gamblers to prevent them resorting to illegal alternatives. But it would be another thing if the commercial policy suggested an intention to encourage an increase in gambling.
Zeturf shows that the facts in relation to justification may matter. Especially where a member state is at the outer limit of what might be acceptable, the facts justifying regulation must be proved '“ and should be scrutinised. One cannot simply say 'state gambling monopolies are justified'; the details are vital.