Case C‑176/11, HIT and HIT LARIX

Casinos from other states justifiably refused when legal protection for gamblers in those States not equivalent to that ensured at national level

>> HIT and HIT LARIX were two public limited companies established in Slovenia. They held licences in Slovenia to operate certain games of chance there and did in fact offer those services in a number of establishments located in that Member State. They applied for permitted to carry out advertising in Austria for their gaming establishments located in Slovenia, in particular for casinos. 

By two decisions adopted on 14 July 2009, those applications were rejected by the ministry on the ground that HIT and HIT LARIX had not proved that the Slovenian legislation concerning games of chance ensured a level of protection for gamblers comparable to the level provided for in Austria, when compliance with such a condition was necessary under the relevant Austrian legislation in order for the permitted applied for to be capable of being granted.

The Administrative Court (Austria) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Is legislation of a Member State which permitted the domestic advertising of casinos located abroad only where the legal provisions in those foreign locations for the protection of gamblers correspond to the domestic provisions compatible with the freedom to provide services?’

>> Infringement of Article 56 TFEU.

The Court of Justice first of all that Article 56 TFEU required the abolition of all restrictions on the freedom to provide services, even if those restrictions applied without distinction to national providers of services and to those from other Member States, when they were liable to prohibit, impede or render less advantageous the activities of a service provider established in another Member State where it lawfully provided similar services. Moreover, the freedom to provide services was for the benefit of both providers and recipients of services (see, inter alia, Joined Cases C403/08 and C429/08 Football Association Premier League and Others [2011]).

In 2010, the Court had held in Sjöberg that, in the area of advertising for games of chance, national legislation whose effect was to prohibit the promotion in a Member State of gambling organised legally in other Member States constituted a restriction on the freedom to provide services (Joined Cases C447/08 and C448/08 Sjöberg and Gerdin [2010]).

Likewise, the Court found that national legislation at issue in the present case constituted a restriction on the freedom to provide services since it impeded the access of consumers resident in Austria to the services offered in casinos located in another Member State, by making the promotion in Austria of those activities subject to an authorisation scheme which required, in particular, that the operator of the casino concerned prove that the legal provisions for the protection of gamblers adopted in the Member State where that casino was operated at least correspond to the relevant Austrian legal provisions.

Consequently, the Court found that the Austrian legislation constituted a restriction on the freedom to provide services that was guaranteed by Art. 56 TFEU.

 >> Justification by overriding reason in the public interest

The Court reiterated that restrictions on gaming activities might be justified by overriding reasons in the public interest, such as consumer protection and the prevention of both fraud and incitement to squander money on gambling (see, to this effect, Case C46/08 Carmen Media Group [2010]).

The Court also reiterated that legislation on games of chance was one of the areas in which there were significant moral, religious and cultural differences between the Member States. In the absence of harmonisation in the field, it was for each Member State to determine in those areas, in accordance with its own scale of values, what was required to protect the interests in question (Case C42/07 Liga Portuguesa de Futebol Profissional and Bwin International [2009]).

The mere fact that a Member State had opted for a system of protection which differed from that adopted by another Member State could not affect the assessment of the proportionality of the provisions enacted to that end. The Court held that those provisions must be assessed solely by reference to the objectives pursued by the competent authorities of the Member State concerned and the level of protection which they seek to ensure.

Here, the Austrian Government took the view that the restriction on the freedom to provide services at issue in the main proceedings was not disproportionate in relation to the objectives pursued. It stated that the number of casinos was limited in Austria to a maximum of 15 and casino operators were required to observe strict rules concerning the protection of gamblers, such as the duty to retain details of their identity for at least five years or the duty of the casino’s management to observe a gambler’s conduct in order to determine whether the frequency and intensity of his participation in gaming jeopardise the minimum income required for his subsistence.

The Austrian Government put forward that, in practice the application of those preventive rules had resulted in a significant reduction in the number of gamblers, as more than 80 000 persons were subject in 2011 to restrictions or bars on entering Austrian casinos. It argued that therefore, in the absence of the contested condition, gamblers would be further encouraged to cross the border and to incur greater risks in casinos located in other Member States where similar regulatory guarantees of protection in some cases did not exist.

The Court held that, in that regard, it was apparent from the contested condition that, in order for a permitted to carry out advertising in Austria for casinos established abroad to be granted, the levels of protection for gamblers that existed in the various legal systems concerned must first be compared.

The Court found that such an authorisation scheme was in principle capable of fulfilling the condition of proportionality if it was limited to making authorisation to carry out advertising for gaming establishments established in another Member State conditional upon the legislation of the latter providing guarantees that were in essence equivalent to those of the national legislation with regard to the legitimate aim of protecting its residents against the risks connected with games of chance.

According to the Court, such a condition did not appear to constitute an excessive burden for operators given the objective, recognised by the Court as an overriding reason in the public interest, of protecting the population against the risks inherent in games of chance.

The Court concluded Art. 56 TFEU must be interpreted as not precluding legislation of a Member State which permitted the advertising in that State of casinos located in another Member State only where the legal provisions for the protection of gamblers adopted in that other Member State provided guarantees that were in essence equivalent to those of the corresponding legal provisions in force in the first Member State.

It was for the referring court to satisfy itself that the contested condition was limited to making authorisation to carry out advertising for gaming establishments established in another Member State conditional upon the legislation of the latter providing guarantees that were in essence equivalent to those of the national legislation with regard to the legitimate aim of protecting individuals against the risks connected with games of chance.