The Compensatory Rush: A European Perspective

This World Trade Organization (WTO) procedure is technically nothing more than a means of leverage for the European Union to obtain more concessions from the United States in opening their service markets, though it may still be perceived as a good sign for the gambling markets.

This procedure will not force the United States to open its market to European online gambling operators, but it will--by opening other services markets--pressure it into compensating the European Union for the barriers to trade services this situation creates.

Nonetheless this procedure confirms the WTO case against the United States--arguably won by Antigua and Barbuda (Antigua)--which leads the U.S. government to promise major changes in their gambling legislation.

Although there is no official European Commission (EC) position in favor of opening gaming and gambling markets, recent facts show the underlying political will exists. In addition, Internal Market Commissioner Charlie McCreevy is a fierce defender of gambling market liberalization.

In 2003, with the Gambelli case, the European Court of Justice (ECJ) reminded Member States that they had to stop invoking imperative reasons of public order to justify restrictions, particularly in relation to public funding, while the actual objective pursued is the protection of the national markets from foreign competition. Community Law commands that Member States pursue a constant gaming policy.

Following this trend, in April 2006, and again in October, the EC launched infringement procedures against seven Member States (Denmark, Finland, Germany, Hungary, Italy, the Netherlands and Sweden), whose legislation restricted the supply of sports-betting services.

In March 2007, the EC sent "reasoned opinions" to Denmark, Finland and Hungary, beginning the second stage of the infringement procedure, considering that the restrictions contained in their sports-betting legislation are not compatible with EU law and are not necessary, proportionate and non-discriminatory. The reasoned opinions provided information on how to put an end to the infringements and requested formally that Member States amend their laws accordingly.

On June 27, 2007, the European Commission will decide whether to pursue their infringement procedure against France.

In case of non-compliance or satisfactory reply within two months, the EC may bring those cases before the ECJ. If all seven cases were raised this could help to give a consistent EU position on gaming laws.

In the meantime, through the ECJ prejudicial ruling mechanism, private operators are progressively challenging national rules creating obstacles. Recently, Portuguese, German, Belgian and Swedish courts have referred to the ECJ in order to check the compatibility of their national laws--which restrict free market access for EU private operators--with Community Law.