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The European Commission must investigate whether or not selecting Dutch lottery operators constituted state aid, after a victory for the European Gaming and Betting Association (EBGA) in the Court of Justice of the European Union (CJEU).
In a ruling on Wednesday (November 15), the EU’s apex court said that the European Commission ignored its obligations to investigate whether lottery licences awarded in the Netherlands in 2014 qualified as state aid.
Incumbent operator Nederlandse Loterij was awarded an exclusive licence for the state lottery in 2017 and holds the country’s only instant lottery authorisation, although the EGBA’s complaint dates back to a licence extension in October 2014. Several other companies offer smaller scale lotteries.
The EGBA initially protested the Dutch lottery concession system in 2016 by submitting a complaint to the European Commission, but was eventually rebuffed in 2020 after the commission closed the complaint, arguing there was no need to investigate as there was no reason to believe a state aid violation had taken place.
The EGBA complained to the CJEU, alleging that the European Commission failed in its duty to assess whether there were state aid breaches, as there were serious doubts about unfair advantage.
The court this week ruled in favour of the trade group, saying that the commission has an obligation under EU law to initiate an inquiry if there is any reasonable doubt over the existence of illegal state aid.
The EGBA maintains that the process should have been more open and allowed new operators a greater chance to compete against the pre-existing lottery provider.
“The renewal of multiple lottery licences of incumbent holders, without consideration at market rate and without an open, transparent, and non-discriminatory licence allocation process, constituted illegal state aid,” it said in a press release on Wednesday.
The CJEU ruling does not amount to a vindication of this position, but forces the European Commission to consider whether or not it is true.
“Due to the complete absence of appropriate investigation by the commission at the preliminary examination stage of whether the contested measure conferred an indirect advantage on those bodies … the fact that this issue was not examined in the contested decision does not make it possible to rule out the existence of serious difficulties in that connection,” says the ruling.
A spokesperson for the European Commission told Vixio GamblingCompliance it “takes note” of the judgment and confirmed that its original view was that “the 2014 decision of the Dutch gambling authority to prolong six lottery and gambling licences was in line with EU state aid rules”.
“The commission will carefully study the judgment and reflect on possible next steps,” the spokesperson said.
EGBA general secretary Maarten Haijer said: “We welcome the CJEU’s ruling to annul the commission decision, and find in EGBA’s favour, but frankly speaking we are not surprised by it. The facts and data of this case raised serious doubts about the compliance of the Dutch licensing procedure with EU law, which should have warranted the commission to open a formal state aid investigation to address those doubts.
“We are confident the commission will now carry out a thorough investigation, and we are ready to provide any necessary information and data. It is crucial for the commission to uphold EU law consistently across all sectors, without fear or favour, including the gambling sector. The selective enforcement of EU law undermines the commission’s institutional role as the guardian of the Treaties.”
The managing director of the Netherlands Online Gambling Association (NOGA), which represents private operators in the Dutch market, also welcomed the ruling, saying he hoped it would lead to greater engagement with gambling regulation at the European level.
“The biggest uplift of this ruling is that the European Commission can no longer shy away from its responsibility to protect the fundamental freedoms of the European Treaty,” said Peter-Paul de Goeij.
“In the end all European consumers deserve the same basic level of consumer protection and in my view there is no valid argument against harmonising European gambling laws. This ruling is an important first step back on the right track.”
