Supreme Court, 24 February 2012, LJN BT6689 (Ladbrokes/Lotto)

A legal struggle of more than 9 years between Ladbrokes and De Lotto has now finally resulted in a final judgment. On 24 February 2012, the Dutch Supreme Court held that the monopoly of De Lotto in organizing and offering games of chance in the Netherlands is not contrary to the EU right to free movement of services. De Lotto was allowed to bar offers of games of chance of the England-based Ladbrokes through the Internet and by telephone, and De Lotto was also allowed to advertise games of chance. These activities are not incompatible with the objective of curbing gambling addiction.

Background

In the Netherlands, De Lotto has a monopoly position pursuant to the Dutch Betting and Gaming Act. The Betting and Gaming Act works with a system of licenses, and only De Lotto has a license to organize specific games of chance like lotteries and sport bets. Ladbrokes, a bookmaker's office based in England, was also offering games of chance by telephone and online, and its offers extended to the Dutch public as well. De Lotto thought that Ladbrokes, by offering games of chance without having a Dutch license, was acting contrary to the Betting and Gaming Act. Ladbrokes, on the other hand, considered the monopoly position of De Lotto to be contrary to the free movement of services in the EU. Besides, Ladbrokes labeled the legislation aimed at curbing gambling addiction 'hypocritical', as it did allow De Lotto to introduce and to advertise new games of chance.

Preliminary Questions

While the appeal to the Supreme Court was pending, the Supreme Court put forward a number of preliminary questions to the European Court of Justice ("ECJ"). One of these questions was (in brief) whether the free movement of services does not preclude that a Member State, on the basis of the closed licensing system that exists in that State for the provision of gaming services, prohibits a foreign service provider which has already been granted a license in its own country for the online provision of such services from also offering those services online in the first Member State. The ECJ answered this question negatively and held that such a prohibition may be justified. The justification may lie, for example, in the objective of the legislation, such as consumer protection, the combating of fraud or crime, or the general need to preserve public order.

Another preliminary question concerned the so-called "test of hypocrisy" as formulated earlier in the ECJ's Gambelli judgment. Is a license holder permitted to make the games of chance which it offers attractive by introducing new games and by advertising, while the license holder may at the same time rely on restrictive measures in the legislation aimed at curbing gambling addiction? The ECJ considered the following on this question: "It is for the national court to determine whether unlawful gaming activities constitute a problem in the Member State concerned which might be solved by the expansion of authorised and regulated activities, and whether that expansion is on such a scale as to make it impossible to reconcile with the objective of curbing such addiction."

The Supreme Court

The Supreme Court held, on the basis of this ruling of the ECJ, that when a provider in another Member State lawfully offers online games of chance, a Member State is still entitled to take the view that this is not a sufficient assurance that national consumers will be protected against the risks of fraud and crime. As far as the test of hypocrisy was concerned, things already did not look very bright for Ladbrokes after the ECJ's judgment. After all, it is not the task of the Supreme Court to give an opinion on the facts. The courts deciding questions of fact had already ruled earlier that De Lotto, as a license holder, can rely on the justice of the national legislation underlying its license. After the ECJ's judgment, the Supreme Court therefore held that the expansion of the activities of De Lotto can solve the problem of unlawful gaming activities in the Netherlands, and that this expansion is not on such a scale as to make it impossible to reconcile with the objective of curbing gambling addiction.

The Supreme Court has dismissed all complaints of Ladbrokes as unfounded and has rejected the appeal. This judgment upholds the court order, which was already imposed on Ladbrokes in 2003 in preliminary relief proceedings, to block access to its internet site for persons residing in the Netherlands.

First published in the Kennedy Van der Laan newsletter - March 2012

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